Worker Mobility Up As Housing Recovers
With U.S. unemployment still high and labor participation at record lows, the nation's job market faces a long road to full recovery. But worker mobility is picking up as housing recovers, giving economists reason to believe that the underpinnings of a stronger market are taking hold.
Mobility, or workers' willingness to pull up stakes and move for a new job, advanced in recent years. Some 7.1 million Americans moved across state lines last year, according to the Census Bureau's latest American Community Survey (ACS), released in September. That is still well below the nearly 8 million pace the country enjoyed before the 2007-08 recession, but it is up considerably from the 2010 trough of 6.7 million.
"It's a very good signal to see people moving," said Ernest Goss, a Creighton University economist.
A Fluid Force
Americans' willingness to move long distances is vital to a vigorous job market, Goss said. A fluid labor force enables talent to migrate to faster-growing companies and parts of the country. This, he said, serves to quicken hiring because employers typically are more eager to bring on workers when they are confident they are attracting the most qualified people.
Sung Won Sohn, an economist at California State University Channel Islands, added that a mobile workforce bolsters economic expansion. "If people can move for the jobs they are best matched for, those jobs can get done better and more efficiently, and when productivity goes up, we get economic growth," he said. "These are all tied together, and that makes mobility very important.
Blame The Housing Meltdown
An aging population and more two-income families have reduced mobility over decades. But the main culprit in recent years was the housing meltdown, which left many Americans owing more than their homes were worth. People are reluctant to move for a new job because they would have to sell at a loss.
But that's changing. S&P/Case-Shiller's July home price index rose 12.4% vs. a year earlier. Appreciation is starting to slow with mortgage rates off record lows.
Some 12.2 million homeowners were underwater at the end of the second quarter, according to Zillow. But that was down from 13 million in Q1 and 15.3 million a year earlier.
"More people can afford to sell and move now," Sohn said. "More have moved and I think more will.
Indeed, there are signs that labor mobility has kept improving. Data compiled by Challenger, Gray & Christmas show that 14% of unemployed managers and executives relocated for new jobs in the first half of 2013, more than double the year-earlier rate and the highest since the first two quarters of 2009.
Nearly 17 million people moved between counties in 2012, an increase of just 1.1%, according to the Census' latest ACS report, its most thorough portrait of national demographic trends. But migration between states rose more than 5%, said Kenneth Johnson, a senior demographer with the Carsey Institute at the University of New Hampshire. Americans who move across state lines are 10 times more likely to do so for a new job than those who make shorter moves.
The recession and housing bust, he said, "froze people in place" and population growth slowed in previously hot states such as Florida, Nevada and Arizona. "With the recession's influence now waning," Johnson said, "migration is again producing larger population gains in these states.
Florida added a net 109,000 domestic migrants in 2012, a 77% surge from 2011 and its biggest gain in seven years, Johnson said. Nevada, badly bruised during the last downturn, rebounded from a net migration loss of 5,600 in 2011 to a gain of 25,000 in 2012.
The housing-jobs relationship is becoming a virtuous cycle: Stronger home prices boost mobility and hiring, while a stronger labor market lifts housing.
Still, the damage inflicted by the recession was deep and lingers. Young workers are particularly vulnerable. A Georgetown University report released in September, for example, found that only one in three Americans in their early 20s and just over half of those in their late 20s are employed full time.
Sohn summed up the current employment picture: It's "cloudy" but "should continue to clear."
