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Home Publications Blogs Beat the Press People Don't Move for Jobs When There Are No Jobs

People Don't Move for Jobs When There Are No Jobs

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Sunday, 31 July 2011 10:04

The Wall Street Journal claimed that a main reason that the economy is growing slowly and not creating jobs is that people are not willing to move because they are often underwater in their homes. The evidence that it presents to support this assertion is dubious.

First, it notes that only 2.9 million people moved for a job in 2009 compared to 4.5 million in 1999. There are two major differences between these years. First, the work force was considerably older in 2009 with most of the baby boomers in their 50s and 60s. These workers are much less likely to move than younger workers.

More importantly, the economy lost 5 million jobs in 2009. It created 3 million jobs in 1999. This means that there were many fewer jobs to move for in 2009 than in 1999.

The best evidence that the sort of housing lock discussed in this article is creating a problem would be to show large sections of the country with rapidly rising wages. Offhand, it would be difficult to identify any significant region where this is the case and the article certainly does not identify one. (It does note an employer in South Dakota who complains about being unable to find workers, but it doesn't report the wages he is offering.)

A recent analysis of the Bureau of Labor Statistics Displaced Workers Survey found no evidence that homeowners in states that had seen sharp declines in house prices were any less likely to move to get a new job than other homeowners. It would be useful if articles like this one based its judgments on data instead of anecdotes.

Comments (11)Add Comment
...
written by foosion, July 31, 2011 12:29
Dean,

What do you think of this estimate:

Debt ceiling vote cuts spending $2.4 T for 10 years or $240 billion/year

Fed spending is $15 T

240/15,000 ~1.5%

That should depress GDP by 1.5% - 2.0% (e.g., Roemer in July 3 NYTimes says 1% cut => 1.5% GDP)

That should decrease employment 0.5% - 0.7% (Okun's law)

Current employment is 150 million

So spending cut results in losing 750,000 to 1 million jobs
...
written by Jim In Panama, July 31, 2011 12:58
"It would be useful if articles like this one based its judgments on data instead of anecdotes." ... that once proud rag is now owned by Rupert Murdoch .... "data?, we don't need no stinking data"
...
written by izzatzo, August 01, 2011 2:56
Exactly. Any economist knows that people vote with their feet - not their houses.
South Dakota?
written by FoonTheElder, August 01, 2011 1:38
Living next to South Dakota I can tell you that it attracts employers who want low taxes and big corporate incentives to locate there. Then many of them sell out to big corporations, where the owners make millions and the employees lose their jobs.

Who in their right mind wants to move to South Dakota for what is in essence a temp job?
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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