December 29, 2009 in Nation/World

Tight budgets keep workers from going where the jobs are

Mortgages, age also among reasons Americans stay put
Don Lee Tribune Washington Bureau
 
Tags:economy

Stuck at home

Many unemployed people are tethered to homes they can’t sell.

In 1940, 44 percent of the nation’s households owned their homes. By 2005, the ownership rate was up to 69 percent.

WASHINGTON – Single and unemployed, Adam Holguin knows he could find better job opportunities outside of California, where the unemployment rate is 12.3 percent. But with little savings, and college loans and credit card bills to pay off, the 31-year-old says relocating out of state is something he can’t afford.

“I don’t have the finances at this time to move,” he said.

One of the American worker’s hallmarks has long been mobility – the speed with which people like Holguin have pulled up stakes and moved for the sake of better opportunities. That mobility has been an important source of the nation’s economic vitality, assuring a ready supply of workers where needed.

But the recession of the past two years has produced a profound change, creating conditions that tethered many more people where they are and making mobility difficult or even impossible.

Since 2007, the nation’s mobility rate has fallen to its lowest level since World War II, said William Frey, a demographer at the Brookings Institution. His findings are consistent with the Census Bureau’s report last week that population growth slowed sharply in Sun Belt states while the outflow of residents from California and New York, as well as from breadbasket states such as Nebraska and North Dakota, eased with the recession’s shifting job and housing markets.

Frey and other experts believe that the U.S. eventually will return to the traditional patterns of robust mobility and migration – from North to South and West, and from the industrial Midwest to the coasts. But as the nation struggles out of the recession and hiring slowly resumes, there are signs that many will remain flat-footed, held back by their home mortgages, personal finances and age.

For employers, that means workers may be harder to find and, thus, likely to be costlier. And that could be another factor making it tough to reduce the unemployment rate.

Already, many economists are concerned that with consumers cutting their spending, economic growth won’t be strong enough to create enough jobs to start lowering the unemployment rate until the second half of next year. Millions of long-term unemployed workers present another problem: The longer people are out of work, the longer it takes them to get retrained and back into the labor market.

With mobility also impaired, some economists fear the nation’s so-called natural rate of unemployment – which had been around 5 percent in past years – will be considerably higher.

“Economically, it means labor will be less accessible,” Frey said.

Past waves of mobility changed the face of the country. The early 1900s saw the migration of African-Americans from the rural South to Northern industrial states, followed by the Dust Bowl flight from the Plains to California in the 1930s. In this last decade many flocked to the Sun Belt for jobs in construction and leisure services.

For people today, that freedom to seek out better opportunities has faded. Many unemployed workers are tethered to homes they can’t sell.

In 1940, 44 percent of the nation’s households owned their homes. By 2005, the ownership rate was up to 69 percent.

“Consequently, in situations where homeowners do not default and walk away from their obligation, or where households are uprooted due to foreclosure, the soft housing market is likely to slow migration,” economist William Testa of the Federal Reserve Bank of Chicago said in a recent blog entry.

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