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Why Are Americans Less Mobile Than Ever?
Settlers in the New World didn’t stick to the coasts. The history of the American experience has been one of mobility, particularly westward. “Go West, young man!” and all that.
But not anymore. First, Americans aren’t moving as much generally as they used to. In 2018, fewer than 10 percent of us changed residence within the past year, half of the level of the 1980s.
And the drive to journey westward, in particular, has dissipated. As Philadelphia Fed economist Kyle Mangum writes in the new analysis “No More Californias”:
This geographic expansion of population throughout the continent was mostly complete by the 1980s. … The 20th century was then essentially the last movement in the long transition of population expansion across the American continent. Aided by new technologies, unpopulated areas filled with residents relocating from older, colder areas. As the technological shocks abated, and as development blanketed the once-vacant land, rates of population change slowly converged across space. Today, the growing areas are not new cities in unpopulated regions but rather the established midsize, interior cities throughout all regions of the county.
So perhaps this is now a permanent “new normal” and what economists would call a “long-run spatial equilibrium.” But is it a balance policymakers should wish to disturb? Do we want people to move more? As Mangun notes, “On average, all types of people show a preference for their initial locations — an attachment to home.”
Staying put has a lot going for it, including the close relationships and informal safety net provided by friends and families. Moreover, all that moving around may simply have been a phase in the American life cycle. Now it’s over. Americans arrived in California, and there was nowhere else to go. And most of us seem OK with that.
Then again, perhaps mobility is being artificially restricted by bad policy. Mangum:
Regulations that make it hard to build new homes increase costs and prevent cities, especially those offering high incomes or many amenities, from adding new residents. Suboptimal urban planning could lead cities to be overly congested and below capacity. This is the more pessimistic perspective, suggesting that restrictions on population growth restrain productivity growth and exacerbate inequalities by prohibiting access to the best spaces. In this case, policy (or perhaps the removal thereof) has more scope to improve welfare. But the goal of these policies is not to encourage people to move more frequently per se but rather to enable desirable cities to accommodate more residents. … To the extent that there are market failures inhibiting population growth in some places, however, there is a need for a policy intervention. If housing regulations are the result of rent-seeking on the part of current residents, or if additional population would enhance worker productivity, or if poor urban planning leads to unproductive (and unenjoyable) travel congestion, then a “benevolent social planner” would design the infrastructure (physical and legal) to accommodate more people. In many cases, local interests may oppose this (for individually rational reasons), but such “growth positive” policy may nonetheless benefit society. If we are out of Californias — if, that is, there are fewer new places to settle — we must manage the urban frontier with great care.
For more on a) why housing costs have skyrocketed, b) to what extent these costs keep people from moving to prospering cities in search of opportunity, and c) how can we combat this issue through both local and state policy, please check out my long-read Q&A (also an episode of my Political Economy podcast) with economist Daniel Shoag from late last year.
Published in Economics
Another reason as to why people might stay put: telecommuting means you no longer have to move somewhere else to do your job. Work from anywhere with a wi-fi connection. A lot of moving around used to be corporate moves.
New York after 20 years of Giuliani and Bloomberg as mayors showed signs of transitioning into economic demographics that were something akin to the urban/suburban pattern of Paris, in that the suburbs there are the less desirable areas to live, compared with the city. New York’s revival had created areas of gentrification in locations just outside of the core preferred areas in Manhattan (which had survived the worst of the 1966-93 period better than other parts of town), while a number of inner-ring suburbs that had first begun to develop with the initial pre-World War II parkway systems were becoming area of poverty and rising crime. The MS-13 phenomenon has been greater out on Long Island than it’s been in NYC, though the negative aspects of the de Blasio-Cuomo criminal reforms could change that and halt the gentrification process in the near future.
That’s something that you could see elsewhere in the country, where as long as the people running big cities don’t go all-in on policies that cause the quality-of-life to plummet, inner city gentrification may take place, and the people in those poorer neighborhoods are displaced to the older/less-desirable inner rig suburbs. (the next question for the displaced, or others in lower economic situations, is why not leave the area completely? There you can have a number of possible reasons, including local family support connections, and the fact that the state and federal safety nets have grown over the years to the point that they can make quality-of-life tolerable to enough people, to the point that up and moving 500-1,000 miles away to start a new life seems like a riskier proposition. Better to stay in familiar surroundings and hope the local economic conditions improve in the near future. That can result in a government dependency underclass that Clinton’s 1996 welfare reform tried to fix, and which Obama’s actions in 2009-10 un-fixed, and going back to the ’96 requirements isn’t going to be easy).
“No More Californias”:
Yep. That’s it. Sorta.
Financialization and over-regulation have killed opportunities for the young, plus our educational/indoctrination system has destroyed far too many lives of our young men. Our idiotic incredibly woke incredibility and often unconstitutionally biased colleges now graduate over 50% more women than men. Men historically have been those who have taken risks, not women, and have been the driving force to take advantage of new opportunities, but now our overly woke College, Corporate and Banking systems have shut men out of the best opportunities so there is no reason to move around.
The social consequences of this extreme discrimination against young men has yet to be appreciated but in the not too distant future you will see the social fabric begin to unravel in a frightening way.
We left Communistfornia in 2017. I am currently having a battle with the Cali Franchise Tax Board which is trying to collect income tax from me for 2017 when I lived in Arizona. We closed escrow on our AZ house in December 2016 and moved over the New Years holiday. I let the seller stay in the house until Jan 1 and we lived in a motel until the movers arrived with our furniture. California has pulled this before. I bought a nice rug in Turkey in 2006. It took weeks for it to arrive and then I went down and paid $450 import duty. A year later, I got a letter from Franchise Tax Board demanding “use tax.” I told them it was unconstitutional for states to charge import duty. That was restricted to the federal government. He agreed with me but said they didn’t care. I finally paid as it would have been more money to fight it.
I move to LA in 1956 to go to college and, except for one year in New Hampshire, I lived there for 60 years. My wife is third generation Californian. We were glad to leave.
Mostly it’s the costs imposed by regulation, and the size and stability of our giants who have learned to manage regulations for themselves which means they work against new competitors by just being in place. But it includes local controls as well such as closed real estate markets. The difference is more than just the extent, depth and cost of regulations, it includes the fact that they are imposed by Federal government employees who are remote, unfamiliar with the thousands of different localities, so they have to simplify and, assuming they operate with some integrity, a big probably inaccurate assumption, they must impose some notion of average on everyone, which adds to the costs and distortions. Even if local regulators,( assuming what they regulate actually needs regulation) are corrupt, they have to respond to folks that are affected, which Federal regulators do sometimes, but to professional organized interests in Washington. Simply not the same thing.
I wonder if the fact there are less suitable places to move to has anything to do with it. Put another way, people aren’t going to move to locations where their standard of living will decrease, mostly due to sky-high taxes and excessive regulations.
One of my friends talked about his neighbor who was forced to move from South Carolina to Chicago because of his job. His new house is half the size (as is his lot), and his property taxes are over ten times higher. Personally, no job would be worth that to me. I’d quit, buy a squeegee, and wash windshields at stop lights first . . .
Honestly, I think a lot of it has to do with healthcare. People want stability and unfortunately, nearly everyone relies on their employer to provide that healthcare/stability. It’s very difficult for most people to just up and move if there is uncertainty about employment and thus, healthcare.
Removing the employer from healthcare would fix a lot of problems. If you purchased insurance as an individual, why not take a risk? Nobody chooses not to move because their car insurance won’t move with them, right? If individuals chose health insurance in a free market, you would see a lot more people moving. People would take more entrepreneurial risks, creating more economic dynamism. The fear of not having healthcare ties down movement and entrepreneurship.
How would you remove the employer from health insurance? I mean there’s a reason they got involved in the first place, right? How would you address that reason without further regulating employer or insurer behaviour?
Excellent points. The same thing with retirement. If a person is vested in a pension, he’s less likely to move (partcularly to a new company). The IRA was one attempt to fix this, but many workers are still tied to their employers’ pensions.
If health insurance was sold the same way as car insurance, the costs would go down. However, most health insurance companies do not want reforms, particularly the one about selling across state lines.
Because the enormous amount of regulations in the healthcare industry are how the employer nearly monopolized it in the first place?
I believe a wage freeze during WW2 was responsible for American business turning to benefits as a way to lure top notch employees to their companies. It spread, and once the wage freeze was lifted, there was no going back.
It’s like when Clinton eliminated the corporate deduction for CEO salaries over a million dollars. Business found another way to lure top notch CEOs – stock, stock options, etc.
There are ways. The important factor is being in a risk pool. When I was still in practice, I had health insurance for myself, my family and my employees. You’d probably be surprised at the number of doctors who did not provide health insurance for employees. I’m glad I don’t have to deal with it now.
Germany has a system where your health insurance is based on your town or state. There are several options and I researched this ten years ago so I may be a bit out of date. France has a system based on payroll tax and there are regional authorities that contract with doctors who are unionized in France. Bernie’s claims about Socialism are not true. We could, if the will was there, move to a system sort of like Germany with groups based on where you live. The French use a market method to control utilization. You pay the doctor or hospital first, then get reimbursed a few weeks later.
During my working years, I was in the Information Technology field and moved no fewer than 6 times in 20 years. In each case, the move was accompanied by a raise in pay and the company that recruited me paid the moving expenses. However, what made that possible was a relatively vibrant housing market; my house was generally on the market for less than two weeks and I usually pocketed a modest-to -good profit.
However, the housing collapse of 2008 changed all that. When the economy tanked, there were still pockets in the U.S. that had job openings that were going begging. However, when people couldn’t sell their houses, they had no choice except to stay put.
I’m not saying that this is the entire reason for the lack of mobility; the housing market has improved. However, it was a big factor.
100% correct. That FDR sure was a great president!