Worker mobility heralds economic comeback
When David Pendery, a corporate public relations specialist, decided to move his family from Colorado to Illinois this year for work, his biggest worry was whether he would be able to sell his home quickly.
It took three days.
“We certainly thought selling our house would take longer,” said Pendery, who started in February at Kerry Ingredients, a flavoring provider for the food and beverage industries.
Pendery's experience might be on the extreme side, but his case could be a sign of a revival in one of the historical advantages of the job market: the ability of workers to go where the jobs are.
For much of the past five years, falling house prices effectively locked people in their homes, since many were “underwater” — owing more on their mortgages than they could raise by selling.
And double-digit unemployment across much of the nation meant there were few jobs to move for anyway.
That might be changing. While far from their 2006 peak, home prices in major metropolitan areas have been rising since early 2012. If that persists, it should make it easier for Americans to move and for employers to match job seekers with available jobs, lowering the jobless rate and increasing overall economic productivity and growth.
“Until the real-estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes,” said Jerry Funaro, vice president of global marketing for TRC Global Solutions, a domestic and international relocation service based in Milwaukee.
Housing added to growth last year for the first time since 2005, and single-family home prices recently notched their biggest annual rise since mid-2006.
Increased hiring, meanwhile, pushed the jobless rate down to 7.5 percent in April, its lowest in more than four years.
“The lack of housing mobility has been a serious detriment these last few years and, frankly, is something we haven't seen much of since the Great Depression,” said Russell Price, senior economist at Ameriprise Financial Services in Troy, Mich.
While mobility is not as robust as it was before the crisis, Price said the economic cycle is “about at the point where these types of structural employment problems start to fall away.”
The U.S. Census Bureau found that the number of people who moved last year rose to 35.6 million, pushing the overall mover rate to 12 percent from 2011's record low of 11.6 percent, the first rise in four years. Long-distance moves ticked up as well.
“It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news,” said William Frey, a demographer at the Brookings Institution in Washington.
Of course, housing is far from fully healed. More than 20 percent of mortgages are underwater and foreclosure rates remain elevated. On average, home prices nationally are back at levels seen in the fall of 2003 but well off their 2006 peak.
Not all regions are booming, either. Florida and Las Vegas, areas hit especially hard when the housing bubble burst, still face challenges, several firms said.
While growth picked up in the first three months of 2013, some worry that higher payroll taxes and government spending cuts could slow momentum.
That is keeping some firms “hesitant and cautious” about moving workers, said Richard Smith, chairman and CEO of Realogy, owner of the Danbury, Conn.-based global relocation firm Cartus, which recorded a 4 percent decline in relocations in the first quarter.
Companies “are still relocating employees but perhaps not as robustly as they would otherwise,” Smith said on a recent conference call with investors. Cartus did register a 10 percent jump in broker referrals, suggesting things might be improving.
Tight bank lending standards, cost-of-living variations and a rise in two-earner families also present difficulties for job seekers, said Ellie Sullivan, vice president of consulting at Weichert Relocation Resources in Morris Plains, N.J.
But Sullivan said things are moving in the right direction.
“We are starting to see a pickup in activity, especially among new hires,” she said. “I don't know if it's contributing to hiring across the board, but I do think it improves mobility, because employees are not tethered to their houses.”