The US economy slows -- and so does worker mobility
The gross domestic product (GDP) fell to 2.4 percent in the last quarter. One reason could be a rising reluctance of Americans to move to jobs in other states. Congress must help revive the historically high rate of mobility in labor.
After a short revival from the 2007-09 recession, the US economy has dipped again. Gross domestic product growth fell from April to June compared with previous months. One reason may well be that more people are unwilling to move to jobs in other states.
Geographic mobility was once an effective way for Americans to fight high unemployment and bring about a quick recovery. It helped employers better match their available jobs to the most qualified applicants. And it gave the nation an edge in global competition.
But now policymakers are stumped in how to reignite that old get-up-and-go spirit among workers and the jobless. Compounding the problem is that only a few areas of the United States, such as the Dakotas, have relatively strong growth.
The reasons for a general American reluctance to relocate are many.
For one, with about half of the jobless now unemployed for more than six months, many have given up looking for work far from home or can’t afford a move.
Two, homeowners seeking another job don’t want to take a big hit on the sale of their houses in the current market even if they might be able to find a job in another state. In the last big economic downturn during the early 1990s, lower housing prices dampened labor mobility by 10 to 24 percent, according to one study.
Three, many of the jobless are staying put because of regular extensions of unemployment insurance by Congress and because of a hope that their jobs will come back soon. Meanwhile, government efforts to assist homeowners in avoiding a foreclosure – while humane in many cases – only add to the forces against greater labor mobility.
And then there is the demographic trend of aging baby boomers less willing to pull up roots, just one more fact that helps explain why the percentage of people moving between states is at its lowest rate in six decades.
Congress needs to support worker mobility through better funding of job retraining, especially in community colleges. Also, because renters are five times more likely to move than homeowners, the coming revamp of federal housing policy by lawmakers should look at the cost to mobility in encouraging Americans to take on high-debt home loans.
America’s past high mobility has not gone unnoticed.
The European Commission recently set a 10-year goal to improve labor mobility with the 27 member states of the European Union. Only 2.3 percent of those in the EU now work in another member state, but a recent poll found 48 percent would look for work in another country if they lost their job. About 1 in 6 foresee working abroad in the future.
Strengthening US economic growth will require government support in a number of areas – taxes, interest rates, education, loans. Making it easier for Americans to pull up stakes should be added to the list.