Americans are Moving Less. Why?

In comparison to our compatriots in other countries, Americans are very mobile people. When the going gets tough or new opportunities beckon, Americans have traditionally been willing to pick up and move.  Our history is replete with such stories–the pioneers moving West, the Great Migration of African Americans to northern industrial cities, and the ongoing shift of America’s population centers to the Sunbelt.  This mobility has often been considered  part of our “secret sauce” for economic prosperity, as a mobile workforce also tends to be more flexible, innovative, and entrepreneurial.

But, lots of new data and analysis is showing that Americans are becoming less mobile.  I spent part of my afternoon today in a Council for Community Economic Research webinar that examined why this is happening and whether we should worry about it.  The webinar focused on an interesting Census Bureau research with the not-very-interesting title of “The Recent Decline in Employment Dynamics.”  A number of recent studies have looked at residential mobility patterns; this research looks at job mobility.  It finds that all sorts of job mobility have declined greatly since the early 2000s.  Fewer people are leaving jobs, fewer people are moving to new jobs,  and fewer people  are being fired.   At the same time, new job creation is also slowing and the share of jobs created by small firms also seems to be declining. To give one example–U.S. job creation and job destruction rates dropped by 22-33% between 1998 and 2010.

This paper is part of a long-term research project and the authors are continuing to dig deeper into the causes of these changes.  At this stage, they point to a number of potential causal factors, some that are good and some that are bad in terms of economic trends.

1) Technology:  Thanks to technology, employers can more easily find workers with needed skills and competencies.  Thus, there are fewer job separations due to mismatches or poor hiring decisions.  This “smoother” labor market is a good thing.

2) Demographics:  An aging population typically becomes less mobile.

3) House and Job Lock:  Workers may be less willing to move due to having an underwater mortgage or fearing the loss of health insurance due to job loss or job changes.

4) Changes in Production Processes:  As manufacturing declines and service sector jobs take precedence, the differences between regional economies also become less pronounced. Service sector jobs (from cashiers and fast food workers to doctors and lawyers) can typically operate in any region, while specialized manufacturing operations are located in a smaller range of communities.  If you want to work in aircraft manufacturing, you typically face a smaller range of communities where you can work.   With fewer manufacturing jobs, fewer workers are moving to be located near production centers.

5) Changes in employment structure:  The rise of temporary work and the growth of the independent workforce allow people to work in the same place over multiple jobs or projects.  Moving to be near work becomes less necessary.

6) Uncertainty:   Job mobility declines furthest during recessions as uncertainty grows.   This uncertainty certainly plays a more long term role in dissuading businesses from making new hires or new investments.

It’s likely that multiple factors are at work.  However, if it is true that economic mobility is essential to American economic prosperity, it’s also essential that we understand the causes and implications of these new job patterns.

 

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