By Bob Sanchez, JMI Policy Director
Posted January 5, 2012
One puzzling feature of the current “jobless recovery” is that thousands of jobs remain unfilled while thousands of qualified workers remain jobless. Although the unemployment rate has dropped slightly – in part because many discouraged workers have left the labor force — the anemic pace of job creation is insufficient to absorb the college grads and others who are still entering the labor force.Observers have cited various factors for the lack of hiring. Some say it’s because unemployment benefits – recently extended yet again – provide a disincentive for the jobless to seek work. Others say it’s because of a mismatch between the skills the nation’s workers have and the skills their potential employers need. Are our colleges graduating too many anthropologists and not enough engineers? Perhaps. Do too many high school grads head straight to college when vocational training may have been a better fit and offer a better return on their investment of time and money? Maybe so.Still other observers claim that many employers who’d like to hire are taking a wait-and-see attitude because they’ve been spooked by the uncertainties created by Obamacare and by other troubling signs, including a series of pro-union edicts issued by the National Labor Relations Board. Sounds plausible.Yet economist Jeff Thredgold points out yet another reason for the jobs paradox: Workers who in the past might have relocated to places with abundant job opportunities are now essentially trapped in their homes. Indeed, the chance for most workers to sell their homes for a profit – or even for more than they owe – simply doesn’t exist right now. This means that the geographic circle within which jobless workers may sensibly seek employment is circumscribed by the distance they’re willing to commute from their current home. In short, what was once an economic asset has become an economic albatross.It’s more than a real estate problem. By hampering workers’ mobility, it’s also interfering with a time-honored American tradition in which folks who learned of places where the grass was greener pulled up stakes and moved – whether from the crowded slums of America’s big cities to the gold fields of California, the corn fields of Iowa, and the oil fields of Texas — or away from the cotton fields of Mississippi to the assembly lines of Detroit.Mr. Thredgold elaborates:
“One of the common developments in ‘the olden days’ of five years ago and earlier was the concept that American workers typically had the ability to be mobile…to move from one geographic area to another…from one state or city to another…in order to fill an open employment position. … That was then…this is now.
“The movement of Americans is at its lowest level since World War II. Weak housing markets of the past 4-5 years now find millions of people buried in their homes, with no chance of selling at a profit. Note that roughly one out of every four homeowners across the nations is ‘underwater’ on their home…they owe more on their mortgage than the home is worth….
“This has profound implications for the American economy, with perhaps the greatest impact on manufacturing firms around the nation. A recent survey conducted by Deloitte & Touche and The Manufacturing Institute noted that American manufacturers cannot fill 600,000 skilled positions, or 5% of all current manufacturing jobs (NADCA)….
“The survey showed that 67% of manufacturers have a moderate to severe shortage of available, qualified employees … The survey also noted that 64% of manufacturing executives lament the lack of skilled workers, which is making it more difficult to expand their operations or boost productivity.”
Mr. Thredgold also takes notice of another recession-related problem, one of particular interest to Floridians:
Mr. Thredgold also takes notice of another recession-related problem, one of particular interest to Floridians:
“The lack of mobility has also had a major impact upon traditional retirement locales such asArizona,Florida, andNevada. If people can’t sell their homes in colder climates following retirement, they can’t easily move to warmer destinations. This reality has contributed to the real estate busts or painful price corrections in one retirement community after another — inPhoenix, inTucson, inSan Diego, inLas Vegas, inMiami, inNaples, etc. of the past four years.
“It has not been unusual to see initial home or condominium prices down 40%, 50%, 60% and sometimes more in these communities.
The old mindset for a retirement community developer was ‘if you build it, they will come.’ The mobility issue rendered that view flawed in recent years.”
To read more of Mr. Thredgold’s insights on this and other economic issues, check out his website: http://www.thredgold.com/tea-leaf/. Meanwhile, it’s obvious that a real estate recovery means more than a bunch of guys with hammers and saws getting back to building homes. It’s also essential for a restoration of mobility for millions of workers and retirees who are now trapped in their homes and therefore not free to move away to take a job.
2012
