Get moving on worker mobility
The economy can revive and thrive if employees have more incentives to move to jobs.
Many countries, especially the US under Barack Obama, are using the global recession to reform their societies, such as changing the rules on credit. They want to be more competitive when their economy revives. Many, however, overlook one idea that provides a strong edge: making it easier for workers to move to new jobs.
For decades, the US has had such an edge with its high rate of labor mobility – a legacy of its pioneering and immigrant roots. Not only did peripatetic workers help boost productivity, they also helped bring the economy out of past recessions.
But the Census Bureau reports that the nation's "mobility rate" in 2008 set a post-World War II record low. Also last year, the smallest number of residents moved since 1962 – when the nation had 120 million fewer people. The largest decline was in the Midwest.
This stay-put trend began before the current recession, which suggests its causes are diverse and difficult to reverse.
The large baby-boomer generation that's nearing retirement, for instance, is shedding its wanderlust and moving less frequently. The necessity for many couples to bring home two paychecks makes it complicated when one spouse is laid off and eyes a job elsewhere.
But more recently, the housing crisis has left a rising number of Americans trapped with mortgages worth more than their home – about a one fifth of all mortgage holders. This makes it difficult to sell a house in order to move to a new work opportunity or to train elsewhere for new skills. (At the same time, with more foreclosures expected in the coming year, the downtrend in labor mobility may slow a bit.)
And here's another move-buster: Whenever Congress extends jobless benefits a month or two, it helps but also hurts. The unemployed have an incentive to wait, hoping jobs in their area bounce back. (Ask former autoworkers in Michigan about that hope.)
Washington may be on track in considering such mobility-enhancing ideas as allowing workers to keep healthcare insurance if they move to a new job or making it easier to obtain job training anywhere while on unemployment benefits.
But it must be bolder to restore America's mobility.
The housing market, for example, needs reforms that help people find renting as financially advantageous as owning a home. In 2008, renters were five times more likely to move than homeowners, allowing them to adjust better to a rapidly changing economy.
Companies, too, must provide better incentives for current or prospective workers to move, such as higher housing stipends or helping a worker's spouse find a job.
Despite an unemployment rate of more than 8 percent in the US, more than 3 million jobs are still available. One reason is that workers with the skills for those jobs can't or won't move. Employers that are still seeking workers with the right skills can do more to remove that reluctance to transfer.
The American dream of upward mobility for all has faded with this latest trend against moving. Both government and business can do more to keep the dream alive.