There is no place like home – and the job market has to adapt

Conventional economic thinking tells us that people go where the jobs are. In America, there is a long history of expanding westward in search of opportunity. In the UK, Margaret Thatcher’s employment secretary Norman Tebbit liked to talk to people about her unemployed father “Got on his bike and looked for work, and he kept looking until he found it. Obviously, it’s easier to find work when you’re mobile. But what happens when people can’t or don’t want to move to where the jobs are?

This is an issue that US policymakers are focusing on following the job destruction linked to the pandemic. Covid-19 has affected different groups of people in very different ways, with virtual knowledge workers doing much better than those in professions requiring face-to-face contact. Statistics showing a decrease in income inequality during the pandemic are misleading, some academics say, because they reflect the government’s short-term policy responses, such as handing out stimulus checks. In the longer term, it is quite clear that the nature of the work will change drastically, with the possibility that a lot of other work will be done anywhere – be it Bangalore or Bangor.

This can open a new globalization white collar labor markets, which could benefit workers emerging markets that are progressing digitally, but could also put pressure on the workforce in richer countries. On the flip side, American workers who cannot afford housing, babysitting, and schooling in expensive coastal cities could move to one of the cheapest cities. “Zoomtowns” which increased during the pandemic.

It is not yet clear how this arbitration will unfold for employment, place and work. But what we do know is that location is much more important in terms of the labor market than we once thought. Economists have traditionally thought in terms of people, not geography. But a more location-based approach to job creation is gaining momentum. Research shows that communities adapt very differently to economic downturns, so a variety of tailored approaches are needed – rather than simple policies designed to create job growth at the national level – to make it happen. face.

Harvard and Berkeley economists have, for example, shown that intergenerational mobility varies considerably across the United States. A 2014 study showed that the odds of a child born in the 1980s reaching the top quintile of the national income distribution, starting from a family in the bottom quintile, was 4.4% in Charlotte, Carolina. from the North (not a backwater, but a southern service center). In contrast, the same group’s odds from San Jose, Calif., Were 12.9 percent. Higher mobility areas like San Jose had a combination of less residential segregation, less income inequality, and better elementary schools. They also had greater social capital and greater family stability.

The point on social capital is extremely important. Think about the book Hillbilly Elegy, when workers without a college degree lose their jobs, they tend not to relocate, but to cling to the little social capital that exists in their home or community. The facts support this account. As “Chinese shock” Authors, economists David H Autor, David Dorn and Gordon H Hanson found that classic economic assumptions about labor market adjustment in response to trade and technology-related job displacement have not held true in the past. in recent decades. “For reasons that economists still do not understand,” writes Hanson in Foreign Affairs Recently, less educated workers “rarely choose to move elsewhere, even when local market conditions are bad.”

The result is localized recessions and the dangerous politics that go with them. What to do about it? For starters, Hanson and many experts are arguing for greater protection for workers in areas undergoing particularly dramatic change, through trade aid. But again, the solutions must be local, not universal. Some people may need money to pay their bills, while others want to retrain or get help finding a new job. All of this should be done in conjunction with assistance from the private sector. When the pandemic hit, European governments did a better job of keeping people working because they worked with the private sector on short-term work programs and wage subsidies. American companies have simply fired people and left them to fend for themselves.

This raises the point that any government subsidies or municipal and regional incentives must be designed to benefit both businesses and workers. Subsidies given to companies to attract employers to besieged cities tend to be erode the tax base and not to help regions in difficulty in the longer term. This is something the Biden administration needs to think carefully about when re-examining Trump-era “zone of opportunity” tax breaks.

Ultimately, a better education is the best buffer for the job. Would love to see a high-tech version of high school vocational programs that the Liberals recklessly thrown in the 1970s i was concerned that poor kids would end up becoming welders and wealthier, say, opinion columnists (on this point i would just like to note that my plumber in brooklyn earns more than i do at the FT). We need both liberal education and workplace learning, and today there are models that combine the two – like the P-Tech program, which has expanded nationally and internationally.

Even in a globalized world, place matters. We need to create jobs. But we also have to get them to where the people are.

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