The Weird Connection Between Moving and Prosperity

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The popular imagination tends to see migration to find work in a new city as an act of desperation. After all, what’s more frightening than leaving one’s friends, family and community behind to seek one’s fortune elsewhere, a stranger in a strange land? That’s why so many coming-of-age movies open with a U-Haul taking an exit ramp off the open highway, usually somewhere in the West.

So it may seem surprising that our current bout of economic stagnation is being associated with literal stagnation — that is, with an unusual lack of geographic mobility among American workers.

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According to an analysis of U.S. Census and IRS data by the Carsey Institute at the University of New Hampshire, reported recently in the New York Times, the bad economy has dramatically slowed the decades-long flow of migration out of northern Rust Belt cities and toward the Sun Belt. “Essentially,” the Times article explains, “millions of Americans have become frozen in place, researchers say, unable to sell their homes and unsure they would find jobs elsewhere anyway.”

Apparently, the Census data that was analyzed is released in three-year chunks, so the most recent data allows the first direct comparison of the post-2008-crash years to previous periods. As soon as the crisis hit, migration from New York, Massachusetts, and California slowed almost to a stop, as did migration into Arizona, Florida and Nevada.

The article also notes that migration has slowed among young people as well as older Americans, pointing to a Brookings Institution finding that “once-flourishing economies like Atlanta, Phoenix and Riverside, Calif., are no longer magnets for Americans ages 25 to 34.”

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What the Times article doesn’t address, but that seems very likely to be the case, is that lack of migration isn’t merely a result of our economic problems. It’s also a cause. A recent McKinsey & Company report on job creation notes that despite our persistently high rates of unemployment, the consulting firm’s own survey of business leaders found that nearly two-thirds “routinely have difficulty filling some positions” and that 40% of companies say “they’ve had positions open for six months or more because they cannot find the ideal candidates.”

Sure, the “ideal candidate” may be a mythological figure. But the deeper point is that one cause of the extended “jobless recovery” appears to be what report co-author James Manyika calls a dramatic “mismatch”: For a variety of reasons, available jobs aren’t being matched with the right workers. And one of those reasons, according to the report, is that “Americans are no longer as likely to move for a new job as they once were.” Whereas one in five Americans changed residences every year in the 1950s and 1960s, today the rate is only one in 10.

Why is that the case? McKinsey lists a few interesting reasons. One of them, ironically, is that home ownership — that mainstay of the American dream — has risen so dramatically in recent decades. Renters, it turns out, are three times as likely to move in a given year as homeowners. And that differential is likely to increase with so many more homeowners now stuck in underwater homes (i.e. those worth less than what’s owed on the mortgage).

Another reason for decreasing mobility is the aging of the population; older Americans are less likely to move than young ones.

And then there’s the oft-noted rise of dual-income families. If a sole earner loses a job, it’s relatively easy for a family to pack up and move to a place with more employment opportunities. But it requires a grand leap of faith to do so when one member of a two-income family loses a job; more likely, the family stays put and holds onto the remaining job for dear life.

None of these factors are likely to ease up in the near future. But McKinsey does see hope for this increasingly static workforce in the changing nature of work, and in particular in the technologically driven development of  “anywhere, anytime” work that doesn’t require the employee to be located at a company facility. “Their ability to work with colleagues and customers continents away in ‘real time’ and perform almost any function remotely provides a whole new level of flexibility,” the report explains, adding that 26% of the execs surveyed plan to employ more people working at home in the next five years, compared to only 15% who said they plan to offshore more jobs.

In fact, McKinsey found, human resources executives interviewed consistently said that remote workers are “more productive and more satisfied, because their jobs give them autonomy and flexibility.” That’s a good combination, wherever you live.