During a recession, most people hunker down and ride out the storm. Some hide in the sanctuary of higher education and hope for a better labor market a few years in the future. Dual income households with children might keep one parent at home and save on childcare costs (among other obligations). That’s the rule. But in the places faring the worst, an exceptional exodus ensues. Not this time:
While sociologists and demographers are just beginning to grapple with the fallout from the foreclosure crisis — no one even knows for sure how many Americans were foreclosed, though the best estimates are about 10 million — it’s clear that most of the displaced have stuck close to home.
That’s unlike the 6 million African Americans who moved during the Great Migrations, which lasted from about 1910 to 1970. They headed to cities in the North, Midwest and West, generally. The 2.5 million people who became part of the Dust Bowl exodus tended to head west, too, often to California.
But in the Great Recession, there has been no exodus. No masses have streamed across state borders. At the height of the recession, from 2009 to 2010, only about 10.5 million people moved outside their counties, according to the Census Bureau — the lowest proportion since the bureau started tracking the number in 1947.
Instead, the displaced likely moved within their towns and cities. In 2010, the number of local moves increased sharply, to 24.2 million, the highest level in a decade, according to a study by Michael Stoll, professor of public policy at UCLA. Nearly a quarter of them moved for cheaper housing. …
… “Paying the costs to move [across regions] without a guarantee of employment just doesn’t make sense,” says Stoll. As a result of the United States’ steady economic decline, perhaps, the percentage of moves that are local is increasing. From 1981 to 2005, between 59 percent and 65 percent of moves were local. By 2010, however, 73 percent were.
Another reason people stayed close to home is that the recession was so broad. Most regions were hit, and from a job searcher’s perspective, there were few green pastures to be found. During previous downturns, some states, including Florida and Texas, received a huge influx of migrants. Not this time: “There was no good place to move to, and some reason to stay,” Stoll says.
Emphasis added. I blog about the great exodus from Pittsburgh that came on the heels of the recessions of the early 1980s. I was a young adult during the bust prior to the dot-com boom. Word on the road was that there were jobs to be had in Minneapolis and Seattle. I made my way to the former, leaving Vermont behind. Those two cities really took off as the economy picked up steam. Washington, D.C., benefited the most from reordering in the wake of the dot-com bubble bursting. For those looking to move in order to improve, there was a place to land.
That’s not to claim there isn’t a place to land post-Great Recession. Everyone continues to head to Texas. Portlandia beckons. Snowbirds still enjoy golf and sunshine in January. Missing is the reorder, the next Seattle.
That’s not to say there won’t be a next Seattle. Sticking out my thumb, the winds of fortune might take me to Nashville or Salt Lake City. A few years come to pass before the press catches up with a black market migration. Yesterday’s numbers are tomorrow’s news.
The more I lean on the past, the dumber I become. Up is down. “Virtue becomes vice and prudence becomes folly“:
Larry explicitly invokes the notion of secular stagnation, associated in particular with Alvin Hansen. He doesn’t say why this might be happening to us now, but it’s not hard to think of possible reasons.
Back in the day, Hansen stressed demographic factors: he thought slowing population growth would mean low investment demand. Then came the baby boom. But this time around the slowdown is here, and looks real.
Think of it this way: during the period 1960-85, when the U.S. economy seemed able to achieve full employment without bubbles, our labor force grew an average 2.1 percent annually. In part this reflected the maturing of the baby boomers, in part the move of women into the labor force.
This growth made sustaining investment fairly easy: the business of providing Americans with new houses, new offices, and so on easily absorbed a fairly high fraction of GDP.
Now look forward. The Census projects that the population aged 18 to 64 will grow at an annual rate of only 0.2 percent between 2015 and 2025. Unless labor force participation not only stops declining but starts rising rapidly again, this means a slower-growth economy, and thanks to the accelerator effect, lower investment demand.
By the way, in a Samuelson consumption-loan model, the natural rate of interest equals the rate of population growth. Reality is a lot more complicated than that, but I don’t think it’s foolish to guess that the decline in population growth has reduced the natural real rate of interest by something like an equal amount (and to note that Japan’s shrinking working-age population is probably a major factor in its secular stagnation.)
We’re turning Japanese, I really think so. The younger migrate. The older do not. The better educated seek greener grass. All that takes a backseat to a new economic paradigm. New house, new offices, and so on for whom? Nobody.
