Declining Mobility and Restrictions on Land Use

Mobility has been slowly falling in the United States since the 1980s. Why? One possibility is demographic changes. Older people, for example, are less likely to move than younger people so increases in the elderly population might explain declines in mobility. Mobility has declined, however, for people of all ages. In the 1980s, for example, 3.6% of people aged 25-44 had moved in the last year but in the 2000s only 2.2% of this age group had moved.

In fact, mobility has declined within age, gender, race, home ownership status, whether your spouse works or not, income class, and employment status so whatever the cause of declining mobility it has to be big enough to affect large numbers of people across a range of demographics.

My best guess is that the decline in mobility is due to problems in our housing markets (I draw here on an important paper by Peter Ganong and Daniel Shoag). It used to be that poor people moved to rich places. A janitor in New York, for example, used to earn more than a janitor in Alabama even after adjusting for housing costs. As a result, janitors moved from Alabama to New York, in the process raising their standard of living and reducing income inequality. Today, however, after taking into account housing costs, janitors in New York earn less than janitors in Alabama. As a result, poor people no longer move to rich places. Indeed, there is now a slight trend for poor people to move to poor places because even though wages are lower in poor places, housing prices are lower yet.

Ideally, we want labor and other resources to move from low productivity places to high productivity places–this dynamic reallocation of resources is one of the causes of rising productivity. But for low-skill workers the opposite is happening – housing prices are driving them from high productivity places to low productivity places. Furthermore, when low-skill workers end up in low-productivity places, wages are lower so there are fewer reasons to be employed and there aren’t high-wage jobs in the area so the incentives to increase human capital are dulled. The process of poverty becomes self-reinforcing.

Why has housing become so expensive in high-productivity places? It is true that there are geographic constraints (Manhattan isn’t getting any bigger) but zoning and other land use restrictions including historical and environmental “protection” are reducing the amount of land available for housing and how much building can be done on a given piece of land. As a result, in places with lots of restrictions on land use, increased demand for housing shows up mostly in house prices rather than in house quantities.

In the past, when a city like New York became more productive it attracted the poor and rich alike and as the poor moved in more housing was built and the wages and productivity of the poor increased and national inequality declined. Now, when a city like San Jose becomes more productive, people try to move to the city but housing doesn’t expand so the price of housing rises and only the highly skilled can live in the city. The end result is high-skilled people living in high-productivity cities and low-skilled people live in low-productivity cities. On a national level, land restrictions mean less mobility, lower national productivity and increased income and geographic inequality.

From my answer on Quora.

Here is my post on occupational licensing and declines in mobility.


The increase in the number of two income families would explain both the decline in mobility and the peaks when the unemployment rate is low.

I've heard this before, but having thought about it, I've become more skeptical. The increase in prices should drive more construction and bring prices back down. I think the two income families have to be coupled with restrictions on supply to have that effect.

Alright, I must've commented without thinking carefully, I thought you were talking about something else.

In response to: "The increase in prices should drive more construction and bring prices back down." You must've missed this part:

"[Z]oning and other land use restrictions including historical and environmental 'protection' are reducing the amount of land available for housing and how much building can be done on a given piece of land."

Daniel, are you saying these restrictions don't exist, or that they are too small to affect supply?

I was arguing that zoning is the main thing driving up prices. Joan was talking about how couples are less mobile when both members have jobs, so my comment was misplaced. I thought for some reason that she was taking about how dual income families bid up housing. I think that problem would be self correcting without zoning.

I agree about the price effects on housing in principle, and that it should stoke more building.

But the part of the 2-earner story that seems relevant to me is that if you have 2 earners, the ability to move is much lower, because both earners have to be able to match to a job in the new location. Assuming that one of the earners will generally have to downgrade their job, this means that the premium which draws the household to the new location has to be even higher, to offset this. In which case, 2-earner households should have lower geographic mobility than if there is just 1 earner.

(However, it's pretty hard to imagine that the economy is overall worse off with 2 earners who are suboptimally job matched than 1 earner who is optimally matched with an unemployed partner.)

Agreed that two-earner households have lower mobility, and that that should merely offset their higher total productivity.

"productivity" is an unfortunate choice of words here.

More housing supply doesn't make it easier to move if the issue is your spouse getting an equivalent job.

It's a good hypothesis but as I mentioned in the post mobility has declined among single-earner couples and among two-earner couples. In addition, the increase in two-earner couples since the 1980s has not been large. (n.b. it is hard to tell the difference between "dual earner" and "dual career" couples). So overall, this does not appear to explain the decline.

I am not convinced by your broad declaration of declining mobility. Table 2 of the linked document provides only three data points, the last one capturing the period of our nation's worst housing market (2001-2010). To create your trend, that third data point need only show a significant decline, which given the broad reduction in home prices and the consequent collapse in home sales was virtually certain.

Does that same paper contain annual trends for each demographic, something that can substantiate the extent and persistence of the trend(s) you note?

The role of immigration ought to be pretty obvious in discouraging Americans from moving to boom towns.

The exception that validates this rule was the recent North Dakota fracking boom, where the severe climate, distance from the Mexican border, and lack of immigrant networks meant that most of the workers who moved to North Dakota were were Americans from the northern states. This led to exceptionally high wages for blue collar Americans.

The difference between dual earner and dual career couples is probably key and probably does explain the decline. The fact that a social change requires more thought to measure doesn't mean it isn't the reason. (Suggestion - look at wage levels and job categories of women as changed over time.)

In the 1980's, women most often had jobs like sales clerk, nurse, secretary, office worker - jobs that are fairly generic and translated quickly into new locations. It was assumed they'd follow their husbands. Today, a far higher percentage of women have specialized professional jobs. Those aren't cookie cutter. Many of them are the primary breadwinner. It's not assumed they will automatically follow their husband.

At least with my friends, trying to keep both spouses employed equivalently is probably one of the two the largest reasons not to move. The other is simply not wanting to if avoidable.

How does the already inflated housing prices and upside down mortgage issue factor into this? It would seem to me that both single and dual income families are affected equally by the recent upside down mortgage factor. If the occupant owes more on their current house than the current market will support, this becomes a factor in accepting new employment in another location.

Speaking as someone who has moved around quite a bit in my adult life, it seems the transactions costs of moving are really high. Buying a new house entails a lot of taxes and costs which don't relate to the value of the house, which also reduces the value to the seller. Not sure how much that has changed over the years and how much of a factor this is causing now, but maybe it's something.

That's why I'm a committed renter.

I also like it when maintenance is included in the monthly fee and everything gets magically fixed by just sending a quick email/text to the same person regardless of what the problem is.

You must have a good landlord. I also like that aspect of renting, but owning is nice, too.

I know the law (especially Ontario and BC), and the first message to a new landlord relating to a repair is accompanied by quoting legislation which asserts my right to hire a contractor out of the yellow pages and deduct costs from rent. (Of course, many types of repairs don't fall into this category.) The landlord can usually get a better price and doesn't want "too much" work done, so they are very quick to avoid such situations.

It tends to turn bad landlords into good landlords, and honestly I have no idea which ones started as which. They are all good landlords for me because I know the law and do not hesitate to use it to my advantage. Actually, I did have one unambiguously good landlord.

The last time I moved, it was from a city home to suburban home one town over at a cost of perhaps $10K buried in the new mortgage.

But for the previous six moves, my employer paid all expenses including non-IRS recognized expenses with a 30% tax adder for the latter, including my first move to take the job. I only rented during that five year period, but if I had owned a home, the costs of selling and buying a new home would have been covered, plus house hunting, without any risk of being stuck with a house that won't sell quickly, by a third party taking over the old property at company expense.

But that was before tax reform going after all the corporate tax loopholes, plus cuts in tax rates, that increased focus on the increasing after tax costs of such concern for employee satisfaction. I also got a week or so of travel for "training".

But that was before 1980. Afterward, those kinds of benefits were clearly under attack, at the same time dual income/dual career couples were increasingly an issue, and employers were paying for placement services for spouses and job hunting trips for the spouse. In the early 80s, there was a clear battle between managers who wanted it to be easy to move people to meet business needs, and the MBAs wanting to cut costs to boost revenue per employee and profits, and lawmakers going after "lavish" employee benefit tax dodges.

I'd say that the graph reflects the willingness of employers in covering relocation costs of new hires, and for moves between regions of a State, nationally, and internationally. A willingness that has clearly gone down since Reagan brought in a view that employees were costly commodities and liabilities, not critical assets.

Reagan was the corporate CEO spokesman, after all. With lots of agreement from small businesses who faced competition from corporations for workers they gave both good wages but plenty of benefits.

Florida and Texas have become magnets for the unskilled and uneducated, the absence of development restrictions (including zoning) and the willingness of state and local governments to assist the developers, builders, lenders, and others tied to growth by building roads to nowhere facilitating relatively inexpensive housing. Of course, the segregation of the unskilled and uneducated from the highly skilled and highly educated contributes to the inability of the latter to empathize with the former, magnifying the growing inequality in America. While there have always been two Americas, today they are separated not only by education, skills, and income but by geography. Decades ago my sunbelt city chose to build its future on relatively low paid, relatively unskilled businesses, in particular the backroom operations of financial and other firms with their main offices in large financial centers. It worked, but only for awhile, for those firms soon discovered that they could move the backroom operations to places with even cheaper labor and other costs, places like India and China. There's always some place with labor willing to work for ever lower wages and benefits. But it's not restricted to the uneducated and unskilled, as highly educated and skilled physicians, accountants, and other professionals have discovered, modern telecommunications equipment allowing those services to be performed in remote locations with much lower costs, not only places like Florida and Texas but places places like India and China. The changes that have taken place in the past 15 to 20 years are revolutionary. I reside in a different place from where I work, something that's becoming more common. Fifteen to twenty years ago I commuted between the two places via commercial aircraft, as the city closest to where I reside and the city where I work had almost 20 direct flights a day, many of the passengers commuters like myself who I got to know over the years. Today, there are only two direct flights a day between the two cities (one in the morning and one in the evening), and they are not even jets. Yet, the populations of those two cities have doubled in 20 years! What happened to all of those passengers?

I can't tell if you are criticizing Florida's and Texas' permissive zoning or not, but the problem is that having a place to live is not optional, so if those states did restrict zoning, even if all the people moving there got PhDs, there would still be a housing shortage and high and rising prices relative to whatever income they were earning. It would probably make the price to income ratio rise in blue states, too!

Investors also realized it's better to get more dividends instead of paying for employee's commuting.

Not sure about Florida, but Texas has been growing through higher skilled positions.

The people I know who have moved there have all been college grads who are now making pretty nice money.

Texas has at least three cities that have tons of professional and technical employment, and Austin is one of the major tech centers in the country. It's not just a low wage state.

Less restrictive urban development laws in NYC did not yield affordable housing for the poor, slums happened instead. Would it be different today?

Of course it would be vastly different today -- Americans are an order-of-magnitude richer overall than they were in 1890 when those photographs were taken. Even 2-3 decades later, only a relatively small fraction of American homes had electric power and indoor plumbing.

I'd subscribe to your general point, but the specific example is a bit off. By 1922, utility companies were reporting they had about 12 million customers; the rest of the decade they reported that about 3/4 of their customers were residential, so there would have been roughly 9 million residential customers that year. Around that time, there were about 21 million dwellings in the United States, so north of 40% would have had electricity 35 years after Riis began his photographic project (and north of 70% four years later). My mother had a friend who could remember when the gas lights were replaced in her family's (lower middle class) home. It was around 1914. I think indoor plumbing pentrated earlier than electricity. I seem to recall a Riis type photograph which included a woman with a broken faucet in her home, spewing water.

Are you saying people had millions in debt in today's dollars back in the old days so people with no assets but hundreds of thousands in debt are richer than their peers a century ago?

More seriously, in the 50s and 60s, a high fraction of home owners took in boarders, especially after children got married and before parents moved in, or after they died. How many of your neighbors take in boarders? Do you take in boarders? They would provide you with extra income to help with your housing costs, plus provide cheap housing for single workers.

Do you not take in boarders because you are an order of magnitude richer in that you own a house with debt? But what makes the single worker with no assets richer? Ten times zero is zero.

Judge people's wealth by what they consume. How many square feet of living space per person? How many bathrooms? What appliances and other conveniences are found there? How many cars do they own? How often do they eat restaurant meals? Do they ever fly on vacation? You're right that few people take in boarders now -- because they'd rather not have strangers living with them and because they're wealthy enough that they don't need to.

Very few people take in boarders now because it's a zoning violation in most areas, including many rural areas. I can't even have someone stay in a guest house or barn apartment in exchange for taking care of horses unless I am their primary employer, directly from our local zoning office.

I would not automatically assume it's preference.

One man's affordable housing for the poor is, as a rule, another man's slum.

I second that comment.

Up to a point. The problem you have with slums is more the crime rate and the general state of neglect (a function, in part, of property taxes). You have a great many impecunious people living in small towns and rural areas, but no real slums.

A half century ago, one man's affordable housing was my widow grandmother's home. Or in my case, the large home of a college administrator with five kids on their way out, freeing up a room or two to rent to help pay for the house, college, etc. Or any of a dozen homes in the neighborhood where I grew up.

Increased regulations, anti-discrimination laws, renter's protection laws etc. have made renting out a room to strangers a more challenging proposition.

They just don't want to incur the hassles.

Psmith beat me to it, but yes: slums *are* a form of affordable housing. There is not some magic world where the government can mandate the quality, quantity, and price of housing. Picking any two (really, picking any one) will have effects on the other(s).

It is not uncommon to find rent controls (price), zoning restrictions (quantity) and advanced building codes (quality) in the same city.

Perhaps surprisingly, this can leave some pretty good deals in gentrifying neighbourhoods where there's an old house kinda falling apart because the owner plans to sell in 10-20 years time once prices go through the roof, and so doesn't want to do any more repairs than the bare minimum required by law. As a student, I was able to rent a pretty "large" room in a very popular and gentrifying neighbourhood (conveniently a 10 minute walk from school) for a very low price. The house was built before present zoning restrictions and modern building codes, and most people who want to live in such a neighbourhood are not willing to live in a dive, but so far as I'm concerned, so long as the plumbing works and there are no vermin, I don't really care. Of course, the roommates are likely to be rather eclectic (or worse) in such situations - one roommate was Thai and had porn playing loudly on his TV thoughout most days while he got blindingly drunk, another was a mentally disabled man who saw an anti-him state conspiracy in nearly everything and had porn plasters to every square inch of his walls, and a variety of oddballs drifted through the fourth room during my time there ... well, I spent most of my time at the library anyways, so it really didn't matter.

"It is not uncommon to find rent controls (price), zoning restrictions (quantity) and advanced building codes (quality) in the same city. "

It doesn't look like you understand hamilton's comment. If you have rent control (low price) Then it pushes quantity downward. If you have zoning restrictions, if further pushes quantity downward. If you have strict building codes it pushes price upward. Which also pushed quantity downward. So, yes you might have all three, but the end result is not enough housing and all of the housing that's at market rate has a high cost.

Rent control acts to bifurcate the market into the lucky (who get a lower price) and everyone else (generally the new comers) who have to pay an even higher price.

Admittedly, the type of situation I describe is somewhat anomalous.

Yes, slums are a form of affordable housing, but it's the other extreme of present situation. I brought slums to discussion because people enacted restrictive laws with this situation in mind long time ago. These laws may be suboptimal today and may need some reform.

However, I'm skeptical with this idea from Alex "In the past, when a city like New York became more productive it attracted the poor and rich alike and as the poor moved in more housing was built and the wages and productivity of the poor increased and national inequality declined."

Yes, housing was built, but poor people did not bought nice homes right away, people coming out of poverty did.

You have not been to Singapore.

Can you name a second location?

Otherwise, we can chalk that up to the exception that proves the rule.

I think, more so, that if you are willing to go whole hog in the controlling game AND AND AND have highly competent people involved, then it can work pretty OK.

But I don't think citizens of many Western countries are willing to give up that kind of control (or pay the salaries to any public sector officials required to attract/retain that quality of managerial or administrative experience).

There are the well-known hell-holes of Paris (population 2,240,621 with density 55,000/sq mi) and Tokyo (pop 13 million with density16,000/sq mi). Compare that with the highly productive San Francisco bay area (7.65 million with density 1,096/sq mi).

Its not just poor people and low-skill workers who are moving away from high productivity/ high cost locations. Plenty of middle class and lower middle class people are moving away from high cost cities.

Migration trends in California demonstrate this pretty well. Sometime in the late 80s early 90s, California switched from in migration to outmigration. And by the 90s California had high taxes and regulations, which add to the cost of living. Sure you could find an affordable home at that time, but your commute would be pretty long.

Had the major coastal cities in California rezoned to allow more density, it could have slowed the increase in housing prices. Instead, with current housing prices, why would any middle class family consider moving to California today when you can get so much more elsewhere?

You are only half correct on this point. While DOMESTIC migration to California has declined rapidly in recent decades, this has been more than offset by increases in INTERNATIONAL immigration. And by "international" the stats refer mostly to illegal immigrants. The effect of this migration trend coupled with restricted and expensive housing results predictably in multiple families living together in a single dwelling. It also results in illegal and untaxed conversion of garages, closets, and yards into living spaces. The growing population density puts additional strain on public and publicly provided goods. Cars that used to be in garages are now on the streets. Fire hazards have increased. Trains and busses are packed. Crime rates go up. Nearly every social ill is highly correlated with population density.

Raising property tax rates and enforcing building permits and warrants is suicidal for locally elected Comptrollers, so they don't. The easier method is to restrict supply and raise revenues through rising assessment base. Even in California that limits base increases, a hot market will still drive up total revenues. The result of tax base limitations, though, is that home owners either don't do improvements that risk increasing the base, or they do so illegally. Imagine a two bedroom house with twelve occupants and one bathroom. This was not uncommon in America's past or in the third world present. But that lower standard of living is precisely the problem and my point.

Trains and buses are well below optimum ridership in California. Half empty, as a high water mark, is not efficient. They are run more to make sure maids get to big houses.

There are many more big houses than occupied garages.

In California (and possibly other states), your property tax is defined at the time you buy the property, with relatively small annual uplifts. This actively discourages homeowners from moving, because their new home - even if it has the same value - will cost more in property tax.

"In California (and possibly other states), your property tax is defined at the time you buy the property, with relatively small annual uplifts. "

In my area, the property taxes are re-assessed periodically (not yearly) are are reasonably linear with market rates. I thought this was a rather broad trend, with local jurisdictions getting away from a one time assessment at the time a property is bought.

Alex, I have to think Willitts is on to something regarding international migration, although I don't know if I agree with everything Willitts wrote.

High housing costs can indicate demand greater than supply. If some policy change could cause California or the New York tri-state area to cease having net positives in international migration, they could resume having net positives in domestic migration. Perhaps we should instead look at the negative domestic migration of high productivity places as a one-two punch of land use regulations limiting supply & international migration increasing demand.

I am guessing the definition of productivity used here is different than the common sense one. There's a huge out-migration from Silicon Valley, for example, with professionals largely going to Austin, Seattle, Portland, and to a lesser degree LA and a few other areas.

Tech professionals are also moving from NYC, I would guess to places like Nashville, Atlanta, etc. All of the mentioned areas are tech centers - people moving are not doing low skilled work - they're doing the same work in a nicer, less crowded, and less expensive area. Lower density cities often appeal to introverted techie types. I know NYC practically gives me hives. I could not work productively there.

What you're often getting are people doing the same work, in an area with lower cost of living, producing the same product, at a lower cost. How, precisely, is producing something more efficiently - exact same product, often for the same company or a competitor, at a a lower price - defined as "less productive?"

For that matter, why is overseas outsourcing considered awesome by economists, but moving your techies to a smaller city where they'll be happier and work for less, or letting them telecommute and paying them less, suddenly a loss of productivity? Not seeing the logical consistency here.

I agree, but it seems pretty Quixotic. Perhaps SF will bring attention, then change.

"Ideally, we want labor and other resources to move from low productivity places to high productivity places–this dynamic reallocation of resources is one of the causes of rising productivity."

Perhaps -- but isn't 'janitor' a poor example? Or do we really think janitors in New York are more productive than those in Alabama? It seems to me that most poor people in rich places now work in non-tradeable services (retail, restaurants, education, healthcare, government, healthcare) where productivity doesn't really vary, but pay is higher in places like New York either because it is necessary to keep people in these high-cost-of-living areas or because of the ability of unions to extract rents from local 'captive' rich people (e.g. maids in Manhattan).

In fact, I'm having a little difficulty thinking of an actual working-class occupation that has higher productivity in New York than Alabama -- can somebody help me out? Honda, Mercedes, and Toyota all have auto plants in Alabama -- do they actually have lower productivity than plants in wealthier states?

You make a good point here. The author may be begging the question. I have no empirical evidence but let's think about it.

How could a janitor in New York have higher productivity than one in Alabama? In other words, is the Marginal Product of Labor higher in NY for the same job?

If housing and businesses are more densely populated, then the total value of public (or shared) goods goes up. That is, a janitor for a building of 100 people is more productive than a building of 10 people when he cleans the lobbies of equal size. One could argue that this effort is not truly shared because his work effort will be larger for the group of 100 than 10. But maintaining a common elevator, heating system, etc for more people isn't that much more work.

Violating ceteris paribus, the NY producer will use more capital. While the MP of labor might be the same, total factor productivity will be higher because of the more efficient use of capital.

Models of labor productivity usually assume workers are homogeneous. But in reality they are not. Higher real wages will attract and demand higher productivity workers.

NY has door men, valets, concierges and many other services not often seen in Alabama. There is a demand for service skills based on the preferences and lifestyles of people in NY that differ in material ways from Alabama. While in Alabama you can drive to drop off your suits at the cleaners, in NY there is no cheap or convenient parking. You might not even own a car. So your home or office might have mobile services that ask for and receive a convenience premium.

Perhaps my thinking is wrong, so feel free to shoot back.

"Higher real wages will attract and demand higher productivity workers."

But, adjusted for cost of living, real wages are lower in Manhattan than Birmingham, Alabama. Wealthy states have very high cost-of-living adjusted poverty rates. Using the supplemental measure that adjusts for cost-of-living, the poverty rate is almost 24% in California (highest in the nation) and 18% in New York, but only 13.5% in Alabama. Which would predict that Alabama would now be attracting the higher quality workers, no?

"NY has door men, valets, concierges and many other services not often seen in Alabama."

Yes, and those kinds of occupations are common in developing countries as well -- which is usually taken not a sign of high productivity but of very high income inequality. Which, of course, is the case in Manhattan.

" NY there is no cheap or convenient parking."

And such inconveniences must have a negative productivity effect, no? New York City has both the highest percentage of mass-transit commuters and the longest commuting times in the country:

The average commute in the U.S is 45 minutes, with New Yorkers having the longest trek to work with an average 73-minute commute. Chicagoans came in second spending 64 minutes a day commuting, followed by San Francisco residents with 56 minutes, while those in Los Angeles have an average 55 minute commute.

That's an extra -- what -- 120 hours of lost productivity for New Yorkers every year compared to the average American worker. So maybe from a productivity standpoint, we should be applauding exactly what has been happening -- migration to lower density southern states, with better, faster transportation and less restrictive building regulations all of which result higher cost-of-living adjusted incomes?

The BEA estimates that per capita real income in NY is 106% of the national average while in Alabama it is 93% of the national average.

What is your source of data that leads you to claim that per capita real income is higher in A;abama?

Do you think maybe the per capita real income in New York includes a different mix of jobs than that in Alabama?

Slocum is attempting to match like-job with like-job.

Median real income isn't higher in Alabama than New York -- it's a little lower ($39K vs $37K -- both of which put them in the bottom half of the states):

But the cost-of-living adjust poverty rate is significantly higher in New York (18.1 %) than Alabama (13.5%)

So the lower quintiles (like the maids and janitors we've been discussing) are better off in Alabama while the upper quintiles are better off in New York. In any case, there's no real income differential that should be driving migration out of Alabama and into New York.

That isn't the point he was making. It isn't that the janitors are more productive but that they partake of the gains from higher productivity. But if housing costs are higher, there are no net gains for them to be had.

So they stay put.

This has other effects as well. If you need workers you have to pay them enough to live, and if housing costs are high, you have to be in an industry or sector where remuneration is high to be able to exist. Otherwise you seek a cheaper jurisdiction, which likely won't be a less expensive county or state, but some other country all together.

"Otherwise you seek a cheaper jurisdiction, which likely won’t be a less expensive county or state, but some other country all together."

That's not always true. Off shoring involves additional costs that being in a different state does. It's always a trade off and generally only large companies with large manufacturing are going to have the economies of scales to be worth while.

I know of companies that pulled out of China sourcing because of travel and related expenses.

Yes, janitors are more productive in Manhattan than in Alabama. Goldman Sachs values the janitorial services in its corporate headquarters more highly than does an office building in Alabama. Ditto for the owners of a Park Avenue apartment relative to a homeowner in rural Alabama.

"Goldman Sachs values the janitorial services in its corporate headquarters more highly than does an office building in Alabama."

Not judging by what they're paid. If we were comparing the wages of janitors in New York and London, wouldn't we use something like a PPP currency conversion? If so, why wouldn't we do the same for NYC vs Birmingham Alabama? A dollar is worth more in Birmingham than in New York City.

Among other things, when a maid costs $15 an hour, it makes sense for the agency that pays them to equip them with stuff that will enable them to get the same job done faster (the agency can then send the maid to more jobs per day and hence make more money from the same pay).

Also, there's the matter of quality. When you've got a high concentration of people earning six figures, there is greater incentive for hospitality, cleaning, landscaping, etc., people to provide a higher quality of service. I don't imagine there are many people (none?) in Alabama willing to pay $200 a month to prune 50 sq feet of hedges, whereas probably a lot of people in NY would be willing to if it was a high quality job.

I think your point applies in a fairly general sense, that most services will not actually be much better/faster, but just more expensive because those people have to pay rent, etc.

"Among other things, when a maid costs $15 an hour, it makes sense for the agency that pays them to equip them with stuff that will enable them to get the same job done faster."

I understand the theory, but I'd bet that in practice, the reverse is true, for two reasons. First, maids in Birmingham will travel to jobs by vehicle and have no trouble bringing any necessary labor-saving devices with them (a carpet steamer, for example), which would not be feasible in Manhattan. Also, in Manhattan, service workers are likely to be union members who have a long history of resisting labor-saving innovations. This came to mind, for example:

"The modified use of plastic plumbing pipe in residential housing of three stories or less was approved Wednesday by the Chicago City Council after a more than decade-long fight by union officials and labor-friendly aldermen"

PVC pipe can be installed much more quickly and with much less skill than copper or galvanized, so of course the plumbers union fought it tooth and nail. That was 25 years ago, BTW, and apparently PVC is still not allowed in Chicago for applications (e.g. water supply lines) where it is commonly used elsewhere.

You do not understand productivity. read BC's comment.
We need a new way to talk about this. Some of the talk sounds like insulting of low productivity workers to the uninitiated. "Low productivity worker" does not mean that the worker is inherently low productive, just in the particular job, which includes place, that they are working. A maid does the same exact amount of work in Honduras is much much less productive there than in New York City or Luxembourg!

I tend to think more along the lines of the productivity of a specific employment position or an organizational structure, less so of workers. However, clearly some workers by adulthood are more productive than others (for an enormous diversity of reasons), and can be more easily paired with capital than others.

"Productivity" stats are normally very misleading because they assume that markets are perfect. Saying someone "doesn't understand productivity" isn't very useful. There are diverse ways of understanding this concept. The maid in Honduras does not have the same quality of tools and cleaning supplies as the maid in NY, and hence the productivity is lower. However, put her in NY, and her inherent ability to produce market value is probably quite similar.

I'm not following the logic of why, all things being equal, productivity would be higher in a high cost city than a low cost city.

Seems like, if you're doing the same work, the low cost city worker is more productive - more output per dollar, and probably a happier worker to boot. The recent trend of tech workers to go to places like Austin, Nashville, Atlanta - that's a good thing, not a bad thing. More productive tech centers scattered across the country are, IMHO, way better than jamming everyone into a very expensive megacity that they don't want to live in.

In effect, wealthy progressive cities aren't that much different from the pre-civil rights South. Of course, it's all about sustainability now, isn't it?

Because if a poor person goes into a wealthy neighborhood, they are lynched?

Black people traveled to wealthy neighborhoods daily in the pre-civil rights South. As the hired help. I think that was probably his point.

there was a steve sailor post from years ago that pointed out that it didn't make sense for a poor guy in a depressed ex-mill town to move to a bigger city because low-skill employers already have/will have immigrants to do those jobs. so why leave your family only to be unemployed in a place with higher housing costs?

Why be starving in the ghost-mill town or blighted city center though?

Oh, I know, public assistance solves that problem! So does illegal commerce.

If you're not literally starving - because you have family that can help take care of kids (can be a 10K or more savings per kid to avoid daycare), you have elderly family you're helping to care for (ditto except potentially even more expensive)? Because your house is paid off and you have a home garden that provides most of your food? Because you have a small business that keeps you going, and zoning wouldn't permit it in a larger city?

Raising your own food, having family to care for kids, not having to pay for eldercare, being able to have a side business - together these can easily be several times more than any increase in salary.

It isn't usually about public assistance nor is it about illegal commerce. You need to look beyond salary to the entire household budget.

As I wrote in VDARE in 2006:

Imagine you are an American blue-collar worker in Cleveland, making $10 per hour. You know the local economy is stagnant, so you're thinking about relocating to fast-growing Las Vegas. But your mom would miss you; and you're not a teenager anymore so you don't make new friends as fast as you once did; and you really like the wooded Ohio countryside you grew up around and the fall colors and the deer hunting; and there's this girl that maybe you could get serious about, but her whole family is in Cleveland and she'd never leave.

So, you decide, you'll leave home behind if you can make 50 percent more in Las Vegas, adjusted for cost of living. That seems fair.

But, then you look through the Las Vegas want ads and discover you'd be lucky to make 10 or 20 percent more because the town is full of illegal aliens. They're moving from another country, so it's not much skin off their nose to move to Las Vegas rather than some place slower-growing.

Well, forget that, you say. I'll stay in Cleveland.

Unfortunately, too many economists forget that too. They can't—or won't—put themselves in other people's shoes and see how the world really works.

The draw toward staying put also ought to be considered. There was an article last month in four 99-year-old friends who have known one another since early childhood. That sort of thing has a value for many people. Has anything over the last thirty years changed to make people more strongly prefer continuing where they are? Such as the population aging? Or being tired of moving and starting over? Or the sunbelt cities aren't shiny new attractive anymore?

I think more people are aware of the value of a network in accessing economic opportunity. However, it's also much easier to maintain that network if/when you move.

What did mobility used to mean? Did people move on net to cities, or move to warm states? How have these changed and does that explain the trend? If Alabama now beats NY, why don't we see the same level of out-migration but in reverse?

>If Alabama now beats NY, why don’t we see the same level of out-migration but in reverse?

We do. Look at the millions of New Yorkers who have moved to Florida and I don't just mean retiree snowbirds.

Increasing numbers of people work online. They don't have to move between jobs.

The internet is the "big enough cause" that you seek.

Another good hypothesis. The number of people telecommuting has doubled since the 1980s but only from 2.1% to 4.1% - looks too small to explain the data.

You also have to look at some industries that switched to contractors from hired workers (many of whom work online). And part-time workers may not report themselves as "telecommuting" as such. For example, in education virtual schools and online courses are creeping everywhere. An adjunct professor teaching online may not count as "telecommunting" for that statistics.

4% is pretty high for an overall rate. The rate in knowledge segments would be much higher.

Many people who largely work from home are not listed as telecommuting.

Home based or online businesses are easy to do via Internet if you have decent bandwidth. A significant amount of tech consulting/development is done remote. If you're starting a retail business, it's likely to be online. Graphic design? Often online. Freelance programming or sys/database admin? Online.

Those aren't going to be listed as telecommuting, particularly remote support. You may even go into an office - it's just not in the same city or state as your client.

Nope. Telecommuting works for someone established and with connections, and not all the time. To improve your situation you have to be there, make connections, build a reputation, and for most be where things are happening.

Derek, have to disagree.

For starting your own business, online is the way to go. If you choose to have a physical office, as long as your server has a decent Internet connection, you can be anywhere. Your server doesn't have to be in the same city or state as your office, either - that's why people invented VPNs.

For tech jobs, if you're on the tech side, you don't need to be there to make connections, build a reputation, and build up a portfolio. Been there, done that, for many years. I have people I've worked with for years that I've never met in the flesh.

If you're gunning for upper management, and you're not starting your own business, you have a point. But I know an awful lot of people who work online or have online businesses and are not considered telecommuters.

It goes both ways. Online work also allows you to move freely without having to worry about finding work wherever you might like to go next.

Why is declining mobility a bad thing?

Alternative ideas: mobility was at one time driven by the effect of climate control on settlement patterns to which was added the effect of the shakeout in heavy industry on Rustbelt cities. Demographic growth rates in California and Georgia exceed national means by only a modest amount; Florida, Texas, Arizona, and Nevada have robust growth rates, but Nevada's rate is the lowest it's been since the 1st World War and the other three have as we speak the lowest rates ever recorded for them.

Declining mobility would be a function of people satisfaction with their current living conditions.

An easy Google

Seems life satisfaction travels in a fairly narrow band, down in recessions.

Obama has restored our satisfaction!

Think about the kinds of jobs that were available to people in, say, Nebraska during the 1970s compared to today. Economies have changed. People used to move off the family farm to become a computer programmer in the big city. But we are all coders now, and the number of former programmers who buy up Nebraska farmland and become grain farmers is still quite small.

The geographic western half of Nebraska has been imploding demographically since about 1930. Same with Kansas. No end in sight. The county Bob Dole grew up in has half the population it did 85 years ago.

Yes, we are in agreement here. Eventually there will no longer be any more such geographical locations and people will stop relocating for the purposes of getting off the farm. I assume at that point there will be some other economic reason to migrate, but it won't be that.

Yet the number of former programmers who buy up hobby farms in Virginia, and become weekend hobby farmers, is fairly large.

No one's going to become a grain farmer as a hobby. That's a job, and a job with huge economies of scale. Not the same thing as raising your own eggs, milk, and veggies.

historical and environmental “protection”: I read that initially as "hysterical protection". I suppose I got the gist right.

The dark side of the Internet. A need to repeat something that is wrong in order to reassure oneself, and declare membership in a tragic group.

Meanwhile, in real life

I hope you realize this trip wasn't necessary, it was your need, dearieme

In order to study this issue correctly, you have to adjust for cost of living. Did cost of living increase or decrease interstate? In short, does it "pay" to move these days or not? If I can make as much in Alabama as in New York today, vs 40 years ago, for a 'typical' (blue collar) job, then mobility will be decreased. I speculate there were greater interstate differences back in the days than today, hence greater mobility back then. California Dreaming (back then)? Or Californication (today)?

If you do remote tech work, you can make nearly as much anywhere. Tech work is increasingly spread out across the country, as introverted tech people don't always like large cities.

There is typically a premium for living in major centers (NYC, Silicon Valley) but for most, not enough to offset cost of living.

It post-housing salaries for low income workers are now better in poorer areas why wouldn't they move away at the same pace the my moved in?

In addition to the explanations offered, I wonder whether lower rural-to-urban transition might be relevant. Even if the same share of rural people are moving to cities, if cities are a larger share of the population then this would be reflected as a lower total transition. Maybe most of the people who wanted to move to cities have done so, and then stay put.

The transition was over by 1970. You only have very circumscribed migration now, in the plains, for the most part.

The observation can be inverted for a reflection on biology - particularly negative niche construction.

Is it possible that an organism colonizing a niche should be selected for making it more difficult to live there?
Well, yes. There are different possible perspectives; but in general, if you want to make high value patches of
nutrient inaccessible, the key is to consume all the 'entry level' resources - the highly accessible, easily processed
ones - first, and then work on the relatively recalcitrant ones. This would be observed as preferential usage,
which could be explained by laziness, but is also a defensive strategy. I wonder if there is a natural experiment
one could do to determine the 'why' ...

Let's take as a given that moving is unpleasant and costly. Perhaps it is 1980 and before that is anomalous, not today.

Reasons to leave have declined: That time was the tail end of people moving north to escape segregation (de facto at that point, if not de jure), and also the tail end of people moving south for warm winters and air conditioning. Now that racial attitudes and indoor climate are more uniform than thirty years ago, people have less reason to leave where they are.

Reasons to stay have increased: Previously those most likely to move were the poor, whose economic was dire enough to outweigh their social connections and impel them to go elsewhere. Absolute material standard of living has increased since 1980. The median poor American now has a full set of appliances, a car that will last hundreds of thousands of miles, etc. The welfare state has enormous bureaucratic delays, which means moving entails going without benefits for months.

A good summary. Also the welfare state is often state welfare, which reinforces bureaucratic burden.

Has Alex talked about nationalizing the safety net as a path to increased mobility?

Salient portions of the safety net (Social Security, Medicare, SSI, SNAP, Section 8, LIHEAP, the Job Corps, the Bureau of Indian Affairs, the Indian Health Service, and disaster relief) are nationalized. Veterans' benefits are as well, though some might define those as deferred compensation rather than welfare. Medicaid and unemployment compensation are state administered but largely federally financed; ditto relief programs like TANF. Your local initiatives would be public schools, a miscellany of custodial care programs, the child protective and foster care service, the pubic defender's office, the legal aid society, & bits and pieces.

Medicaid, SNAP, TANF, Section 8, etc may be federally funded, but they are run by local offices. Clients go on a Section 8 waiting list for a particular district, apply for Medicaid at a local government office, get food stamps from a state-run program, etc.

Moving from one jurisdiction to another requires dealing with government bureaucracy, and unglamorous government bureaucracy with a captive audience at that. They know they can't be fired, they know you can't take your business elsewhere, and it's not like handing out Medicaid attracts the bright and competent like the CDC or NASA might. Thus it could take months or years to get on the same program in a different jurisdiction.

For low conscientiousness people with no stored resources, this means they cannot move.

It's even harder to move between programs that are administered differently. Most people on these programs are of limited cognitive capability and aren't very good at thinking symbolically. They know how to access welfare programs due to socially-acquired cultural knowledge. Put them in a welfare system that they have to figure out by reading things and they are lost.

There are NGO's who specialize in helping people in hardship.

Also, were we to nationalize welfare, we'd still have local offices.

Isnt this just showing negative income elasticity in migration? And wouldnt you expect just that?

Smaller families and increasing lifespans...

If there are several siblings, then more of them may feel "free" to move, because there are still one or more siblings still living near their parents. Young/middle age adults in 1980 (e.g. born mid-1940 - 1950's) would have been part of relatively large families.

If there are only one or two adult children, which would be increasingly common moving forward from the 80's, then the problem of aging parents and where/whether to move is much harder. If one sibling moves, the other may feel constrained not to move. Or one sibling may be married to a partner who feels constrained to live near his/her parents. Increasing lifespans magnify the problem...

The propensity of poors to move to poor areas and riches to move to rich ones has been in place for several decades. This is not a recent development, although it may have become more pronounced.

Some good suggestions here in the comments. I think it's obviously more than one factor and probably no factor explains anything close to half of the effect. In my case, my wife having state-by-state licensing requirements for her profession make moves kind of difficult. She can get a license in another state, but it costs thousands of dollars, plus she has to schedule and take a test in some far-off town. If all goes well she only can't work for a couple months. If she messes up the exam and has to retake then it's more like 4-6 months.

I blame stuff.

When we had less stuff, moving was not unthinkable. My first move was covered by a Datsun hatchback.

I can't imagine moving now. Bet you I'm not alone.

Alex this is possibly your best post. Congrats. Also I would like to see some examination of high property taxes as a possible driver of big city rents.

I am genuinely unsure about this. I can certainly see property taxes driving up rents, but much harder to see property taxes driving up purchase prices. If a place had high rents, but ordinary purchase prices for residences, it would seem reasonable to see high property taxes as a possible culprit for why its rents are high. However, it seems most places with high rents also have high purchase prices. I wonder what the purchase prices divided by monthly rent ratios are for various places across the country. If big cities with high property taxes have low purchase price divided by monthly rent ratios, then it would make sense to see property taxes as a culprit for high rents.

This is a cause of underestimating the tax contributions of the poor. On paper, the wealthy landlord pays the property tax. However, the renter actually pays the property tax as a part of their rent.

"Ideally, we want labor and other resources to move from low productivity places to high productivity places"

Perhaps Alabama (and other "fly over" zipcodes) are approaching parity with NYC and California with regard to information based productivity. That internet thing, you know.

Huntsville, for example.

Agree with your point. I think the idea of NYC and Silicon Valley being automatically more productive is grossly oversold.

I was born in the San Fernando Valley of Los Angeles in the late 1950s when it was, by today's standards, insanely affordable.

The environmental movement that began in January 1969 with the Santa Barbara oil spill always struck and soon became wildly popular in Beverly Hills and Malibu always seemed like it was intended to keep the middle class masses of the SFV from being able to afford to live closer to the beach.

Anyone who thinks the problem is Americans not being transient enough is a lunatic who has no understanding of human beings and no conception of what makes life worthwhile. He is also probably an economist, but I repeat myself.

When people tolerate two hour commutes one way, they have wide regions for employment change without a change in residence. If there is some upward mobility options within the regional labor market or adjoining ones, there can be advancement without going through the hassle of a home sale. Some are upside down in their mortgage, so it is hard to go into a new housing market with no equity and perhaps poor credit. A plateauing of the economy?

Also, it doesn't quality as geographic mobility if you have a 2-hour commute and move closer to your job. I know a fair few people in the GTA (Toronto) who have moved many times to get better jobs and avoid a long commute (easier if you rent), but statistics would record that they are 100% geographically immobile.

When society is wealthier, and people are assured of a basic level of public support, the relative increase in standard of living from relocating is outweighed (for some) by the loss due to moving away from family, friends, and community. Housing would be a factor in this - as it is part of what determines the difference in standard of living between two locations - but it is far from the main story.

If you can't afford food or shelter after your employer closes, you'll be willing to move away from where your family and community to change that. If you are still able to get by after your employer closes, and the relative improvement in your standard of living from moving is minimal, you'll stay.

Found another large chunk of statistics, also due to the internet. People these days are much more likely to stay in happy long-term relationships, because they video-chat, game, and otherwise rich-media communicate online.

So people don't move to keep a relationship, like they used to do. Especially young people.

Comments for this post are closed