They're out digging coal for all the bad little boys and girls, and if those little buggers are especially bad... well then you have the sock and underwear making elf's.
They collect. Haven't you ever wondered where socks, pens, earrings go? Why, in your flatware set for eight. do you only have six forks? Think of all the things that disappear each year. Could it be the elves collecting for Christmas repurposing?