In his op-ed at RealClearPolicy, I think that Todd Hitt is drawing attention to a genuine problem. Although in many cases complaints about a labor shortage are just a stalking horse for trying to keep wages low, population mobility is a real issue:
In 2017, fewer Americans moved than in any year in the last 50 years. The U.S. mover rate is now 11 percent, half of what it was just 30 years ago. Instead of moving for a new job, today’s out of work Americans are more likely to simply drop out of the workforce. The University of California at Berkeley’s Enrico Moretti has even connected the decline in labor mobility to increased income inequality.
The result? Fewer Americans are able to access the American Dream. Indeed, fewer Americans believe in the American Dream.
Newspapers are filled with stories about employers searching for workers. NatureFresh, a Canadian company that was planning to expand to Ohio, put those plans on hold because it couldn’t find enough workers. That’s a multinational company that wanted to expand in the United States, but couldn’t because we don’t have the labor. Those jobs will go elsewhere. The company’s president, Peter Quiring noted, “It’s not a NatureFresh problem … [It’s] a coast-to-coast, border-to-border problem.â€
Unfortunately, his identification of the problem is a lot better than the solutions he proposes, at least in part because I don’t think he understands the problem. I think there are at least two.
First, we don’t have the same labor force we did seventy years ago. People won’t leave their present social support systems to go to a place where they’re uncertain of what may meet them. That, among other reasons, is why blacks move to Atlanta to find work rather than North Dakota.
But possibly even more importantly inducing a worker is not enough. In two job or even two career families, moving has to make financial sense for the whole household and that can be a tall order.
Your assessment is closer to what I think is happening. When both parents work, unless they have well paying jobs, such a large percentage of household income goes to child care that if one person loses their job, you don’t take such a huge hit if they don’t work. If you stay, and have a good social network, that person who loses the job can take care of the kids and probably pick up odd jobs here and there. Also, my sense, I think there are studies on this, is that unmarrieds are staying at home more than in the past, so losing a job doesn’t necessitate moving to get a new one.
Steve
The mobility issue is one I’ve noted for years. It apparently has entered the calculus of one of the gang of thieves here.
However, call me not that sympathetic. It’s a real issue, but no one is promised a rose garden. The year was 1998. I had a 6 month old daughter and a wife with a serious position at a Chicago money manager. To go to New York to seek fame and fortune, or not? At the prospect, but of course no guarantee, of partnership. Safety, or risk? The rest is history. And we even got to come back to Chicago after 5 years.
You often muse about whether businessmen have lost their risk tolerance. I don’t see it. Mid and lower level people, yes. Mobility issues being one of them. But there are plenty of people still willing to reach for the ring. And they quickly learn the real meaning of career trade offs.
I’m not asking for anybody to be sympathetic. I’m trying to explain why the sort of mobility that was commonplace in the 50s and 60s may never return.
Come back down to earth Drew. I also think people are still willing to go for the ring, but that is not the issue here. Are people willing to move for a job that won’t be much different, or even a bit worse, than the one they lost? Does it mean moving to a state where they will have a job but make less money and not have health insurance?
Steve
Hitt specifically mentions NatureFresh, which a little online research shows is a Candadian company that opened a large commercial greenhouse in Delta, Ohio, specializing in tomatoes that had its expansion plans delayed for want of additional employees. Delta is a village with a population of 3,136 in a county of 42,698. The County is part of the Toledo MSA, but this is a rural county with a number of small manufacturing businesses.
Expanding the greenhouse would create up to 100 additional jobs picking tomatoes at $12 an hour, up to $18 per hour if good. (Ontario’s minimum wage is about $14 (CAD, or $10.61 (USD)) They’ve had difficulty filling “picking” jobs both in the U.S. and Canada, as opposed shipping or receiving labor. They have 43 workers from Honduras and Guatemala on visas, but complain that the visa process is meant for seasonal work and is more burdensome than Canada’s.
A problem is drug use; of the 600 interviewed during the last two years about 35% failed the drug test and they don’t screen for pot. A lot of workers hired don’t show up the first day, or appear to quit or be fired relatively quickly.
A lot of the info from here:
http://www.toledoblade.com/Economy/2017/08/17/Delta-greenhouse-expansion-on-hold-nature-fresh.html
Other issues: steve touched on childcare but there’s also elder care. That routinely falls heaviest on women. As I noted above that’s not a plea for sympathy. It’s a recognition of reality. A half century ago dad pulling up stakes and moving the whole family across the country was a commonplace.
When you take the increase in population since 1970 into account that’s a major change.
On the one hand, this story undercuts my belief that more greenhouses would be a good solution to agricultural labor’s inability to find seasonal employees. But I’m skeptical about businesses that open up on rural fringes and complain about labor supply. I’d love to see the thought process and wonder if they simply believed that it would be easier to attract employees by paying 50% above minimum wage in the U.S. If the work is unpleasant (or relatively unpleasant to nearby mfg jobs for instance), then the wage is going to have to be higher.
I’m on earth, steve. And even in reality. You totally miss the point. If people aren’t willing to take the plunge, then they don’t have the risk tolerance. You just point out a consideration. Like Dave, who misses the point as well, the 50s and 60s are irrelevant. Risks and rewards evolve. Always have.
I make the same point in another way at times. Everyone is an expert, a critic and and big talking advisor until they have to pull out their checkbooks and stroke checks of a magnitude that make them rather uncomfortable. I know of the former, but I don’t know of the latter, other than me, here willing to do that. Think of that what you may. It’s not a matter of superiority or anything like that. It’s just risk tolerance. If you have it, you may reap the rewards. If you don’t, you are in the pack.
No tears.
Oh, I understand your point. I don’t think you understand mine. 60% of the families with kids are in the situation where both parents are working. When one parent loses his or her job, she or he can take care of the kid s while trying to look for something else.
Jobs today are sufficiently specialized that moving frequently just means swapping one partner’s job for the other’s. Doesn’t really make financial sense. The issue isn’t looking for pity but more along the lines that PD has been posting about. Don’t expect it to be easy to fill jobs. For 90% of the people it’s not a question of taking the risks and reaping the rewards. They’re just trying to pay the mortgage, put food on the table, and sock a little away for retirement.
I suspect the expense of moving has also become a significant factor given 64% of Americans report they cannot afford an unexpected $500 expense. In other words as the middle class has dwindled the capacity for mobility has fallen.
Not too long ago a war would ensure full employment. not sure today, but maybe worth a try?
We don’t make war that way any more just as we don’t build highways by getting a big crew of guys with shovels.
So Drew, if you were making $30,000 a year you would move and lose your child care to take another job at $30,000? Suppose you were say, 48 years old and in that situation. Factor in moving costs as noted above.
Steve
Not too long ago a war would ensure full employment. not sure today, but maybe worth a try?
As Keynes argued, surely we can have the same gains in peace that we can in war.
WW2 was an outlier. Going to war costs a lot, and it is usually financed by debt. With the money spent for the Iraq and Afghanistan invasions and occupations, the US should have a roaring economy.
Historically, war could be profitable. The ‘spoils go to the victor’ meant taking anything of value and enslaving those still alive, or they could just raze the city and eliminate the competition.
You guys have provided a laundry list of reasons not take risks. And sanitized it by intellectualizing the subject. But the only one that’s really changed is the duel professional income family. But even there, don’t kid yourselves. It happens all the time.
I take Dave’s point that for a large segment of the population the economists “market frictions†cause people not to move for work. It could be family. It could be money. It could be lifestyle. (That’s really my essential point. The should-coulda-woulda set vs the I-did set. With no implications for strength of character, just the cold hard reality of risk and reward………..and tolerating NYC.). But that’s not particularly new, not since the end of the gold rush anyway. And it’s reflective of a general tendency towards risk aversion. But heading off to NYC or LA is a well worn phenomenon. Even the subject of movies. Further, I would remind people of the mad rush to Texas in the 80s, or the Dakotas more recently as part of the fracking wave. Or Silicon Valley. Etc etc
Which brings me full circle. There are, and always have been, people very good at providing objections, or acting in accordance with risk aversion. And there are those who yell damn the torpedos. The American Dream is not suddenly beyond the reach because of external factors. It’s the decisions of the principals. Same as it ever was.
Not quite. I’m trying to explain that when there is no risk premium or people don’t believe there is a risk premium, they won’t take risks.
The total number of people who’ve moved to North Dakota is probably fewer than 100,000. Since 2010 probably 20,000 people have moved to Atlanta.