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Analysis: Some workers on the move again, but most stuck
May 24, 2012 / 5:38 PM / 5 years ago

Analysis: Some workers on the move again, but most stuck

NEW YORK (Reuters) - Bruno Martinho, a wind power engineer, moved quickly when he landed a new job in March that raised his pay by a third.

Within weeks, the 34-year-old was on his way to Houston from New York, a 1,600 mile journey, to monitor the wind in Texas, a booming center for wind power.

For those with skills in hot demand, the United States looks more like a land of opportunity again, especially if they are prepared to uproot and move for work.

But such people are more the exception than the rule. For most Americans, the country’s famously mobile labor market, long seen as a driver of its economy, is steadily becoming more static, according to several recent studies.

Even if the recovery from recession picks up speed, things may never quite be the same again.

“In the early 1990s about 3 percent of Americans moved between states each year. Today that rate has fallen in half,” Greg Kaplan, an economist at the University of Pennsylvania, and Sam Schulhofer-Wohl, an economist at the Federal Reserve Bank of Minneapolis, wrote in a recent study.

During the 2007-09 recession, companies slashed hiring and housing prices plunged. That combination deterred the few workers still sought by employers from selling their homes at a loss and moving on, compounding a downward trend in labor market mobility that began 20 years ago.

The effect the housing price bust had on discouraging people from moving to find work has added an estimated 0.2-0.5 percentage point to the unemployment rate, according to a recent study by economist Plamen Nenov at the Massachusetts Institute of Technology.

One person who feels trapped by her devalued home is Nalini Indorf Kaplan, who worked as a chaplain in a hospital, among other part-time jobs, in Raleigh, North Carolina. She had to return to her previous residence in Boulder, Colorado, because she was unable to sell her property there.

“I loved my job. I would have stayed in North Carolina, except I could not sell my house. I did not get a single offer. It was a really bad year,” Kaplan said, adding she was hopeful about signs of improvement in the economy. “It is better now.”

AMERICANS MOVING, BUT NOT MUCH

Companies are hiring and in many states, housing prices are showing tentative signs of recovery.

“People are now starting to feel more confident and have a little bit more flexibility,” said Joanie Ruge, chief employment analyst for the U.S. arm of staffing group Randstad.

She noted that companies were more likely than in recent years to sweeten job offers with relocation packages for skilled workers, especially in states with booming energy or technology sectors, such as Texas and California.

Some moving companies have seen a pick-up in business. United Van Lines said in May that revenue from moving residential households has grown by low single-digit percentages over the last two years.

However, overall household moves have not reached the pre-recession level.

That may be because for most Americans, the labor market is becoming less mobile, with fewer companies making offers that are worth a move and fewer workers accepting them.

“We should not really expect a big pick-up in job mobility because this has been the long-term downward trend,” said Aysegul Sahin, an economist at the Federal Reserve Bank of New York.

After peaking at 3.3 percent in 1990, the annual gross migration rate, which measures all Americans moving to a different state for work or other reasons, fell to below 1.4 percent in 2010.

The rate, based on calculations from official Census data by Kaplan and Schulhofer-Wohl, edged up to 1.5 percent in 2011.

A similar trend exists among people who moved specifically for job-related reasons. The Minneapolis Fed study, which has not yet been published, found this rate fell by nearly half, to 0.7 percent in 2010 from 1.3 percent in 2000, before rising to 0.9 percent in 2011.

LABOR RELATIVELY FLEXIBLE

Despite the sharp reduction in mobility, economists say the U.S. labor market remains very flexible by international standards because Americans still change jobs frequently, even if they stay in the same locations.

Only 25 percent of U.S. workers remain with the same employer for more than 10 years. That contrasts sharply with some European countries, including Greece, Italy, France and Sweden, where the number is closer to 50 percent, according to the New York Fed’s Sahin.

Changing jobs usually adds to productivity levels, helping an economy grow, she says.

“When people move from one job to another and from one location to another they typically find better matches, receive higher pay and boost job productivity,” said Sahin.

Some economists worry that slower geographical mobility could be an early sign of the labor market becoming more static and more similar to Europe, where many countries are struggling with slower growth and higher unemployment than the United States.

The reasons why Americans are staying put are unclear.

Some analysts point to the fact that more households have two incomes than in the past, making a move to further the career of one spouse a potential money-losing proposition for the couple.

Others cite the aging of America, which reflects not only that workers are generally getting older and less likely to move, but also that more people want to stay close to elderly parents or relatives to help care for them.

Another possible reason is technology, such as broadband Internet access, which allows employees to work for companies located elsewhere.

The number of people, such as financial analysts, architects or journalists, who often can work from home, nearly doubled between 2000 and 2009 to 4.1 percent of all workers, according to a 2011 study by researchers from the Federal Reserve.

However, telecommuting on its own is too small to account for the decrease in migration, they found.

Some economists say the link between mobility and economic growth is outdated. It may simply be that jobs in different sectors of the economy are now better distributed across the country.

“Many policymakers have worried that the decline in migration heralds a less-flexible economy,” wrote Kaplan and Schulhofer-Wohl.

“Low migration is good news, because it means either that workers have better information about their opportunities or that workers do not need to move to obtain good jobs.”

Additional reporting by Lynn Adler; Editing by William Schomberg and Dan Grebler

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