By Robert J. Samuelson, May 8, 2014, The Washington Post
One disturbing trend of recent decades is the decline in Americans’ geographic mobility. We pride ourselves on being a get-up-and-go people. In particular, we see ourselves as willing to move for opportunity. If there aren’t jobs here, we’ll go there.
Our “flexibility” is reputedly a large economic advantage, especially compared to Europe’s, where people tend to stay put. It’s a flattering self-portrait now marred by the reality of more Americans also staying put.
The dramatic drop in geographic mobility is usually taken as yet more evidence that the U.S. economy has become less dynamic and flexible. Examples abound. Just recently, the Brookings Institution — a Washington think tank — released a report indicating a decline in entrepreneurial success. The number of firms being created is falling, and in recent years there have been more company failures (470,591 in 2011) than start-ups (409,209).
It all seems of a piece. Firms are less innovative and hardy. Workers are more rigid and immobile. The trends are unmistakable.
The Census Bureau regularly asks Americans whether they’re living in the same place this year as last. In 1948, one in five Americans (20.2 percent) reported moving in the previous year. Most (13.6 percent) stayed in the same county, but sizable minorities went elsewhere in the state (3.3 percent) or relocated to a different state (3.1 percent).
Nearly four decades later in 1985, the patterns were virtually identical: 20.2 percent moved, with insignificant shifts among their destinations. (In both years, there was also a small group that migrated from abroad.)
No more. In 2013, only 11.7 percent of Americans had moved in the previous year, with 7.5 percent staying in the same county and 2.3 percent remaining in the same state. A mere 1.6 percent left for a different state. These changes began in the late 1980s and seem to have accelerated in the 2000s.
Aside from a general couch-potato attitude — a reluctance to move — many theories have been advanced to explain this shift.
Among them: an aging society (the middle-aged move less than the young); the rise of two-earner couples (if one loses a job, the other still has one); homeowners with “underwater” mortgages (if they sell their homes, they’ll suffer large losses); and the fading appeal of the South and West with lower costs and warmer weather.
All these sound plausible, but they’re mostly wrong, argues a new study by economists Raven Molloy and Christopher Smith of the Federal Reserve Board and Abigail Wozniak of the University of Notre Dame.
A better explanation, they assert, is the job market. Jobs do cause people to move, but jobs are not as plentiful as before and wage premiums are lower. So people move less. (Their study is Working Paper 20065 of the National Bureau of Economic Research.)
For within-county moves, the aging population and homeownership do explain some of the drop in mobility, the economists found. But that’s not true for interstate moves.
Declines here occurred among all age groups, suggesting that larger forces are at work. Similarly, renters as well as homeowners experienced big drops; this, too, indicates larger forces. As for the South’s and West’s fading allure, migration declines aren’t concentrated in these regions.
What’s changed is the nature of the labor market, the study says. Both firms and workers have become more defensive. Companies are more reluctant to hire; perhaps in reaction, workers are more reluctant to quit existing jobs. The result: fewer job offers to tempt workers to move.
In addition, bargaining power seems to have shifted to employers. In the 1980s, young workers received an average 7 percent wage increase for moving to a new job, the economists estimate; more recently, the premium is about half that. The lower wage premium also discourages people from costly and uncertain moves.
The economists figure that these factors may explain half the fall in interstate migration. Is this good or bad news? It’s unclear. Declining migration doesn’t automatically mean the economy “has become less dynamic,” the study says. It could signify that “fewer location and job changes are needed in today’s economy.”
Well, maybe. But there’s another possibility: It may reflect a world motivated more by fear than by hope.