Are Expanded Unemployment Benefits Keeping Americans From Moving To Find Work?

It’s not exactly news that millions and millions of Americans are out of work right now, or have less work than they want/need to support themselves. It’s a chronic problem that has plagued the country throughout most President Obama’s term in office.

But what is news is that the Federal Reserve Bank of Minneapolis has found that Americans are moving less to find work. According to this article, from the 1990’s to today the number of American interstate moves has been cut in half.

“There has been a large downward trend in mobility that goes back at least a few decades and (it) has been there as prices go up and down,” Sam Schulhofer-Wohl,  director of research at the Federal Reserve Bank of Minneapolis, told Minnesota Public Radio.

So what’s the explanation? Some say the problem is the collapse in home values. People who are underwater on their home mortgages can’t exactly afford to sell them, take the loss, and move on. So their homes are anchoring them where they are at. Schulhofer-Wohl says the problem is that labor markets are becoming more uniform. “The kinds of jobs you can get and the money you can earn varies less around the country than they used to,” he said. “There’s less reason to move because of the kind of job you can get.”

These are both plausible factors, butI’d suggest a third: Expanded unemployment benefits reduce incentive to find work in general, including moving to find work.

One of the policies pushed by Democrats during America’s recession was an expansion of unemployment benefits. But longer duration of unemployment benefits correlate with longer durations of unemployment. The benefits make it more likely that workers will stay unemployed for longer.

If we’re already removing incentive to return to the work force, it follows that we’re also removing incentive to move to find work.

That’s a big problem. Especially for states like North Dakota which have a chronic labor shortage. In fact, North Dakota’s leaders have launched a marketing campaign to try and lure more workers to the state. Unfortunately, they’re dealing with headwinds in the form of federal policy that makes it less likely that unemployed workers will seek work.