A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Feb 15 2017

Moving for Work Not Really an Option for Many

ECRI has long cut through the happy talk regarding the labor market during the Obama administration, and last November showed that, since the pre-Great Recession employment peak in November 2007, “Whites, who made up over 81% of the labor force in 2007, accounted for negative 9% of the net job gains.” While at the time this insight confused many economic observers, it helped explain the election outcome.
Geography is a key reason why Whites have fared so poorly over the past couple of expansions. Most job gains, especially post-Great Recession, have been in metropolitan areas, while the recovery has been meager in nonmetropolitan areas, where the population is overwhelmingly White. Those nonmetropolitan areas are also where the manufacturing jobs, swept away in the “globalization tsunami,” were largely based.

After the Great Recession, employment rebounded much earlier in metropolitan areas, with metropolitan employment bottoming in late 2009 (chart, dark blue line), while nonmetropolitan employment did not trough until mid-2011 (light blue line). Moreover, the recovery was much stronger in metropolitan areas, where employment has increased by almost 14 million jobs since late 2009. In contrast, nonmetropolitan employment has risen by fewer than 1½ million jobs.

An obvious solution would be to move to a metropolitan area with greater economic opportunity, but this is not a realistic option for many people. First, most Americans do not have even $1,000 in savings, so the cost of moving, then paying a security deposit and first month’s rent — assuming a landlord would rent to someone without a job — would quickly exceed any available savings. Separately, many social services do not transfer across state — or, in some cases, county — lines, meaning the potential loss or disruption of health insurance or other benefits. Lastly, if they have children, they may be moving away from a familial support system, and would then have to pay for child care out of pocket. In most cases, moving is actually a Herculean task.

As a result, despite the lack of economic recovery for Whites in nonmetropolitan areas, the barriers to moving to metropolitan areas are often insurmountable, so that many are stuck where they live, perhaps with health insurance and family support, if not a job.

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