5. The Inequality of Mobility and Cost of Living

AMERICANS HAVE HISTORICALLY been an unusually mobile people, constantly seeking better economic conditions. Yet this process of geographical readjustment is not perfect. In fact, it is highly uneven. Even if everyone is completely free to move to look for a better life elsewhere, not everyone takes advantage of the opportunity. As it turns out, this has profound implications for inequality in America.

In Italy, where I grew up, most people spend their entire lives in the city where they were born, which is often the city where their parents were born. Young Italians are particularly immobile. In a study published in 2006, I calculated that Italians tend to live with their parents until quite late in life: 82 percent of Italian men between the ages of eighteen and thirty still live at home. And when they do leave the parental nest, they do not move far away. Young people commonly get an apartment in the same neighborhood as their parents, often in the same building. While Italians may be an extreme case, Europeans are generally much more geographically rooted than Americans. Compared with people in most other developed nations, Americans are outliers. The Great Recession has temporarily slowed Americans’ mobility, but once the economy rebounds, people will start moving again.

 This willingness to relocate is a large factor in the country’s prosperity, and it always has been. Tocqueville remarked in the nineteenth century that “millions of men are marching at once toward the same horizon; their language, their religion, their manners differ; their object is the same. Fortune has been promised to them somewhere in the west, and to the west they go to find it.” In the late nineteenth and early twentieth centuries, migration from rural communities to urban areas provided the crucial labor that fueled the expansion of America’s mills and factories. The economic historian Joe Ferrie, one of the foremost experts on this issue, noted that migration “facilitated the exploitation of natural resources at locations distant from the narrow band of initial settlement on the Atlantic coast. Farmers moved to more fertile land in the Ohio River Valley in the late eighteenth century and on to the Great Plains by the middle of the nineteenth century. And mineral and timber resources were worked by migrants to the West and the Northwest. By the Civil War, much of the gap in wages between the West and the East in the Northern states had been erased.” More than that of any other developed country, America’s population has always been on the move, chasing the next opportunity. Using a detailed data set painstakingly assembled from original entries in historical censuses, Ferrie estimated that even in the nineteenth century, Americans’ propensity to move was twice that of residents of Great Britain or Japan in the same period.

Today about half of American households change addresses every five years, a number that would be unthinkable in Europe, and a significant number relocate to a different city. About 33 percent of Americans reside in a state other than the one in which they were born, up from 20 percent in 1900. This staggering degree of mobility has both positive and negative effects. On the one hand, moving has social and personal costs. Americans tend to live farther from their parents and siblings than Europeans. When they have children, they are less able to rely on their family for help in raising them. They are less attached to their neighborhoods and less familiar with their neighbors. But there are also advantages to mobility: if the economic conditions in a region are not particularly good, Americans are apt to look for better opportunities elsewhere. By contrast, Italians and other Europeans tend to stay put. At the individual level, Italians are giving up career opportunities and higher salaries to be close to their parents and friends. At the national level, this immobility worsens the unemployment problem and lowers overall job and income growth. In some regions of Italy (typically in the north), there is an abundance of high-paying jobs and virtually no unemployment. In other regions (typically in the south), there are very few jobs, low salaries, and high unemployment. By not moving north, young Sicilians and Neapolitans effectively increase the unemployment in their region, a situation that leads to less prosperity and stunts Italy’s potential for growth.

 Although Americans as a whole have always been much more mobile than Europeans, there are large differences among them, with some groups much more willing to move than others. At the time of the Great Migration in the 1920s, when more than 2 million African Americans abandoned the South for industrial centers in other regions, less educated individuals were more likely than others to migrate in search of better lives. Today the opposite is true: the more education a person has, the more mobile she is. College graduates have the highest mobility, workers with a community college education are less mobile, high school graduates are even less, and high school dropouts come at the bottom of the list.

 In this respect, American high school dropouts are more similar to Italians than to American college graduates. And it’s not because of a lack of opportunities. The United States is a large and diverse nation, and it is always possible to find cities and states that are doing better than others. These geographical differences can be very large. In 2009, at the peak of the Great Recession, unemployment in Detroit reached 20 percent, while unemployment in Iowa City, about 500 miles west of Detroit, was only 4 percent. The experience of unemployed workers in the two cities could not have been more different. A 4 percent unemployment rate is so low that economists consider it effectively zero for all practical purposes. It means that anyone looking for a job in 2009 could have found one in Iowa City in a short time, but finding a job in Detroit could have taken years. These staggering geographical differences are not just specific to periods of recession. Even in more normal times, unemployment in Detroit can be double the rate in fast-growing cities. And yet, unemployed people in Detroit do not all leave at the same rate. While college graduates are streaming out of that city, the flow of high school graduates is much slower, and the flow of high school dropouts is a mere trickle.

In total, almost half of college graduates move out of their birth states by age thirty. Only 27 percent of high school graduates and 17 percent of high school dropouts do so. These differences in mobility rates reflect the fact that some attend college out of state, but they mostly reflect differing propensities to look for work elsewhere. Using data from millions of individual histories from the economic census, the Notre Dame economist Abigail Wozniak matched workers in their late twenties to the economic conditions they faced in their state when those workers were eighteen and about to enter the labor market. Some of these young workers were fortunate and entered the labor market in states that, at the time, had a strong economy; others were less fortunate and entered the labor market in states with a weak economy. While being fortunate or unfortunate had little to do with schooling, how these young workers reacted to their fortune largely depended on their education. Wozniak found that among those who entered the labor market in bad times, a large portion of the college graduates relocated to states with stronger economies, while the majority of the high school graduates and high school dropouts did not move.

This implies that the job market for professional positions is a national one, while the job market for manual or unskilled positions tends to be more localized, so that people ignore good job opportunities in other cities. This is not just an American phenomenon but almost universal among rich countries. In the United Kingdom, the unemployment rates of highly educated workers in different regions are similar, because the high propensity to migrate tends to equalize job opportunities across regions, while the unemployment rate of less educated workers is vastly different. When Europeans are asked by pollsters whether they are “attached to their town or village,” the number answering that they are “Not at all attached” or “Not very attached” is high in countries such as Finland, Denmark, and the Netherlands, which have high average educational levels, and low in countries such as Portugal and Spain, which have low average levels of education.