How do people have this ability?

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Why is it people have the ability to be able to tell if your employed or unemployed even if you lie and say you are working?

I asked my mom once how people seem to be able to pick on the fact I am not in employment and she said "you can appear spaced out and you have not got much to talk about"

I think what your mom is saying is true. Working takes up a lot of most people's time and so they tend to share their experiences when they talk to others in casual conversation. It would be rare for someone to obviously not say anything about their job if they have one. My son works with a security clearance and never actually talks about his job but still talks about people or situations or the commute.
People see you driving off and coming back. When you have a day off you get errands done and you are busy a lot. People with lots of free time are not usually employed.

People can be wrong in their impressions though.

I have a friend who works night shift -- he's a taxi-cab driver but in order to avoid the high daily cost of the inner London congestion charge, he takes the night shift on his shared cab (his friend drives it in the day) as there's no charge during the night.

But in the day, once he's had a few hours sleep, his whole day is free and he potters around on long walks with his dog. Of course he doesn't have to dress smartly to drive a cab, either, so he always looks uber-casual in his dress style, like he has no work. Everyone who encounters him on his dog walks kind of thinks he must be unemployed. He's not, he works all night and the job can be quite crappy too, dealing with drunks and thugs.

I too am self employed and because of functioning issues I only schedule half a day of work each workday at this stage of my life. The rest of the day I have free and I often sit in the park for hours. I pretty much realize everyone must think I'm completely unemployed. I'm not, I run my own business! The downside is of course I don't make a lot of money these days but these people are wrong to assume that just because THEY only see me sitting around in the park looking like I sleep there, doesn't mean I'm not working my ass off during the hours I do have work scheduled.

So, just to say, people can be mistaken. You can't really read a book by its cover, as the saying goes.