The pioneering spirit America would do well to revive

For centuries millions moved to find work, but this mobility has declined
Image of Gillian Tett

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Three long decades ago Norman Tebbit, a British politician, became in­famous for saying that in the 1930s his unemployed father “got on his bike” to look for work. It was meant to be sensible advice. But “Onyerbike”, as Mr Tebbit came to be known, sparked fury because many unemployed people did not want to move to new areas.

Echoes of this are playing out, this time in West Virginia. Hillary Clinton has infuriated coal miners in the Appalachian region by suggesting during her presidential campaign that her environmental policies will put “coal miners out of jobs”. She then tried to make amends by highlighting her $30bn plan to promote measures such as retraining; as the Financial Times reported this week, some miners are becoming software engineers.

This sounds reasonable but there is a hitch: Appalachia has few software jobs. So far, former coal miners seem unwilling to get on their bikes — or even into their pick-up trucks.

On one level this seems unsurprising. On another, however, it points to a mystery hanging over the American economy and a policy issue that the next president urgently needs to address.

The US used to be renowned for having a more flexible and mobile workforce than Europe; in previous centuries millions of people travelled in search of land, riches and jobs. But mobility has declined, not just in Appalachia but everywhere else as well. In 1990, for example, economists calculated that more than 3 per cent of the workforce moved across state borders each year; that has tumbled to 1.5 per cent.

The decline has affected almost all ages, educational groups and regions. Indeed, the only highly mobile group are low-skilled Mexican Hispanics: as economists Brian Cadena and Brian Kovak show, Mexican-born immigrants are still moving to find work in big numbers. White unskilled workers are not.

Why? One theory suggests that, when house prices collapsed in 2008, it left millions of households “underwater” on their mortgages, making it hard for owners to sell and move. But this is unlikely to be the only explanation since mobility was already declining in the decade before the crash of 2008, a period when houses were easy to sell.

Policymakers would do well to note an intriguing second theory that emerged this week from the research and statistics group at the New York Federal Reserve: this suggests the problem reflects indirect consequences of demographics. In the past three decades, as Fatih Karahan and Darius Li observe, the proportion of middle-aged workers in the US economy has risen sharply, from 45 per cent to 60 per cent.

Older workers tend to have less desire — or ability — to move. The fact of ageing may partly explain the decline in mobility. But Mr Karahan and Mr Li suggest that, when populations age, younger workers also become less willing to move. Between 1990 and 2010, mobility rates for middle-aged workers fell from 2 per cent to 1 per cent; and, for younger workers, from 5.5 per cent to 3 per cent.

While no one knows exactly why this occurs, the NY Fed economists suspect the trend reflects the fact that companies are “adapting” by becoming more adept at hiring local workers, and Americans are losing the habit of travelling for jobs. “A 10 per cent rise in the share of middle-aged people implies a 30 per cent rise in the share of local hires,” they conclude, arguing that this localisation trend in hiring accounts for 1.2 percentage points of the 1.5 percentage point decline in interstate mobility.

This localisation trend might seem counterintuitive as the internet is supposed to have created a hyperconnected world that makes it easier to connect workers with far-flung jobs. But if the theory is correct — and I suspect it is — it has two big implications.

First, it helps to explain why so many communities find it hard to adapt to wrenching industrial change and the impact of trade. Hence the appeal of Donald Trump’s “America first” sloganeering on the campaign trail.

Second, the unwillingness of workers to travel implies that policymakers need to rethink. Instead of offering retraining, the next incumbent in the White House might need to offer big incentives to companies to move.

The next president may also need a 21st-century version of the 1862 Homestead Act — which offered land to settlers who went west — and find new ways to encourage workers to relocate. It will not be easy. But if mobility keeps falling, the sense of political polarisation and rage in places such as Appalachia will rise. Either way, one thing is clear — whatever happens on November 8 — the wrenching process of industrial change will not go away.

gillian.tett@ft.com

Letters in response to this column

Jobs now require greater literacy and numeracy / From Bertrand Horwitz

Relocation leads to loss of community support / From Ted Gaffney

Why not stay home, where everybody knows you? / From Joel Dobris

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