It’s time to drop the nostalgic narrative about how our lives have become unmoored, how the whirl of the 21st-century economy drives us around the country in search of new opportunities and keeps us leaping from job to job at a pace our one-career elders never knew.
It just isn’t so. Americans actually change houses less frequently than in the past. And on average, we switch careers about half as often as we did a generation ago.
Why is that? This is still an area of active research but it seems like opportunity itself may be diminishing, with fewer enticing job offers and fewer affordable housing options in the most desirable cities.
And there’s a real cost to all this staying put: It’s made the US economy more sclerotic. Among other things, poor states have stopped catching up. And when manufacturing towns get hit by competition from places like China, people give up on work rather than move away.
Americans aren’t moving or changing jobs
However you measure it, people aren’t moving as often as they used to. They’re not switching homes, switching counties, or switching states. That may seem counterintuitive, but the data have been piling up for decades.
In the early 1980s, about 17 percent of Americans changed their address each year. Now it’s less than 12 percent. Bigger moves, between different states, have dropped even faster.
At around the same time, Americans also stopped switching jobs. When Ronald Reagan took office in 1981, about one in 10 Americans changed occupations in a given year. As of 2012, it’s more like one in 24. That’s according to data from a team of researchers at the Federal Reserve and the University of Notre Dame.
These two slowdowns are probably connected. After all, the biggest reason people move is to pursue a new work opportunity. And if you look at individual states, the ones who have seen the fastest falloff in job churn have also seen the biggest drops in geographic mobility.
When people get stuck, the economy falls apart
Maybe it doesn’t seem so bad, the fact that people are less mobile. Changing jobs is disruptive, moving separates you from friends and community, and uprooting kids has been shown to leave long-term scars. Not to mention, plenty of European countries have lower rates of movement and job churn while still maintaining high levels of human happiness.
But the slowdown in job and house-switching carries real economic costs.
Most directly, there’s a cost to people’s wages. One big reason people jump between states and careers is because they’re lured away by the promise of higher pay and grander opportunities. The fact that fewer people are moving suggests fewer are getting those life-altering chances.
Also, it means people are more likely to get stuck in economically depressed communities. When MIT economist David Autor looked at areas most affected by competition from China, he found that the economic damage lasted far longer than expected. And one big reason is that people didn’t escape to new towns and new careers, as economists had expected. Instead, a substantial portion simply dropped out of the labor force, ending up in semi-permanent economic limbo.
Big interstate moves are essential to keep alive the dream of national equality. Otherwise, our economy may fracture into a jigsaw puzzle of rich and poor pieces.
In the mid-20th century, when Americans were moving about with greater frequency, poor parts of the country were catching up with the rich parts. There are a few reasons for this but here’s one: When people from poorer states leave home for better opportunities, that brings additional workers into thriving regions — and an influx of workers means more restrained wage growth. Meanwhile, back home, the exodus leaves a shortage of capable workers, which pushes wages up and makes people better off.
But now that people have stopped moving between states quite as often, this dynamic has been blocked. A recent study authored by two Harvard professors found that poor states are barely gaining any ground. Between 1880 and 1980, income differences among the states tended to shrink about 2 percent a year. This catch-up growth was only half as fast from 1990 and 2010. And if you focus on the few years just before the recession that began in 2008, there was virtually no convergence at all.
Should this trend continue, the gap between rich and poor America may become a permanent feature of economic life.
If you want people to move, just give them a reason
The “why” behind all this is still a bit of a mystery. But we can rule out some of the more tempting answers.
It’s not because of the recession of 2008-2009. The increase in home-bound, job-bound Americans may have sped up during that severe downturn, but it didn’t start there. And seven years into the recovery, there’s been no turnaround.
Don’t blame demographics, either, since the slowdown has affected virtually every social group.
One plausible explanation is high housing costs. It’s hard to move — even to a job with a higher wage — if all the benefits will be eaten up by unaffordable rents. This is one of the arguments of the Harvard paper, and it could help explain why more people aren’t moving to areas like New York, Boston, and northern California, which have high wages but also high costs.
Another leading possibility is that people aren’t getting tempting job offers to begin with. Here’s how the team of researchers from Notre Dame and the Federal Reserve decided to measure this: If people were being courted by distant firms, but didn’t want to move, they would still be able to use the offer as leverage when negotiating for wages. So their pay would go up whenever their skills were in demand. By contrast, if people weren’t getting good offers, their earnings would track their initial salary (plus regular raises.)
It turns out that people are increasingly getting pinned down by their initial salary, which suggests they’re not getting the job offers they need to win salary negotiations.
Is this part of a deeper shift?
This slowdown in geographic mobility isn’t exactly unprecedented. In the early 20th century, interstate moves were even more rare (job churn data don’t go back that far, so that’s harder to compare.)
Only in the middle decades of the 20th century did America see a steady increase in family moves, which could suggest that it was a kind of historical blip, now ended.
Or — perhaps more disconcerting — the contemporary aversion to changing jobs and homes may be yet another symptom of the broader ailment that has afflicted the economy since the late 1970s, the same one that has given us shrinking growth rates, rising inequality, and stagnant wages.
One thing is for sure: There’s something wrong with all the rhetoric about the dynamism of the 21st century economy, and the social angst about how our community roots have grown shallow and long careers have disappeared.
Measured by our propensity to switch jobs and move between communities, Americans seem more grounded than they’ve been in a long time. And that’s not necessarily a good thing.Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the United States. He can be reached at email@example.com. Follow him on Twitter @GlobeHorowitz.