Real Estate

Does less mobility hurt the economy?

By From page HS3 | January 17, 2014

As a kid growing up, we moved a lot. My father was a career military officer and about every two or three years he was transferred to another military installation. One year we were living in Tampa, Fla., and the next I was in Chicopee, Mass. I attended school in five states from Alaska to Florida, have worked in four and finally settled down in El Dorado County.

Back in the day, relocating to different regions of the country was considered worthy and necessary for advanced job promotion. Today, most folks would likely view moving to a distant community as a disadvantage because it means leaving family and friends behind, pulling children out of school and it can be expensive. However, relocating taught me some valuable life lessons such as the ability to travel light and often on short notice. Our belongings had to be operationally functional and versatility was an advantage. The U.S. Air Force would only pay for moving a set number of pounds of furniture. If it was over the limit it didn’t get shipped. Kids learned quickly to make friends and adapt to new environments.

Relocating around the country is more natural than staying in one place. Humans have been moving around the earth for about 200,000 years, mostly searching for food as hunters and gathers. Relocating wasn’t an option. When the food source relocated so did we. America was settled by relocating pilgrims and moving from east to west has defined our history. Imagine what our country would look like if the 49ers and settlers had decided to stay on their farms back east.

Many economists believe that American propensity to move makes the country’s workforce more dynamic and strengthens our economy. A more mobile workforce is a more nimble and fluid one. When folks are moving, both businesses and workers have an easier time matching up skills and opportunity. Geographic mobility has deep linkage with economic mobility. A computer programmer moving from Iowa to Silicon Valley might triple wages and be 10 times as productive. Relocating can be a temporary inconvenience but it may be a necessity for the family’s financial survival and is generally accepted as healthy for the county. That’s why many economists are concerned about our declining migration rates.

According to the most recent U.S. Census data, the percentage of Americans moving across state lines is falling to record low levels. Last year 4.8 million folks moved across state lines. That’s down from 5.7 million in 2006 and from 7.5 million in 1999. About half the number of Americans are moving across state lines today as did in the 1990s and that downward trend is expected to continue.

“I think it’s troubling,” said William Frey, a demographer at the Brookings Institute who analyzed the Census Data. “One of the hallmarks of the American Economy has long been the mobility of its people.”

The Great Recession had an impact on declining mobility. Jobs were scarce all over the country and even when available in another state, many homeowners were stuck in their underwater home unable to sell and move. But the recession has been over since 2009 and the housing market has been recovering since 2011 and folks still aren’t moving.

It is a fascinating phenomenon that folks continue to live and work in many extreme environments such as in the Midwest and Northeast, where earlier this month the “polar vortex” plummeted temperatures to 20-year lows. For more than 160 years our mild Mediterranean climate and economic opportunities attracted millions of folks to move to California.

That pretty much stopped in 1995. More folks continue to leave California for other states than move here from their existing state. According to the California Department of Finance, 103,000 more residents relocated to other states than moved here. Many southern states, including Texas, Florida and Arizona, continue to have a net increase in domestic migration and foreign migration, and the high birth rate for foreign immigrants now account for our 1 percent growth rate.

One age group that is moving is the 18- to 31-year-olds. However, they are not forming new households, buying homes or moving around the country in search of employment. They are moving back in with Mom and Dad. According to Pew Research, nearly 22 million young adults are living with their parents.

Aging boomers are not moving very far. Only 4.4 percent of seniors 55 and older moved across state lines last year.

Searching for employment used to be the primary reason for moving. Labor would relocate to industrial or manufacturing centers that were usually clustered together in certain regions of the country. That’s changed. With the decline in manufacturing and increase in servicing jobs, labor markets have become more homogeneous. Earnings are more similar across the country so there is less incentive to move from one place to another.

When folks do move across state lines their moves are more permanent. They move less frequently. The Internet has allowed those considering relocation to research job opportunities and communities before making the commitment. This information improves the quality of the move and reduces the chance of moving again.

Does a less-mobile populace mean a less dynamic economy? That’s likely to depend upon employment. Despite challenging climate and housing costs, folks continue to follow the food source. Economic opportunity will always attract capital and labor.

Ken Calhoon is a local real estate broker. Address questions and comments to [email protected]

Ken Calhoon

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