May 21, 2016
Arthur Brooks, the the president of the American Enterprise Institute, used his NYT column to complain that people in the United States were not moving enough. He argues that people were reluctant to move from depressed areas of the country to the growing areas which offer more opportunities. Ironically, his examples of prosperous areas and sectors were based on badly outdated information.
Brooks tells readers:
“We might expect movement from a high-unemployment state like Mississippi (unemployment rate: 6.3 percent) to low-unemployment states like New Hampshire (2.6 percent) or North Dakota (3.1 percent). Instead, Mississippians are even less likely to migrate out of the state today than they were before the Great Recession hit.”
While New Hampshire’s economy (with total employment of 660,000) still seems to be healthy, North Dakota has lost 3.8 percent of its jobs over the last year. While Brooks might expect people from Mississippi to move to leave their family and move to a frigid state whose economy is collapsing with the oil bust “we” probably don’t.
Brooks continues in this vein:
“There has also been a decline in blue-collar skills, like welding on a pipeline, that often require moving. This has created a needs-skills mismatch, with companies desperate for skilled tradesmen sitting alongside idle workers.”
The link is to an article from March of 2014 which discusses the surging demand for welders as a result of the oil boom. With the bust, employment in the mining sector has collapsed. According to the Bureau of Labor Statistics, employment in mining has fallen by 132,000 (15.7 percent) in the last year.
The more general point about a serious needs-skill mismatch was never supported by the data. The way we know there is a shortage of workers with a particular skill is that wages in that occupation rise rapidly, as employers attempt to get workers to fill vacancies. There were/are no major occupations seeing rapidly rising wages, which means that there are no major areas with shortages of workers.
The moral of this story is that the main problem with the labor market continues to be weak demand overall. This is remedied by either the government spending more money or reducing the trade deficit. If a strong economy lead to vibrant labor markets in certain regions, it is likely that people would move there. (Better government support for such moves would be beneficial.) However no one should be surprised that people are reluctant to move across the country in pursuit of phantom jobs.
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