Strongly recommended. Glaeser says,
the changing nature of innovation has meant that there’s more of a complementarity between skilled workers and other skilled workers rather than between skilled workers and unskilled workers. And in some sense, I often say that sort of every non-employed American is a failure of entrepreneurial imagination. . .That’s one aspect. A second aspect is . . . between 1950 and 1992, the inter-county migration rate–meaning the share of Americans who moved across county borders in every year–was never less than 6%. . . since 2007, it has never been above 4%. . . .prior to 1960 people moved to higher income areas. So, the farmers moved to Detroit. They moved to Chicago. The Okies in the Great Depression moved to California. So, there’s this migration to high-income areas. We’ve seen much less of that over the last 30 years. Particularly for less-skilled Americans. There’s very little that’s directed toward high-income areas. And, one possible explanation for this is that this has to do with the restrictions that we’ve put on housing markets in these areas. That, yes, you could find work in Silicon Valley if you are a less-skilled person working in, you know, a variety of service industries; but you are going to have to pay for housing in that area. And, the overall deal doesn’t look particularly good when you are kind of happy sitting there at home in Kentucky. So, this migration has really shut down dramatically; and that’s a second change.
These comments elaborate on an essay that Glaeser wrote last year, which I linked to when it first came out.
Other possible reasons that people might be less likely to move today:
1. Can’t sell home (often a family’s biggest investment) because it’s located in a economically depressed and declining area. The extent to which this is true brings into question the federal government’s emphasis on policies promoting home ownership.
2. State licensing laws may make it more difficult to quickly find work in new states.
3. “Investment” in applying for and obtaining local welfare benefits.
4. Lack of qualifications due to a failure of public schooling. Many of today’s high school graduates are functionally illiterate.
Perhaps this is an obtuse question, but I’ll ask it anyway. Anecdotally there was substantial news coverage of exodus from the industrial heartland / “Rust Belt” in the early 1980s. Anecdotally, there was discussion of what Texas thought of people from Michigan. Methinks it was “Black tag people” since the Michigan license plates were black.
I recall reports of legislation making it illegal to lie down in public in Arizona municipalities.
There is a photo book _Journey to Nowhere_, perhaps not a very good book, about a guy who loses his job during the sudden total collapse of the Youngstown OH steel industry, eventually rides the rails to the West scrambling for work.
Are there similar treatments for more recent migrations driven by the business cycle?
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Citation: _Journey to nowhere: The saga of the new underclass_, by Dale Maharidge. original publication 1985.
1) High income areas are crowded and it is hard to move in. While we need deregulation of licensing and housing but this will have modest changes. Again explain to me how investors are going to build houses if their price drop by 25%.
2) Many high income areas have labor supply of locals that have benefit to being local over out-of-towners. They can live at home until 30 and work low pay jobs these days.
3) In terms of living in Southern California, I assume one advantage of minority movers is there are generally minority communities in our area that support the new workers.
4) I wonder if there was some assortative mating in the Rust Belt in which all the smart ones got out in 1980s and 1990s. (Now the Charles Murray Bell Curve is working against the Rust Belt semi-rural areas. We could blame public schools but why would anybody young become a teacher in West Virgina?)
5) I still think the past generations of high movers (1965 – 2000) is the primary reason our nation has had a decline of local community activity, trust issues, and bowling alone type issues.
6) It is exceptionally hard to move to high earning/high cost areas. Failure has tremendous costs and people should read The Grapes Of Wrath for how the great Okie migration went in the 1930s. (And realize it was worse than The Grapes of Wrath book or movie.) SoCal has numerous people moving and failing ending homeless in our area.
Over the next 10 – 20 years, with the shortage of labor supply will we see the increase of worker mobility but also businesses investing more in new talent?
Rust belt definitely has to be “unpacked” into a larger number of analytical categories. Most large “Rust belt” cities have some professional middle class living fairly well in the suburbs, and also in some city neighborhoods. One phenomenon of the Rust Belt was the sharp and sudden decline in wages and demand for labor for blue collar factory work that was either unskilled / semi-skilled or at least peculiar to the plants that closed.
I think there is probably a big difference between a small and exceptionally specialized MSA like Youngstown Ohio and a much bigger MSA like Cleveland.
Any MSA the size of Cleveland has tony suburbs inhabited by people in the top quintile of socio-economic status who are not obviously suffering–I would say you see that lifestyle in smaller cities the size of Rochester or Buffalo. I’m not so sure about Corning and Elmira, Canton, Saginaw, Flint, etc…
Yep, good point. Smaller towns like that probably had more of their eggs in one or two baskets. Bigger cities have more amenities, too, to give professionals an incentive to hang around through the rough times, whereas a city like, say, Erie, PA…if your job goes away, what reason is there to stay there? Minor league hockey? Presque Isle for the three months a year it’s warm enough to swim there?
I was pleasantly surprised that Glaeser suggested the challenge of non-employed Americans to be a “failure of entrepreneurial imagination”. However, a change in perspective is involved for the organizational capacity of time based services product, because the primary object is to improve the experience of services production for those who take part in the process, as entrepreneurs of their own time management with others.
Also, given AI’s recent ability to apply deep learning to what has previously been regarded as required human capital investment, this new reality – given the chance – could once again make it possible for diverse skill levels to merge in many workplaces, as AI manages the data sets and leaves it to the individuals to make judgments.
https://monetaryequivalence.blogspot.com/2018/03/can-ai-reduce-burden-of-human-capital.html
I think it’s a mirage to think that service-sector workers could raise their incomes if they could only move to Silicon Valley. When southerners moved north in the early 20th century, they did it to work in manufacturing that produced a lot more value per hour than sharecropping. The same is true of migrants in the past decade who’ve moved to oil-patch regions.
But service sector workers who would be moving to SV just to do the same work as they’re already doing (in the same ways, using the same tools)? Yes plumbers and lawn service people and all the rest do make more in the Bay Area. But only *because* housing restrictions have driven up the cost of living. You have to pay people more to live there. If there was a sudden construction boom that brought down housing prices, salaries of service-sector workers would fall in tandem (since it would no longer require as big an incentive for them to live there).
A large number of higher income households increases the possible number of personal service sector jobs. If a person is make less than 150% of the lawn service people, they are economically better off mowing the lawn themselves then using after tax income to pay somebody else to do so. Dog walking becomes more economically feasible when there are enough dogs the dog walker can walk together.
In addition to factors raised above, I think the two-income family plays a large role as well. If one partner still has a job, say the wife is a teacher or nurse or government worker, then if the family moves, both people now need to find a job. As well, a lot of the more stable jobs like these tend to have seniority tied to the location. Moving means that you lose your seniority as well, even if you find a job in the same sector.
+1 I think that could possibly be the biggest reason right there.
Very true but also a lot of two income families, many of them learn to manage on one income for a period. I suspect this is one reason why the level of political impact was limited in The Great Recession as compared to the Great Depression. (Especially looking at Europe) The internet got nasty but very limited on the violence and extreme politics.
In terms of less working after The Great Recession, I still think the some of drivers were the increase of education (Teenage employment dropped like rock) and the increase of single income families. The lack of mobility made an impact but again I believe the unskilled labor in the city had a significant advantage (live with parents) over the unskilled labor moving into the city.
From the comments, the biggest miss of libertarian economist about the decline of labor mobility is it costly to move and very easy to fail in the new city. (Read The Grapes of Wrath about the Okies.)
One could as well argue the economy was less efficient in the past and more efficient pricing of housing has reduced those free lunches. Less innovation, innovation reducing large scale employment, fewer booming industries, less value added, unskilled jobs moving offshore all contribute. The population is older as well. Moving is a young persons game. When boomers were hitting the market there was plenty of opportunity in moving. Now there is is moving to retirement communities.
Most new jobs come from new and small companies. Regulations through the Bush and Obama years have exploded, keeping new businesses from opening and shutting down small companies that can’t deal with the paperwork.
Not only, as Rohan has pointed out, are more women working, meaning that there are two jobs to relocate, but there’s more divorce and out of wedlock marriage. Men might not want to leave their children–and if they actually do find a job that pays more, the mother is going to file for more child support.
Also, a lot of the reason housing prices are driven up is immigration–a lot of it unskilled, a lot of it piled into one house, violating zoning laws (states with lots of immigration are much more interested in fining people who can pay than in enforcing laws that immigrants break.
I wrote about one possibility for low income areas–why not locate votech training facilities there? https://educationrealist.wordpress.com/2016/05/31/vocational-ed-advancing-the-debate/
It might encourage industry to set up shop there, and if not then the trainers, etc, would stimulate need for housing, restaurants, etc.
But all of this requires a major reduction in unskilled labor competition from immigrants.
Immigrants are indeed a factor.
You can think of a city like Chicago that has a high demand for unskilled labor. Before WWI, many immigrants from Europe took those jobs. After the flow from Europe was cut off, a big flow from the Deep South and the Appalachians became prominent. More recently, a flow from Mexico (not entirely new but now much enlarged) so that many of the old ethnic neighborhoods are increasingly Mexican.
In terms of comparative statics, what would happen tomorrow if not a single person was allowed to come to the USA to work, officially or unofficially. There would be both substitution effects in production (more capital and less labor) but also different flows of workers from within the USA.
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I have seen it asserted in print that there is a big demand for “construction management” workers. My interpretation is that hiring unskilled workers is within the market’s easy provision–but finding someone who supervise unskilled / semi-skilled workers, or those with poor English, to make sure jobs are done the right way and with the right supplies is harder–and it takes people who can puzzle out all the documents.
Someone told me that many of the roofing crews in Western New York State tend to Mexican (not Puerto Rican, I wonder?) with one guy who speaks English. That’s not a new approach–probably it’s drifting back to the system of Italian gangs straight from the impoverished Mezzogiorno with a padrone to manage / care for / guide / exploit them.
There was a lot of good discussion in this one. I was glad that Glaeser made the point about “real income” and at least hinted that service workers moving to city didn’t necessarily increase their functional productivity (i.e., real output per hour), and that some of the higher nominal wages were merely a consequence of the equilibrium between locations with very different costs of living.
I’d guess that some of Glaeser’s statements about average skill and income growth trends in cities would reveal a lot of skew if dis-aggregated according to age cohort, immigration history, and levels of human capital.
The talk was a bit short on the many effects of women joining the labor force that contribute to prime male unemployment, probably because that topic is too hot to touch. Previous commenters discussed two-income traps, the need to stay close to children over whom one lacks geographical control, and the difficulties of moving when husband and wife both need to get new jobs, which is often difficult because of licensing, or at the very least involves “resetting” back at the bottom instead of level horizontal shifts. This short-circuits a lot of military officer careers (and/or encourage those with promising careers and potential for the highest ranks to nevertheless “retire” at the earliest opportunity), and I got permanently sucked into the DC black hole via the same mechanism.
But the more taboo topic regards the sexual marketplace and what it takes for most men in terms of earning power to generate enough of a durable perceived status gap to attract women and form families. And here it is quite obvious that social and economic changes have put that prospect completely out of reach for a growing fraction of lower-skilled men, who figure if they can’t achieve much more than a loser loner lifestyle even by busting their butts, then why not live easier off of mooching and welfare and porn?
There’s not going to be any forthcoming solution to that problem, which is only going to get a lot worse, but neither should it be ignored.