Making a Move to Counter Unemployment and Boost Social Mobility

In the long run, unemployed Americans moving to better labor markets could also save the federal government serious money.

National Journal
Nancy Cook
June 18, 2014, 4 p.m.

The solu­tion to two of the coun­try’s most press­ing eco­nom­ic woes may come down to a very simple idea: rent­ing a bunch of mov­ing vans. Those vans could help re­lo­cate some of the more than 3 mil­lion Amer­ic­ans who have been out of work for more than six months to states with re­l­at­ively low un­em­ploy­ment rates, such as Texas and North Dakota. Or the vans could trans­port en­tire fam­il­ies to places where low-in­come kids his­tor­ic­ally have a bet­ter chance of mov­ing up the in­come lad­der as they age.

The concept of en­cour­aging un­em­ployed work­ers to move en­joys bi­par­tis­an sup­port. Back in Feb­ru­ary, a tea-party Re­pub­lic­an from South Car­o­lina and a Cali­for­nia Demo­crat in­tro­duced a House bill to give the long-term un­em­ployed vouch­ers worth up to $10,000 to move at least 60 miles away from home for ser­i­ous job of­fers. The main con­di­tion? The new loc­a­tion would need to have an un­em­ploy­ment rate much lower than the area the per­son left.

Re­pub­lic­an Sen. John Thune of South Dakota, a mem­ber of the Sen­ate GOP lead­er­ship, sup­ports a sim­il­ar idea. He wants the Labor De­part­ment to award low-in­terest re­lo­ca­tion loans to the long-term un­em­ployed. “There is a bar­ri­er be­cause people who are un­em­ployed don’t have the re­sources to be able to re­lo­cate, and this is something that would al­low them to do that,” Thune said in Janu­ary dur­ing a press call.

(Mike Mc­Quade)Giv­ing long-term un­em­ployed work­ers sub­sidies to move is, in part, the brainchild of con­ser­vat­ive eco­nom­ist Mi­chael Strain of the Amer­ic­an En­ter­prise In­sti­tute. “A lot of the long-term un­em­ployed are in really bad shape. They could use some help, be­cause the policies we have aren’t work­ing,” Strain says. “It’s a threat to the ef­fi­ciency of the labor mar­ket when the work­ers live one place and good jobs are else­where.”

A 2010 pa­per from the Hamilton Pro­ject at Brook­ings es­tim­ates that re­lo­ca­tion sub­sidies would cost the fed­er­al gov­ern­ment less than $1 bil­lion a year and would res­ult in as many as 62,000 matches between work­ers and new jobs. (In the long run, un­em­ployed Amer­ic­ans mov­ing to bet­ter labor mar­kets could also save the fed­er­al gov­ern­ment ser­i­ous money on pro­grams such as food stamps, Medi­caid, and state-sponsored chil­dren’s health in­sur­ance.)

Mov­ing may help those just start­ing out their lives, too. Two prom­in­ent Har­vard eco­nom­ists, Raj Chetty and Nath­aniel Hendren, are work­ing on a study, tent­at­ively due out this later this year, that will look at the value of re­lo­cat­ing to a dif­fer­ent area as a way of in­creas­ing so­cial mo­bil­ity for kids. Mov­ing, and mov­ing alone, could in­crease the like­li­hood that a child at the bot­tom 20 per­cent of the in­come-dis­tri­bu­tion lad­der even­tu­ally rises to the top 20 per­cent, says Hendren.

Hendren and Chetty’s hy­po­thes­is fol­lows on the heels of their re­cent much-buzzed-about work, which found that where people live af­fects their fam­il­ies’ eco­nom­ic chances. Low-in­come chil­dren in cit­ies such as Bo­ston, New York, Pitt­s­burgh, Salt Lake City, San Jose, Seattle, and Wash­ing­ton en­joy much high­er rates of in­come mo­bil­ity than those in places such as At­lanta, Cin­cin­nati, Colum­bus, In­di­ana­pol­is, Mem­ph­is, and Raleigh. (The first group of cit­ies share some com­mon char­ac­ter­ist­ics, in­clud­ing so­cioeco­nom­ic­ally di­verse neigh­bor­hoods, high rates of civic en­gage­ment, and good schools.)

Mov­ing to where the jobs are dur­ing tough eco­nom­ic times — or where low-in­come kids have more op­por­tun­it­ies — may seem like an easy fix. Yet few­er Amer­ic­ans move today than did be­fore the re­ces­sion. Eco­nom­ists can­not agree on the reas­on every­one is stay­ing put. All they know for cer­tain is that, if Amer­ic­ans star­ted rent­ing mov­ing vans en masse, it would be a very good thing. 

For more on how chan­ging demo­graph­ics are re­shap­ing the na­tion, go to Na­tion­al Journ­al‘s Next Amer­ica web­site.

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