Why video games may be causing a big problem for the US economy

Danny Izquierdo, a 22-year-old who lives with his parents in Silver Spring, Maryland, has found little satisfaction in a series of part-time, low-wage jobs he’s held since graduating from high school. But the video games he plays, including FIFA 16” and Rocket League on PlayStation and Pokémon Go on his smartphone, are a different story.

“When I play a game, I know if I have a few hours I will be rewarded,” he said. “With a job, it’s always been up in the air with the amount of work I put in and the reward.”

Izquierdo represents a group of video-game-loving Americans who, according to new research, may help explain one of the most alarming aspects of the nation’s economic recovery: even as the unemployment rate has fallen to low levels, an unusually large percentage of able-bodied men, particularly the young and less-educated, are either not working or not working full-time.

Most of the blame for the struggle of male, less-educated workers has been attributed to lingering weakness in the economy, particularly in male-dominated industries such as manufacturing.

Yet in the new research, economists from Princeton, the University of Rochester and the University of Chicago say that an additional reason many of these young men – who don’t have degrees – are rejecting work is that they have a better alternative: living at home and playing video games. The decision may not even be completely conscious, but surveys suggest that young men are happier for it.

“Happiness has gone up for this group, despite employment percentages having fallen, and the percentage living with parents going up. And that’s different than for any other group,” says the University of Chicago’s Erik Hurst, an economist at the Booth School of Business who helped lead the research.

While young men might temporarily enjoy a life of leisure, the implications could be troubling for them as well as the economy. The young men aren’t gaining job experience that will better equip them to work in their 30s and 40s. That, in turn, could lead to a lifetime of decreased wages, limited opportunities and challenges such as depression and drug use – problems the US is already seeing in areas hit with heavy job losses.

At the same time, if a historically vibrant portion of the population doesn’t feel as much desire to work, this could harm the economy’s future and the ability of government to use policy to create jobs.

“That’s a big chunk of labour that could be used for something, and we’re not using it,” said Greg Kaplan, an economist at the University of Chicago who was not involved with the new research.

As of last year, 22 per cent of men between the ages of 21 and 30 with less than a bachelor’s degree reported not working at all in the previous year – up from only 9.5 per cent in 2000. Overall, only 88 per cent of men between the ages of 25 and 54 are working or looking for work, the third-lowest among 34 developed countries, according to the White House’s Council of Economic Advisers.

Young men without college degrees have replaced 75 per cent of the time they used to spend working with time on the computer, mostly playing video games, according to the study, which is based on the Census Bureau’s time-use surveys. Before the recession, from 2004 to 2007, young, unemployed men without college degrees were spending 3.4 hours per week playing video games. By 2011 to 2014, that time had shot up to 8.6 hours per week on average.

More-educated young men have ratcheted up their gaming time, too – but this group has an easier time finding good jobs, and so their work hours haven’t fallen as much. The trends are different for women, who are much more likely to go back to school after leaving the labour force.

The researchers are not merely saying that young men, out of work, are turning to video games. They’re saying that increasingly sophisticated video games are luring young men away from the workforce. To determine this, the researchers analysed changes in how people were allocating their time to leisure, and ran statistical tests that they say show that technological improvements are pushing people to spend much more time playing video games. That, in turn, is changing people’s trade-offs about when to work and when to play.

“People have switched so much time, more time than we would have predicted, to computers and video games, and our model attributes that to technological progress,” Hurst said.

The paper attributes one-third to one-fifth of the decline in work hours by less-educated young men to the rising use of technology for entertainment – mainly video games. The new study has not yet been published in a peer-reviewed journal, and the researchers say they are continuing to refine the precise figures. But other prominent economists who reviewed it for this story said it raises important questions about why so many young men have abandoned the workforce.

Alan Krueger, a former chairman of President Obama’s Council of Economic Advisers, said the research presents “strong evidence that the increase in the number of less-educated young men who are not working is not entirely a result of weak demand for their services”. “They find evidence that a portion ... of the decrease in work time of less-educated young men can be a result of the appeal of video games,” he said.

A few decades ago, an unemployed person might be stuck on the couch watching TV, isolated and depressed. Today, cheap or free services such as Facebook, Snapchat, YouTube and Netflix provide seemingly endless entertainment options and an easy connection to the outside world. Video games, in particular, provide a strong community and a sense of achievement that, for some, real-world jobs lack.

Jacob Barry, a 21-year-old from Grosse Point, Michigan, who works part time making sandwiches at a Jimmy John’s and dreams of becoming a therapist, says the community – as well as a sense of escape – is what draws him to video games. After logging as many as 40 hours per week playing games, Barry realised that he was using games as a way to avoid the pressures of working life. “Honestly, I realised it was a bad thing when my mom would say things like, ‘When are you going to go apply for these jobs? When are you going to go back to school?’ And then in the back of my mind I kept hearing fun facts about these games.”

Barry dropped out of college because he was not sure the high cost of tuition would pay off, but he now feels stuck in a minimum-wage food service job. He wishes he could find a career like his grandfather, who joined the phone company after high school and worked there for decades. “But there’s no option to do that,” he says.

One reason young men are drawn to games is their extremely low cost, after the initial outlay for a computer or gaming system. Barry says he logged thousands of hours on an online battle arena game “and it cost me zero dollars”. Recent research has found that households making US$25,000 to US$35,000 a year spent 92 more minutes a week online than households making US$100,000 or more a year.

Young men such as Barry are also helped out economically by living at home. In the US, nearly two-thirds of unemployed, less-educated young men live with parents or other family members, up from about one third before the recession. For the first time since the 1930s, in fact, more US men aged 18-34 are living with their parents than with romantic partners, according to the Pew Research Centre.

“Not withstanding all these bad labour-market outcomes, this group has found a place to live and things to do,” says Kaplan of the University of Chicago.

That situation does not appear to be weighing on their happiness. Data from the General Social Survey, a national survey of several thousand people, shows that young non-college men actually report being happier than in the early 2000s, with the percentage of men saying they are very or pretty happy rising from 81 per cent to 88 per cent. In the same period, the reported happiness of other groups remained constant or fell.

For Izquierdo, the 22-year-old in Silver Spring, video games provide a respite from job market pressures. The son of immigrants from Guatemala, Izquierdo dreams of becoming a graphic designer but has had trouble finding a job that offers sufficient working hours and opportunity for advancement.

“As a young, first-generation male, there’s a lot of expectations. So it’s kind of cool to pop on a game ... and you will be rewarded for doing small tasks,” he says. “They just make me happy.”