[OPE] US labour mobility in the wake of the recession

Reuters blog, September 3rd, 2009
Where the job seekers aren't
Posted by: Christopher Swann

(...) the United States still boasts one of the most dynamic labor markets
of any rich nation. OECD rankings of its 30 wealthy member nations put the
U.S. far ahead of other large countries. (It comes second only to Denmark,
which has unmatched programs to help the unemployed back to work.) On
average, around a quarter of American workers change jobs each year,
compared with 15 percent in Italy and 13 percent in Greece, says Stefano
Scarpetta, head of employment research at the OECD.

Yet there has been a striking decline in U.S. mobility in recent years.
Since 2000, the movement of Americans across state lines has halved to just
1.6 percent of the population this year - the lowest rate since records
began in 1948. Even movement between counties is at historic lows. Americans
may be becoming less adventurous because they are getting older. During the
recession of the early 1980s the median age in the labor force was 35,
according to the Bureau of Labor Statistics. Now it is 41. In middle age,
people are less willing to leave their home and yank their children out of a
school district for anything less than a dream job. OECD figures show that
workers above 45 are half as likely as those under 34 to change companies.

Another factor is at work - the housing meltdown. Tighter lending standards
and negative equity make it much harder to relocate. The willingness of
people to move for a new job halves when a family is suffering from negative
equity, according to research by Joseph Gyourko and Fernando Ferreira at the
University of Pennsylvania. Those who owe more on their mortgage than the
property is worth face a tough choice if they are offered a job elsewhere.
Either they can sell and hand over the balance of the debt to the lender -
often tens of thousands of dollars - or walk away and suffer years of higher
borrowing costs.

This is a problem that is certain to grow. Negative equity currently
afflicts around 26 percent of borrowers, or 14 million properties, according
to Deutsche Bank. By the time the slump is over, Deutsche expects that close
to half of households will suffer from negative equity. More than a quarter
of borrowers could end up owing more than 125 percent of the value of their
home.
Economists believe there may be other factors chipping away at the
flexibility of the workforce. Rising healthcare costs have increased the
risks associated with going without insurance - something than many dynamic
startups can't afford.

When a recovery gathers pace, the frustration of being tied down to
depressed areas will become ever more acute. The United States may not have
the onerous labor market laws seen in much of continental Europe. But the
housing market collapse combined with an aging population may end up having
a similar effect. If American companies find it harder to draw on the nation's
full pool of talent or if workers can't move where they will be most
productive, the prospects for a full-blooded recovery will dim.
http://blogs.reuters.com/commentaries/2009/09/03/where-the-job-seekers-arent/

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