US Workers’ Sinking Labor Mobility Hurting the Economy

US Workers’ Sinking Labor Mobility Hurting the Economy

In 2016, US labor mobility fell to an all-time low since the Census Bureau began collecting data after World War II. Increased economic uncertainty for lower- and middle-class workers paired with cultural and political polarization have made it tougher for those in distressed, typically rural, regions to accept higher-paying jobs in thriving urban centers, if they can even get them. This has hindered the ability of growing companies in America’s most productive cities to attract talent from outside these urban cores, while also contributing to reduced socioeconomic mobility.

Problems that were previously linked to struggling cities, such as high unemployment and reliance on social services and low-income housing, are now rampant in rural areas. For those who own homes there, local housing markets have failed to recover from the late-2000s crash due to a drop in demand caused by the significant reduction in farming, manufacturing, and other blue-collar jobs. Even if a better opportunity came along somewhere else, selling their property would be tough.

Small-town workers are also put off by the socially liberal attitudes and lack of community in larger cities, so even if they can manage the financial and logistical challenges, the metropolitan culture may be too distant from their own to bear. Eventually, they begin to believe they are stuck. Examining this dilemma at the Wall Street Journal last week, Janet Adamy and Paul Overberg noted that the rate of people in rural America moving across county lines has dropped from 7.7 percent in the 1970s to 4.1 percent in 2015, and this reduction in mobility is having a significant impact on the country as a whole:

For small towns, mobility has always been something of a problem: When the brightest youngsters leave and don’t return, “brain drain” can be a drag on the community, even if it is a boon for the other cities they settle in. Now, the lack of mobility has become a drag on the entire U.S. economy.

“We’re locking people out from the most productive cities,” says Peter Ganong, an assistant professor of public policy at the University of Chicago who studies migration. “This is a force that widens the urban-rural divide.”

To compound the problem, larger companies headquartered in suburban centers have begun relocating downtown in order to attract top talent. In the past year, McDonald’s, Caterpillar, and GE were among the corporations that announced such moves. Major companies tied to industry hubs, such as New York City for finance or Silicon Valley for tech, have chosen to open outposts in less expensive cities across the country, or even outside of it, to supplement their workforce. As technology further enables remote collaboration, this practice should increase as companies seek to reach rich talent markets outside their hubs to meet talent shortages rather than acting as a nationwide magnet.

Many are pointing to the proliferation of remote work as part of the solution, as it would allow companies to hire skilled workers from anywhere without needing them to leave their preferred communities and perhaps hasten rural economic distress. Companies may also want to consider the value of having secondary outposts closer to their headquarters, which would improve exposure across the region and also demonstrate a dedication to the community, which the increasingly socially conscious workforce would appreciate.

Another option would be for companies in major metro hubs to begin offering better relocation packages. Regional representation is another form of diversity; it offers the same benefits of racial or gender diversity. Like other diverse groups, people from smaller communities would be more enticed to make the leap if there are more people like them around, but the first ones will need some extra help.