How America Lost Its Mojo

In today’s services economy, cities have a more uniform mix of work, particularly for low-skilled workers. In every major city, there are many stores, health-care facilities, and insurance offices. By and large, less educated workers might be less willing to move between states because they assume every area has generally the same type of work. In Long and Ferrie’s words, today’s economy has less “locational arbitrage.” There are no gold rushes anymore, and North Dakota’s oil boom and bust notwithstanding, it’s getting rarer for Americans to think they can move to get rich.

Can the internet be blamed for this, somehow? The internet can always be blamed. One hundred years ago,  somebody moving from a small farm to Washington, D.C., would have to visit the capital to understand its culture, job mix, pretty falls, and humid summers. But today’s potential movers are more informed and therefore more strategic: They can research their ideal cities online before moving there, and they can easily visit by plane. In 2015, the economists Greg Kaplan and Sam Schulhofer-Wohl bolstered this theory by showing that “repeat migration”—e.g., moving from New York to D.C., and then quickly moving back to NYC—was falling even more than total migration. Perhaps workers are more satisfied with their new city after they move, they concluded.

It’s a clever theory. But it’s incomplete, because it suggests that the decline of mobility is a sign that modern workers are sorting themselves efficiently. But if labor markets were operating efficiently, workers would be moving to where their work was most valuable. Instead, the opposite is happening. People aren’t moving toward productivity. They’re moving toward cheap housing.

Can housing costs be blamed for the decline in geographic mobility? Yes, they can.

Between 1880 and 1980, people generally moved from poor states to rich states, seeking the best jobs. “The creation of a single automobile plant—Ford’s River Rouge complex, completed in 1928—boosted Michigan’s population by creating more than 100,000 workers,” as Tim Noah reported. Migration promoted geographical equality

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s