Americans Are Moving Less, And Not Because of COVID

How a Stagnant Labor Market is Leading to People Staying Put

Jan 08, 2021
Management

SMITH BRAIN TRUST  If it seems like you know few people who have relocated and started new jobs in the past year, it’s probably not simply a result of the pandemic and the resulting economic downturn. It’s a trend that’s decades in the making, says Maryland Smith’s Evan Starr.

The labor market has been largely stagnant for the last 30 to 40 years, and Americans simply aren’t changing jobs as frequently as they used to, Starr says. And the impact goes beyond jobs too. Starr recently discussed the trend on Marketplace Radio.

“When we talk about a stagnant labor market, we’re talking about people not moving jobs and wages that are not rising,” says Starr, an assistant professor at the University of Maryland’s Robert H. Smith School of Business. “We have seen wage gains, but they've come at the very top of the distribution. The lowest 10% of income earners in the US have seen real wages fall by 5% over approximately the last 40 years.”

It’s a sad reality that has been even more severe during the pandemic, Starr says. College graduates and displaced workers have lost out on potential increased earnings from new positions because those new jobs just aren’t happening.

“It's often the case that people get a pay raise by going to a new firm. During the recession, when nobody's hiring, you're less likely to receive those job offers,” says Starr. “I fear that the cohort of students that are graduating right now and those being displaced are likely to see persistent earnings losses in the years to come.”

However, the future is not entirely bleak, Starr says. Successful mitigation of the pandemic could spur an economic bounceback. Many businesses have closed in recent months, but new business applications are growing, driven in part by need-based entrepreneurship – startups launched as people without a job elect to launch a small business instead.

Meanwhile, a growing acceptance of remote work, deemed necessity amid the pandemic, may remove some barriers in the job hunt, Starr says. A Maryland worker’s ability to work for a firm across the country without relocating may help reduce friction in the labor market.

It’s unclear whether the trend will be a net positive, Starr says, as lifting geographical constraints could vastly increase competition for positions. But it will play a role in the long recovery ahead.

For more, read Marketplace’s “Number of Americans Moving Homes Hit Lowest Level in 73 Years.”

 

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About the Expert(s)

Evan Starr

Evan Starr is an Assistant Professor of Management & Organization at the Robert H. Smith School of Business at the University of Maryland. He received a Ph.D. in economics from the University of Michigan and a bachelor's degree from Denison University. He originally hails from Claremont, California. Starr's current research examines issues at the intersection of human capital accumulation, employee mobility, entrepreneurship, and innovation.

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