Why Aren't People Moving in America Anymore?

By Matthew O'Brien
There's a connection between certain places and certain jobs. Silicon Valley is to tech what New York is to finance what Detroit is to cars. Call it the Synecdoche Economy. It's what Paul Krugman dubbed the new economics of geography: small differences beget more differences that become big differences. Regions specialize -- or do they still?

Maybe not quite as much. Silicon Valley still does computers, New York still does trading, and Detroit still does automobiles, but all of us do a whole lot less of one big thing -- moving. Consider that gross interstate migration has halved in just the past two decades, as the chart below shows. 

Now, less migration doesn't tell us that there's less specialization, but it does tell us there are less regional differences among job openings and pay. In other words, you can pretty much find the same work for the same wage whether you live in Texas or New York. That's what Greg Kaplan of Princeton and Sam Schulhoffer-Wohl of the Minneapolis Fed found in a recent paper that tries to explain our less peripatetic ways. The chart below looks at job variation across states -- the lower the number, the less variation -- over the past four decades. Welcome to the Homogenous States of America.

It's not just jobs that are the same across states. Wages are too. Kaplan and Schulhoffer-Wohl find there's been less variance between states among industry-specific average wages. In other words, there's less reason to move for work. That's even more true when it comes to moving to find out if you want to move, which isn't as tautological as it sounds. Before the age of cheap travel and Facebook, nomadic twentysomethings were more likely to move somewhere to find out if they wanted to live there. That's not to say that doesn't happen now, just not as much -- there are fewer serial movers nowadays.

If people aren't moving for jobs, why are they moving? Well, it has to do with something that is too damn high. As Ryan Avent and Matt Yglesias have pointed out, land zone regulations senselessly restrict housing supply in many big cities, pushing up rents. These higher costs of living often make higher-paying jobs in New York or San Francisco less attractive than slightly lower-paying jobs in the Sun Belt. The more wages converge, the more this will be the case. This is really a story about the rise of cities. The more cities dominate the economy, the more uniform the economy becomes, and the more quality of life rather than job matters. 

There is no red state economy or blue state economy, but a city economy.

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