Peak Neoliberalism: Wall Street Journal Pearl-Clutches Over Lack of Mobility Due to High Housing Costs, Insufficient Pay

It’s telling when a mainstream outlets like the Wall Street Journal is alert enough to notice an impediment to groaf, yet seems unable to follow its evidence to the logical conclusion. The whinge of the day is how American mobility has fallen. In this story, that means physical mobility, as in moving to a new residence, as opposed to far more important income mobility, Keep in mind that for nearly a generation, there has been none in the bottom in the 40%. If you are born into a poor or near-poor family, the odds of being able to move up the food chain are very small.

The focus on physical mobility means the Journal is conflating two sets of issues. One is households simply wanting to trade up or down: families with kids wanting a bigger dwelling, oldsters seeking smaller digs, as well as needing to seeking to lower housing costs due to job loss, divorce, or disability. The second is that people are less willing to move (by implication, out of area) for career reasons. The paper decries that the latter will hurt American vibrancy. But look how it conflates completely separate issues:

Americans are stuck in place.

People are moving to new homes and new cities at around the lowest rate on record. Companies have fewer roles for entry-level workers trying to launch their lives. Workers who do have jobs are hanging on to them. Economists worry the phenomenon is putting some of the country’s trademark dynamism at risk.

Help me. A dearth of starter jobs and employees fearful of job loss is a sign of a faltering economy. The lack of “dynamism” is an effect, not a cause. One can argue that this is simply the logical outcome of the war against labor. We highlighted a recent Journal story in which CEO were celebrating continued headcount reduction. It was now a point of pride, as opposed to a probable sign of operational or market problems.

We see more category errors later in the article:

For generations, Americans have chased opportunity by moving from city to city, state to state. U.S. companies were often quicker to hire—and to fire—than employers in other parts of the world. But that defining mobility has stalled, leaving many people in homes that are too small, in jobs they don’t love or in their parents’ basements looking for work.

First, this is of questionable accuracy. Job tenures were much longer when I was young. I recall that a partner who joined McKinsey in the 1970s from industry said the firm looked at him a bit askance because he had changed companies after 10 years. I have not checked recently, but before Covid, average job tenures were barely over 4 years. It was companies that were moving people about back in the old days, and not employee wanderlust that was driving out-of-city relocations back then.

Second, being “stuck” as the prototypical growing family with not enough house has nada to do with moving from city.

Third, being unable to move out of one’s parents house is proof of a basic failure of our economy as presently organized, to deliver adequate paying work to those who want to work.

So aside from a weak job market, we have the “AI is coming for you” raft of stories leading job incumbents to hang on for dear life, and employers in certain once-important-to-new-grads fields sharply cutting back on hiring, again presumed due to AI. However, as yours truly has pointed out for over 15 years, Slashdot would every six months or so, feature a piece from a community member lamenting his inability to land an entry-level position and seeking advice from greybeards. They generally could offer only solace, not leads.

The Journal does, remarkably, point out that pay is often too low compared to local living costs. Are these new hires expected to continue to live with their parents? From the article:

Josue Leon, who recently graduated from the University of Pennsylvania with an engineering degree, applied for over 200 jobs since April, piling up credit-card debt and living in his girlfriend’s family’s home. In many cases, he didn’t even get a reply.

“It’s been a nightmare,” he said.

But when the Fort Worth, Texas, resident finally got a job offer, he turned it down: The job would have required a move to Massachusetts, the company didn’t offer relocation assistance and the five-figure salary wouldn’t stretch far.

“Moving to Massachusetts with almost no money is very difficult,” Leon said. Eventually he landed a job as a magnet technology engineer in Fort Worth, keeping him close to home.

How can an economy be depicted in a healthy state when it won’t pay an approximation of a living wage to a college grad with a supposedly prized STEM degree from a good school?

The article later makes a point oft stated right after the crisis, that your pay right out of college tends to set your career income trajectory. Those who start out lower than you “ought” to, nearly all wind up at permanently lower pay levels than recent norms. After the crisis, when unemployment among new grads was well over that of high-schoolers and many were taking jobs at well below their skill and credential levels. Even if they got back on a professional career track, the initial years at lower compensation set them back in terms of lifetime earnings. As the story notes:

Recent college graduates who are underemployed are more than three times as likely to be underemployed a decade later than those who quickly secure a good job, a recent study by the Burning Glass Institute found.

The article does not follow up on Leon’s unhappiness over the lack of mobility assistance. When I got my job at Goldman, they paid for my flight from Boston, where I had gone to school, to New York City, as well as reimbursed my (modest) moving costs. I have no idea if this practice has fallen by the wayside. But more generally, moving bennies were far more common in the days when IBM meant “I’ve been moved” and corporate America was fond of relocating mid and top level execs. My father even had a loss on house sale reimbursed when he was transferred after only 18 months, although it took a lot of kvetching to prevail.

The willingness to uproot for career opportunities has fallen, although the biggest driver is the rise in two-career families. And the data the Journal presents actually does not much support the contention that workers are not willing to move for career reasons. Look how flattish the lines at the bottom of the chart are, for moving out of county or state. A move within a county is vanishingly unlikely to be for work reasons:

Admittedly the Journal does provide some evidence of a big shift….before the time period above:

In the 1950s and ’60s, some 20% of Americans would typically move each year.

The share of people moving has steadily slowed since then, in part because the U.S. population has aged, and older people tend to move less. More Americans also live in households with two earners, which makes uprooting more challenging.

By 2019, the year before the Covid pandemic, 9.8% of Americans moved.

Journal readers regarded the impediments to moving for job reasons as obvious. From the commments:

A Jogaleka
This is not a new phenomenon. American mobility has been decreasing for at least a generation. In a nutshell, America has simply become unaffordable. Inflation, house prices, groceries, education, everything has skyrocketed while wages have stagnated, so what do we expect?

But let’s go back to the unstated assumption: that moving is good. Having attended nine schools before I graduated from high school, I disagree vehemently. It did not occur to me until my late 20s that I might have relationships that would endure over time. My parents had virtually no friends during these frequent moves.

And it’s not just a matter of friendships. Living near relatives often provides a practical and financial support network. One reason mothers are now so dependent on child care is not many live near grandparents or aunts/uncles who can assume some of the child care duties.

On top of that, buying and selling houses chews up a high percentage of your equity. If you assume 25% equity, between brokerage fees, points, closing costs and even modest fix up, you are easily at 7% of the sale price. There’s a reason, as Matt Stoller pointed out, that the old model of housing as forced savings presupposed stability, as in a laborer or professional in the same house during his employed years, gradually building up equity as he paid down a 30 year mortgage.

To put this more bluntly, the lack of employer attachment to workers, and vice versa, employees understandably feeling no loyalty, is packaged as a weird virtue of mobility. If you’ve ever been a boss, you know that turnover is disruptive and it cost money (identifying and vetting candidates, sometimes paying search fees, training and/or “newbie is less productive” costs).

But the Journal would have you believe lower job turnover is a bad thing:

“Switching employers” is so anodyne, as if this pattern was the result of employee opportunism, when the description of the data suggests that it includes hard and soft firings too (like not giving bonuses or corporate acquisitions that mean high odds of employees of the purchased company being turfed out).

Aside from the increasingly hostile pay and perks environment for workers, the Journal also pussy-foots around the fact that housing is increasingly unaffordable, which is a barrier to trading up and even trading down. The article does mention that, but comparatively late, and it comes off as an afterthought:

For much of the 2010s, a median-income family who bought a median-priced home spent 30% or less of their earnings on housing costs, according to brokerage Redfin. That share is now 39%. Last year, home sales fell to the lowest level in almost 30 years.

So we have a world where most married couples have both partners working, housing and other expenses mean most workers are barely getting by, employers merrily squeeze worker pay and now have the threat of AI to hold over their heads….yet this article has a complete lack of agency, as if these conditions just dropped of the sky, as opposed to are the result of more and more capitalist extraction.