MOONLIGHTING OVER THE BUSINESS CYCLE

I. INTRODUCTION During economic downturns, employment levels fall, unemployment rates increase, and real wages drop. As such, real wages are considered somewhat procyclical. Yet, very little is known about the cyclicality of multiple-job holding. From a graphical analysis of national time-series moonlighting data during the 1960s and 1970s, Stinson (1987) finds evidence of large increases in moonlighting during expansionary periods. Likewise, Partridge's (2002) findings support the possibility of procyclical multiple-job holding. Yet, the popular media and employment think tanks discuss moonlighting as a by-product of financial pressures. (1) Furthermore, the idea that individuals may hold multiple jobs during an economic downturn in order to supplement family income is consistent with the so-called "added worker effect" in the labor economics literature. Why should we care about the cyclicality of multiple-job holding in the economy? There are numerous reasons. First, moonlighting has played, and can be expected to continue to play, a visible role in the U.S. workforce. The moonlighting rate was 5.2% as of 1970, with 7.0% of male workers and 2.2% of female workers holding multiple jobs. This moonlighting rate remained practically unchanged over the course of the next 30 yr. Yet, its gender incidence did fluctuate. In particular, the female moonlighting rate grew over the past several decades from the above listed 2.2% in 1970, to 3.8% in 1980 and to 5.9% in 1991, and exceeded the male rate for the first time in 1995 (6.5% vs. 6.3%). In May 2007, the moonlighting rate was still similar to the moonlighting rate in 1970 (i.e., 5.3%), although now females are much more likely to moonlight than men, with rates of 4.9% vs. 5.7%. (2) Considered over the course of an entire year (vs. at a point in time), an even larger percent age of workers hold second jobs. In this regard, Paxson and Sicherman (1996, p. 357) note that approximately 20% of male workers and 12.2% of female workers hold second jobs in any given year. (3) As these numbers suggest, moonlighting is a substantively important labor market phenomenon; however, it is much understudied. In fact, our review of the literature to follow will show that only a handful of research papers have studied this phenomenon. Thus, our primary motivation for writing the paper is to shed light on a poorly understood, yet numerically important, feature of the labor market. A second reason for examining the cyclicality of multiple-job holding is the potential importance of moonlighting in facilitating labor supply adjustments during temporary economic downturns or upturns. (4) Through a description of moonlighters, our analysis will shed light on how workers respond to fluctuations in job opportunities across the business cycle. Macroeconomists and labor micro-economists have long studied employment cyclicality in an attempt to improve the explanations of the changing composition of the labor force over business cycles, for example, the added and discouraged worker effects. (5) Third, as one part of the broader picture of economic cyclicality, our study fits nicely into the ongoing debate concerning the cyclicality of real wages. (6) Considerable research effort has been devoted to understanding the nature of real-wage fluctuations across business cycles, yet these studies are muddied by a glossing lack of distinction between workers' average real wages across all jobs and their wages in the primary job alone. Understanding the role that moonlighting may play in employment cyclicality may inform the debate concerning the measurement of real wages when studying real-wage cyclicality. A final and policy-relevant motivation for this research refers to the structure of employment taxes affecting secondary jobs. As explained by Anderson and Meyer (2003), unemployment insurance (UI) payroll taxes are highly regressive, in large part because benefits are structured in the same way. …