Don’t deter workers from moving

John Hood - Contributing Columnist

Here’s one of those statements that seems like it can’t be true and yet is firmly supported by the evidence: Americans don’t move around as much as they used to.

This is not about people lounging around too much, watching TV or playing video games (if you deserve such a scolding, you’ll have to get it from someone else). What I’m talking about is interstate mobility — people moving from one state to another, often for employment or educational opportunities.

Historically, Americans were a footloose people. Early settlers moved west and south, filling a vast continent with farming settlements, mill villages, market towns, and new cities. Later, large numbers of black Americans moved away from the places they or their recent ancestors had been enslaved, and into the growing cities of the Northeast and Midwest. Later still, the flow reversed and many moved back to the South.

During the 1940s, 1950s, and 1960s, an average of about 3.5 percent of Americans moved across state lines every year. The interstate-mobility rate fell a bit in the 1970s and then recovered some in the 1980s. It was just over 3 percent as recently as the late 1980s. Then the rate began to tumble. It’s currently in the range of 1.5 percent a year.

Broader measures of mobility that include people moving within their states, or even within their own counties, also show declines, albeit much smaller ones. As the population ages, it makes sense that fewer people would move every year. Higher rates of homeownership will also tend to reduce mobility, and even after the ravages of the Great Recession more people own their own homes than was true generations ago.

But why has interstate mobility dropped so much more than the rate of relocations closer to home? And why should we care about this? There may important issues of public policy here. The propensity of working-age people, in particular, to relocate to other states is related to the efficiency of the labor market and the productivity of the economy as a whole.

Economies are dynamic. They change, often rapidly, sometimes explosively. Natural disasters can wreak havoc on local communities. Technological changes can render industries obsolete and create whole new ones. Broadening patterns of trade can change what work is best done where, and reveal new opportunities to repurpose old locations.

There is nothing new about this. Indeed, much of America’s history of footloose migration reflects these kinds of developments. People moved to farm new lands, mine newly discovered resources, staff new industries, flee stagnant hometowns, or abandon business or personal failures. While painful in the short run, most of these moves proved to be beneficial in the long run, not just for the movers themselves but also for the broader economy.

Good reasons exist to believe that today’s relative lack of interstate mobility is harmful. It is probably one reason why the economic recovery from the Great Recession, while lengthy, has been anemic by historical standards. People stayed unemployed and underemployed far longer. Their wage gains were far smaller.

Furthermore, good reasons exist to believe that some public policies have actively, if unintentionally, discouraged interstate mobility. Examples would include extended unemployment-insurance benefits and mortgage-modification programs. They serve as anchors.

On the other end of the potential interstate move, occupational licensing seems to serve as a deterrent, by making it harder for new arrivals to find work. During the same period that interstate mobility declined, the number of occupations licensed by state governments has increased, representing nearly a third of the workforce today, up from just 5 percent of the workforce in the 1950s. In a Cato Journal paper, economists Sean Mulholland and Andrew Young found a strong adverse relationship between interstate mobility and state licensing laws for workers without college degrees — precisely the group one would expect given the range of professions being regulated.

Government shouldn’t try to move jobs to people. That usually fails. Let’s at least stop discouraging people from moving to find the jobs they need.

John Hood is chairman of the John Locke Foundation.

John Hood

Contributing Columnist

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