The October unemployment rate was a staggering 31.9% in the metro area of Yuma, Ariz., and 25.2% in El Centro, Calif., according to a Labor Department report released Thursday. They had the highest unemployment rates, which aren’t seasonally adjusted, among the 372 metro regions measured by the Labor Department’s monthly report.
Other regions — namely, those benefiting from a natural resources boom — are humming. Bismarck, N.D., for example, had the nation’s lowest unemployment rate in October at 1.7%.
I think we know how those on the right would try to explain why people stay unemployed in Yuma rather than move to Bismarck. What is the explanation that comes from the left? Mark Thoma? Brad DeLong? Anyone?
I am quite serious. I do not want sarcastic answers from people on the right. I would like someone on the left to offer a reasonable counter to the obvious story that someone on the right would tell.
Lack of housing. Relevant bits starting at 2:45
http://www.youtube.com/watch?v=kafIZwybJ68
Matt Yglesias says, Bismarck is “remote, cold and expensive”.
http://www.slate.com/articles/business/moneybox/2013/08/unemployment_is_very_low_in_some_cities_so_why_don_t_people_move_there.html
Brad Delong, in 2011, says the “sub-4% unemployment parts of America have 1% of the population and 6% of the senators”. (Referring to ND, SD and NE at the time).
http://delong.typepad.com/sdj/2011/02/geography-unemployment-and-senators.html
I’m not sure the left and right would differ on the causes. I suspect left and right would agree that people aren’t moving from Yuma to Bismark because they don’t want to leave home, friends, and family, and extended unemployment benefits mean that they don’t have to. Where I think the differences would arise is that those on the left think that this is appropriate — that people shouldn’t have to move across the country to find work. Instead, they should be able to live on government safety net programs until there are jobs for them in their communities. And if years of joblessness render them unemployable, then moving them onto the disability rolls is also appropriate. The left didn’t want the 1990s welfare reform, and the repeated extensions of unemployment insurance combined with the rapid expansion of the social security disability program is an indirect way of undoing those reforms. The left would probably prefer to repeal those reforms directly, but the alternative of extended unemployment and SSDI is acceptable.
As Thomas Sowell notes, the left are more inclined to explain behaviour by dispositions rather than incentives. Perhaps, then, people are merely disposed to stay where they are, or maybe they’re ignorant of opportunities elsewhere. How long has unemployment in these cities been so high? Have you even compared the migration rates to and from these cities with the average? People don’t just move their home and families overnight in any case. Besides, what is there to counter? Maybe one benefit of the welfare state is that people aren’t forced to leave their homes just because the watering hole has been drying up.
Anyway, one thing I’ve noticed is that people are sorting themselves into communities where everyone works and communities where nobody works, and they’re developing very different cultural norms and expectations. This might be one mechanism by which this sorting is occurring.
You know life sucks; the economies with high unemployment, like in Yuma and El Centro feature secular stagnation, the jobs go to other places like Bismarck, ND and Greenwich, CT.
The explanation would probably be that a lot of those unemployed Yumans never had a high savings rate to begin with and burned through what little savings they did have very quickly after they became unemployed. Thus, they don’t have the money to just pack up and head off to Bismarck without a job offer in hand.
“Thus, they don’t have the money to just pack up and head off to Bismarck without a job offer in hand.”
Do you think if a non-profit offered the unemployed in Yuma free round-trip bus tours to Bismarck to look for jobs that there would be a lot of demand for service? I have my doubts.
I have two thoughts about these sorts of phenomena:
a. Finite horizon of actions – people just don’t know/think/believe that they can move/train/grow/compete. What many miss is that we *all* have finite horizons, and finite ability to expand them. Incentives are very important as motivators to help people break through this.
b. Pinning. By this I mean there’s some constraint in life, or many small ones, that make changes much harder than they might seem to be. Examples: How many of the unemployed residents of Yuma have close family members who ARE employed? How many are caring for someone ill or disabled? How many have children doing well in the local schools? How many own or have a stake in a house they cannot sell, or cannot sell without huge loss? How many are devoted members of a local church, and said church and its congregation are the centers of the their lives? How many are comfortable in the heat of AZ and utterly unable to cope with the winter cold of ND? How many are members of some immigrant community or have less than stellar English skills, and truthfully face, or simply fear, failure or discrimination in ND?
Of course, in the end, the employed in ND will have finite willingness to fund the unemployed in AZ, and this limitation of reality constrains “the left.” The employed everywhere also have finite willingness to let anybody starve, and this reality constrains “the right.”
Two reasons:
1: Selection bias. Those in Yuma with the desire and ability to move have already left.
2: Incentives. The federal government is paying people to be unemployed in Yuma. Thus, we get more of it.
There is no famine nor pogroms in Yuma. Why move?
Moving long distances is for the young. Even if they did, that would leave a lot behind.
The other being much of this is seasonal, working when they work and waiting for work when there is none. Migrants likely congregate in low cost areas until the seasons change. While some probably would go if certain of well paying work, anyone providing this service would take most of the profit from doing so. Still, where are the body shops recruiting busloads to ND? While pay is undoubtedly good, so are expenses, and there is probably little housing capacity for them even if they arrive and limited demand for the unskilled.
Less trying to explain “Why” than to offer factors to consider:
Type of work may also be a factor. Bismarck, ND likely has a high number of job opportunities in the oil industry. Were I unemployed, one of the questions I would have to ask is whether it’s better to move in order to try for (what would be for me) less satisfying and less desirable work, or stick it out and try to find work that I want in the are I live in.
The matter is further complicated by two income families. If I’m out of work, then I contribute to the unemployment rate. But if I’m out of work and my wife is not then it becomes less necessary to look to drastic measures to replace my job.
North Dakota has a low unemployment rate to be sure, at about 3%. Other hand, North Dakota is a low population state, with just under 700,000 residents today — several years into the fracking boom. Realistically, how many new immigrants can ND accommodate — a few million, a few hundred thousands, or perhaps a few tens of thousands? The metropolitan Yuma area has about 200,000 year round residents — assuming 40% of them would be in the workforce in the best of circumstances, 30% of them would run to 24,000 people — likely enough to swamp North Dakota even if nobody from anywhere else in the US were to move there.
Moreover, if you’re used to Yuma, North Dakota is a really different place. 90 of ND residents are native whites (90%) for instance (and 5% native Americans, and 2% Hispanic/Latino). 55% of Yuma residents are Hispanics. ND is cold, Arizona is warm, and living costs in Yuma are lower than the US average.
Much of the unemployment in Yuma is attributed to agricultural workers who find only seasonal work. Unemployment rates are higher for Hispanics and mixed-race individuals (14% and up). but lower for non-Hispanic whites and Asians (under 5%).
Other words, if you’re an out of work person in Yuma County, Arizona the odds are pretty good that finding employment in the North Dakota oil fields doesn’t strike you as all that likely. And in fact, they probably aren’t.
————
Also in fact, this fits what liberal economists tend to say these days — that cross-country migration by job seekers has declined considerably in the past several decades, that based on past history this is a bad thing, but that the current pattern might actually be understandable. The sort of regional booms we used to have — California in the 1930s, Alaska in the 1950’s, the South in 1960’s — seem to have subsided as the nation ages — which is why North Dakota, small as it is, is such a novelty and why no one seems to think ND’s growth is going to continue indefinitely. The utility of migrant workers has fallen, partially because the country’s population has gone up almost three times since the start of the Great Depression so local workers are already available in most places, partially because unemployed or underemployed workers tend to be poorly educated and thus likely unemployable anywhere. What we’ve got instead is a pattern of migration in which young people from rural or high employment areas get college educations and move to low-unemployment urban areas; that’s how our population shifts today.
IANA Professional Liberal Economist. But that’s how it looks to me.
Looks like most things have been said, but I would like to emphasize temperature difference. You could sleep outside in Yuma but not in Fargo and given the pressure on housing spend a large amount of wages to live in a trailer. Also there is the question of how long the boom will last. Oil booms are known for having big crashes and is it worth while to move for a year before things might go bust.
This seems to be selection bias. Why don’t the unemployed move rather than why don’t employers seek from afar. Why North Dakota rather than Texas. Why is UI a barrier to the the former and not the latter.
Slocum and Brian Williams, I am shocked and wondered by the polite, thoughtful replies on this thread, especially you two. Thumbs up. I rarely see people actually trying to think things through, rather than mentioning how bad the other team is.
On further thought, I’d like to politely suggest that ND is a poor candidate in the “why don’t the unemployed move there?” exercise, and when studying this problem we should consider more informative examples. I suggest Seattle, since the weather is pretty mellow, it’s a relatively cosmopolitan place, and is much bigger and likely long lived as an economic center than the oil fields of ND. (Not that there’s anything wrong with ND as a place or community.)
There is a whole class of people in Seattle metro who appear to have an unemployment rate of zero. The only problem for our unemployed Yuma resident is that the members of this class are computer programmers, and in fact high skill high value computer programmers. The sorts of people who work on Windows or Google Adsense. It’s a fine life, I lived it for decades, and frankly highly recommend it.
And the odds of the, oh, median or representative, unemployed resident of Yuma being able to secure such a position without serious training is just about zero. (But likely some 30% to perhaps 100% of them have the innate mental qualities needed, so training is perfectly plausible.)
And truth be known, if our unemployed seasonal farm worker transforms themselves into a doctor, nurse, computer programmer, or the like, they can very likely get a job in Yumma, or LA, or Silicon valley. Or, with comparable effort, one of the high skill high pay jobs in the oil industry of ND.
I like to highly encourage such transformations. But we should not be deluded into thinking that moving to ND (or anywhere else) is as effective as securing the skills to hold a high demand job.
By the way, high demand jobs are often very hard, programming certainly is. But earning a living as a seasonal produce picker has to be very hard too.
And of course, I’ve just sidestepped the question “what relatively fast and easy thing can the person of low economic status do to better themselves?” – and that’s an important question. I just don’t know that ND has much to do with it.
Is there a view that the percentage of individuals who exploit a social safety net is greater than the percentage who practice equally unfair behaviors in the guise of maximizing profits? Or, is it just an assumption that less harm is done in one than the other, all things being equal?
From a non-idealistic viewpoint, corruption is inevitable in any system. Is the level of corruption tolerated variable and guided by empirical methods or just what supports one’s worldview?
Thanks.
Irish Welfare Authorities are trying to nudge job seekers to move. Has this happened recently and are there are studies how many take up these offers? From the FT:
http://www.ft.com/intl/cms/s/0/b510d38a-5da3-11e3-b3e8-00144feabdc0.html#slide0
It’s too bad there aren’t a lot of genuine leftists on the comments thread. I’m curious how they would answer too. In line with ‘three axes’ theory, I suspect they would try to undermine a ‘personal responsibility’ incentive structure narrative with an ‘oppression’ theme.
Candidates for oppression:
1. Racism. Structural, institutional, systemic, unconscious, etc. Whether on the part of employers, coworkers, or communities. It’s ‘unwelcoming’ and makes the Yumanis uncomfortable. Add ‘inhospitable’ to immigrants, or anti-illegal-immigrant policies and attitudes, which intimidate or deter legal immigrants or their descendants.
2. Homogenous Monoculturalism in the places where there is good employment: North Dakota is ‘too whitebread’ to appeal to them. The Yumanis won’t have the familiar cultural support structures of cuisine, churches, language, co-ethnics. They will become isolated not just from existing friends and families, but in fact atomized and alienated as a stranger in a strange land.
3. Beyond being racist, maybe the employers are just stupid and overly provincial, not picking up $20 bills in their market failure to advertise amongst easy, cheap recruits. They advertise and recruit locally, sucking up all the existing talent and paying high wages to attract folks from nearby instead of looking ‘abroad’ at distant locales to satisfy their concerns. Maybe there is just a distance / culture / language gap that is too hard to overcome between the recruiters and the Yumanis.
4. Insufficient / overwhelmed Social Services in the locales where there is work. That could include the ‘stinginess’ of welfare in those states.
5. The kind of work is ‘anti family’.
6. Swamped local government, and insufficient urban planning to accommodate new arrivals.
7. Racist / Fascist policing.
8. Knowledge problem: The government, either local in Yuma or maybe a lack of federal programs at the department of labor (definitely the fault of Republicans / the sequester) isn’t doing enough to educate the Yumanis and bring them awareness of remote work opportunities.
9. Barriers to Mobility. It takes money to buy that bus ticket / move your stuff. And you are taking a big risk if you do so on credit.
Personally, I don’t expect any of these claims to survive much scrutiny, but they fit traditional leftist themes and I can see their rhetorical power.