America's Steep and Troubling Decline in Geographic Mobility. NewsWire

NEWSWIRE: 12/10/19

SPECIAL NOTE: Social Intelligence Podcast with Neil Howe will return Monday, December 16, 2019. 

• According to new Census data, only 9.8% of Americans moved in the year ending in March. This is the lowest rate since the government began tracking it in 1947 and the first time it’s fallen below 10%, thanks in part to an especially sharp decline in moving rates among Millennials. (Census Bureau)
• NH: From Walt Whitman's The Open Road to Jack Kerouac's On the Road, geographic mobility has been a distinctive American trait. "Go west, young man, and grow up with the country," announced Horace Greeley in 1865. Even as recently as the postwar American High--a half century after the official "closing" of the American frontier--Americans were still celebrated around the world as a restless people, always on the move.
• We may need to reconsider that self image. Starting in the late 1960s the rate at which Americans change their residence has declined steadily and today is less than half of what it was fifty years ago. See the first chart below. Think the America of Eisenhower, do-wop, and black and white TV was a staid and static place? Think again. During the 1950s, an average of 5.2 million Americans moved from one state to another each year. That's more than in any year during the decade following the Great Recession--despite the fact that America's population has roughly doubled between then and now.
• The decline has occurred in all types of moves: within counties; between counties but within the same state; and between states. Over the business cycle, geographic mobility typically dips just after a recession, rises during the recovery, and peaks late in the expansion. Remarkably, the mobility rate has shown no such buoyancy since the depths of the Great Recession. Through 2019, the rate has fallen for four years straight--and for seven out of the last eight years.
• One probable consequence of declining mobility is a slowing rate of convergence in per-capita incomes between states. In the century before 1980, state incomes converged at an average annual rate of 1.8%. From 1990 to 2010, that rate fell by half. And in recent years the convergence has stopped altogether--triggering fears of a re-emerging regional divide in America between haves and have-nots (see "The South's Economy Falling Behind"). See the second chart below.
• What explains America's mobility slowdown? Explanations abound. Let's look at demography, "job lock," real estate, and the economy.
• First, demography. Yes, an aging society moves less. This is because there is a lifecycle pattern to mobility: People generally move at higher rates as young adults and at lower rates as they grow older. As America's entire population ages--and especially as Boomers retire--there are relatively more adults in the lower-rate age brackets. Yet by all estimates this slow-moving "age effect" can only explain a small share of the mobility decline. Most of the decline is driven by drops in the mobility rate of each age bracket over the last 50 years. And in recent years, the rates have been declining the most rapidly for Americans under age 45--that is, for Millennials and late-wave Xers. See the third chart below.
• More important than the "age effect," then, is the "generational effect." Why are later-born cohorts moving less than earlier-born cohorts? In particular, if we're just looking at the decline since 2000, why are Millennials in their 20s and early 30s moving so much less than earlier generations at the same age? One obvious explanation is growing risk aversion--a Millennial trait we have covered in this context (“Explaining the Decline in U.S. Geographical Mobility”) as well as more generally ("Millennial Risk Aversion Spreads Across the Globe"). Compared to Boomers or Xers at the same age, Millennials are less likely to move to risky new places without friends, family support, official credentials, and an invitation. Millennials are famously less trusting of strangers than older generations.
• The mainstream media sometimes imply that the economic challenges facing today's young adults--and the related delays in their age of marriage, child bearing, and home buying--are all contributing to mobility decline. But this defies common sense. A generation facing economic hardship ought to be more--not less--willing to move and take risks. Indeed, all else being equal, marriage, children, home ownership, and less education make adults less likely to move. A Millennial Generation top-heavy with single and childless and college-educated renters should therefore be more willing and able to relocate on a moment's notice. But they're not.
• Boomers may not be helping much. To be sure, Boomers in their 60s and 70s are increasingly employed--and this almost certainly helps to boost mobility in their age bracket. On the other hand, whether they are working or not, Boomers prefer to "age in place" rather than move into senior communities (see "The Death of Senior Housing") and this may be suppressing mobility. Moreover, a growing share of these aging-in-place Boomers share their homes with their adult Millennial kids (see "For the First Time Ever, Average Size of U.S. Household Is Growing"), which clearly discourages Millennials from moving. In fact, the growing economic importance of the extended family may be doing as much to pull down mobility today as the rise of nuclear family once boosted mobility during the American High.
• What about "job lock"? One popular explanation for declining mobility is that a rising share of workers are "locked" into their current job--maybe due to employer-sponsored health insurance or because two-earning couples find it harder to move at the same time. The data don't really support this explanation. The prevalence of two-earning couples hasn't risen much over the last 25 years. And health-insurance worries are unlikely to deter job mobility among young adults, whose mobility rates have declined the most.
• Real estate--and in particular, the high and rising price of housing in urban centers--is a more likely culprit. The evidence does suggest that non-college migration from low-pay to high-pay regions is negatively correlated with housing costs (which in turn are correlated with land-use regulation). NIMBY zoning for the benefit of property owners may help explain David Autor's recent finding that, after accounting for housing costs, noncollege workers no longer have any incentive to move to most big cities. See the fourth chart below. Regulatory constraints on housing supply are just one of many state- and local-government policies that may turn away newcomers or keep current residents from leaving. Others include occupational licensure, welfare benefit eligibility, residential subsidies, and vast sunk infrastructure costs in declining counties.
• Or, at the broadest level, maybe the problem isn't so much that people or laws are changing. Maybe it's that our economy is losing its dynamism and is no longer generating new firms and new jobs at the same rate as it used to. A large and growing economic literature identifies a "decline in business dynamism" (with falling rates of job and firm turnover) over roughly same period in which geographic mobility has been declining. For my presentation on this topic, see "Declining Business Dynamism: A Visual Guide."
• So take your choice. An aging society. A more risk-averse rising generation. The graying of wealth and the strengthening of multigenerational families. More anti-growth and pro-incumbent regional policies. More localism. Less trust in strangers. Declining business dynamism. All of them are contributing to a steep decline in geographic mobility. Ominously, such behavior may become self perpetuating--as Tyler Cowan suggested in his recent book The Complacent Class--since individuals and families no longer accustomed to moving tend to develop stronger regional attachments over time. Mobility, like stasis, is a social habit that can be unlearned as easily as it is learned.

• In an essay titled “The End of Babies,” journalist Anna Louie Sussman argues that falling fertility rates are evidence that “late capitalism...has become hostile to reproduction.” She recounts her experiences as an American alongside stories from Denmark and China: countries with vastly different social and economic conditions, but all facing the same declines. (The New York Times)
• Sussman offers a perceptive and elegant overview of many of the reasons why parents in high-income countries are having fewer children--and of how difficult it is for government policy to raise the fertility rate once it has already fallen for decades.
• Her basic insight is pretty simple. Millennials growing up in capitalist societies are extremely good at optimizing all of their choices in order to maximize lifetime welfare and consumption. And most of the time this optimization puts child-bearing way down the list of priorities. Raising children is arduous, time consuming, and expensive. It eliminates all sorts of pleasant future life options. And it holds out, in return, satisfactions that are difficult for young adults (especially those living in a singleton urban environment) to compare with alternatives. They refrain from having children not because they are myopic and distracted, but rather because they are trying to be perfectly far-sighted and rational.
• Yes, this starkly individualistic and "self-actualizing" perspective gives her essay a very blue-zony tone. She would like to blame government, but she admits that declining fertility is a problem even in countries like Denmark with extraordinarily generous maternal policies. She would like to blame capitalism for making us all so rational and hard working. But then again she has to admit that capitalism has liberated many women by enabling them to pursue a childless and fulfilling career. She seems, in the end, oddly puzzled over why societies for countless millennia ever had a good track record at motivating parents to have children.
• Well, let me bring two insights to bear. First, there's one obvious inference from survival bias: Only those societies and cultures and religions that have been really good at incentivizing child bearing are still with us. So maybe it's not so effortless. Maybe lots of societies have tried to ease up and de-emphasize child bearing for the sake of personal fulfillment. But those societies are no longer with us.
• Second, she hardly mentions the powerful economic motives to have children that have traditionally accompanied the social and cultural incentives (peer pressure and moral stigma). Children, as they grew older, were once a treasured resource for parents: They were a source of labor, protection, and care and security in old age. In the modern era, children are no longer a source of labor; they are the object of immense human capital investment--which parents must fund primarily out of their own pockets. And with the advent of pay-as-you-go retirement and healthcare programs, we have effectively socialized the cost of growing old. Which means that each one of us becomes a free-rider off the payroll taxes contributed by other people's children.
• Sussman notes, correctly, that Millennials' desire eventually to have children has not fallen nearly as much as their realistic expectation that they will have them. I guess this translates into something like the following: Sure, having children would be great--but practically speaking I don't like the trade off with everything I would have to give up. And the more carefully young adults calculate this trade-off, the more onerous it seems.
• This explains why pronatalist policies are so expensive: Governments have to spend a lot of money to counterbalance all of the built-in incentives not to have children. ("Nations Labor to Raise Their Birthrates.") It also explains why the fertility rates of couples in today's high-income societies are increasingly correlated with intensity of religious motivation. (See "Will the Religious Outnumber Nonbelievers in the Long Run.") One of the few remaining persuasive reasons to have lots of children is... God told me to.
• Socialism is as popular as capitalism among young Americans, according to Gallup’s most recent poll. This milestone has been driven by declining approval of capitalism, which has gone from 66% to 41% among adults under 40 over the past decade; over this period, their approval of socialism has remained flat around 50%. (Gallup)
• NH: We have seen this coming for a while now; just look at the Democratic primary. Left-leaning candidates like Elizabeth Warren and Bernie Sanders, who even calls himself a democratic-socialist, have been buoyed by the support of Millennials. Meanwhile, moderates like Amy Klobuchar, John Delaney, and Michael Bennet have failed to resonate with young voters. (See “Public Leaning Much More to the Left" and "Millennials Like Bernie Sanders Because their Experience with Capitalism Hasn't Been Great.").
• One reason why Millennials are fond of socialism is that they want government to empower community, and "socialism" seems like an easy way to summarize that goal. Another reason is generational memory. Older Americans remember the carnage of Mao, Stalin, Pol Pot, and other "socialist" dictators of the Cold War world. Millennials don’t have those recollections. (See also "Are Millennials Giving Up On Democracy?" and "Millennials Moved by Democratic Socialism.")
• According to Karlyn Bowman at AEI, it's hard to determine how much public opinion is shifting because historically there have been very few polls asking about socialism's popularity. True enough, but the polls we do have (such as Gallup's poll, which goes back to 2010) shows attitudes changing in a favorable direction, especially among Democrats. She also observes, accurately, that the public's definition of "socialism" has changed over the decades. In the early postwar era, most Americans assumed socialism meant government ownership of property and control of the economy. Today, the public tends to equate socialism with mere "social democracy." (Though Bernie Sanders calls himself a "democratic-socialist," he clearly is no such thing by any European definition of the term.)

• According to a new study on the long-term effects of paid family leave, mothers who took leave in California in 2004 ended up working less and were paid less a decade later. These results go against conventional wisdom about the merits of paid leave and emphasize the importance of other incentives and policies if the goal is to keep mothers in the workforce. (The New York Times)
  • NH: In 2004, California made news when it became the first state to offer paid family leave (PFL). Federal law had already given workers 12 weeks of unpaid leave for the birth of a child, but no state or federal act had ever offered a benefit with wage compensation. Many people believed that the stress in the first few weeks after birth led to mothers leaving the workforce. But if this stress could be alleviated through wage compensation, many believed moms would be less likely to abandon their careers.
  • This NBER study turned so many heads because the results were the opposite of what was expected.
  • Researchers tracked the California mothers who took PFL in the first months the program was offered and compared them with uncompensated moms just before the benefit went into effect. The results showed that, ten years after giving birth, the compensated moms were more likely either not to be working or to be working in lesser-paying jobs than uncompensated moms. The program thus resulted in more mothers leaving the workforce than staying.
  • So why did the study have such different results than what was expected?
  • The simple explanation is that, thanks to PFL, more mothers were able to spend some time at home with their child--and some discovered that they liked parenting better than their career. People simply misjudged how mothers would react. Sure, PFL may have helped some moms keep their jobs. But apparently more moms responded differently. They figured out how work less and be a mom more.
  • This is the sort of study that can ruffle ideological feathers. The NYT reported that the authors could “feel the air go out of the room” when the researchers first presented their results. The only favorable outcome for PFL, it seems, was a boost in female work participation and female careerism. Apparently, empowering women to become moms was not on the feminist agenda of the policy team that originally drafted PFL. But that's what makes life interesting. It's full of surprises.
• The food service sector is experiencing a jobs boom: Restaurants and bars account for nearly 14% of the new jobs created since February 2010. The fastest growth has been in places serving snacks and nonalcoholic beverages, such as coffee shops and juice bars, where employment numbers have surged 70%. (Bloomberg)
• NH: Yes, restaurants and bars make up 13.6% of all net new jobs created since February of 2010. That's one job in seven. If you count all jobs in the entertainment and leisure sector, you're talking about 17.8% of net new jobs. What do most of these jobs have in common? They are low skill. They are low pay. They are largely non-unionized, with unregulated hours, no health benefits, and no paid vacation. They seldom offer career advancement paths. And they have irregular hours which wreak havoc on workers' personal lives and mental health.
• Sure, that's fine if you're a teenager learning what it's like to hold a job. But teens hold a small and declining share of food-service jobs. In fact, these jobs are aging along with first-wave Millennials working at them into their mid-30s, Xers working at them into their 40s and 50s, and Boomers still needing to support themselves into their 60s and 70s. (See "McDonald's Teams with AARP.")
• Oh, and there's one other thing about food-service jobs: They show little or no productivity growth over time. Which is why these jobs are growing so fast as a share of our economy--just as Baumol's "cost disease" theory would predict. (See "The Great Productivity Slowdown: Fact or Fiction.") Other sectors in this zero-or-negative productivity growth category include healthcare, teaching, construction, retail, and other services. Altogether, these sector account for well over half of net jobs added to the U.S. economy since 2010.
• In time, many of these sectors may be amenable to gradual productivity improvement. Thanks to rapid recent rises in low-skill wages--and to Millennial consumers, who would just as soon not order their breakfast from a real person--automation is beginning to creep into the fast food industry (see “McDonald’s Rolling Out AI-Powered Menus”). Similar signs of creeping automation can be seen at restaurant tables with digital menus or at grocery stores with self-check out stations. Some Japanese restaurants are pioneering the use of robotics in hamburger flipping and salad preparation--even if the Japanese service sector more generally remains woefully inefficient by American standards.
• Still, let's be honest: There's no productivity revolution about to happen here.

• Chicago’s neighborhoods are home to the biggest gap in life expectancy within a single U.S. city: 30 years from one end of the Red Line to the other. Observers say that the differences between the affluent north and the struggling south mostly reflect the effects of extreme racial segregation. (The Economist)
• NH: How do researchers obtain life expectancy data from individual neighborhoods? Good question. It turns out that the CDC takes state-agency reported death certificates, puts them into a computer, and matches the deceased’s address with census track codes. (A census track designates an area smaller than a zip code--i.e., a small neighborhood.) For each track, all of the age-at-death numbers are used to synthesize an age-adjusted mortality rate over several years (in this case, between 2010 and 2015). Those mortality rates are then translated into a neighborhood life expectancy.
• Are these data useful? Well, that depends.
• Normally, life expectancy (or fertility) is calculated at the national level, not for localities. That way, even though you're looking at all ages at one moment, you're still looking mostly at people who were born in the nation and who will later grow older in the nation. Across the entire United States, some people move in or out of the country, but the vast majority stay within the borders.
• But a smaller group like a neighborhood is likely to be more porous: People may be moving in and out all the time. More importantly, the people who self-select as residents or non-residents may be systematically different in terms of age, income, education, race, health, family status, or lifestyle.
• Let’s look at the situation described in the article. Life expectancy in the Streeterville, Chicago is 90 years while the life expectancy in Englewood, Chicago is about 60 years (see chart below). So are we to imagine that people are being born and raised and living all their lives in one place until an average age of 90--and another group is doing likewise in another place until an average age of 60? No, of course not.
• Rather, we should imagine Streeterville as a community that attracts the wealthy, the educated, the successful, and the healthy--advantages that tend to be highly correlated. Less successful residents tend to move away. And we should imagine Englewood as something like the opposite: Those who feel they have no other option stay there--and endure the high unemployment rate, the rampant drug abuse, the scarcity of intact families, and all the criminal violence (this is one of the most dangerous neighborhoods in Chicago). The healthy or educated or industrious residents tend to move out.
• So no, unlike vital statistics for a nation, these numbers don't describe an entire population across its collective lifecycle. That's because few people live their entire lives in one place or the other. But clearly they do reflect a dramatic gap in quality of life between two Chicago neighborhoods--and that ap is breathtaking enough. At a national level, the difference between a 90- and 60-year life expectancy is the difference between living your life as a female in Japan or as a male in Malawi. It's big.

DID YOU KNOW?

O (Artificial) Christmas Tree. Shopping for a real Christmas tree? You’re not alone, but your ranks are shrinking. Fewer Americans are putting up Christmas trees, and those who do are increasingly opting for artificial ones. According to national survey data, the share of U.S. households that purchased a Christmas tree during the holidays fell from 90% in 1989 to 76% in 2018. The percentage of real trees has fallen even faster, from 47% in 1989 to 21% last year. Overall, the number of Christmas trees cut by U.S. tree farmers is down more than 25% since 2012, according to the Census of Agriculture. Artificial trees are a lot more convenient—and what’s more, like the overall population, tree growers and shoppers are aging fast. Many Boomers who used to go to Christmas tree farms with their young children are less likely to put up or wish to maintain a live tree now that their kids are grown.