Migration around the U.S. slowed to a crawl last year, especially for this decade's boom towns, as a weak housing market and job insecurity forced many Americans to stay put. Demographers say the dropoff in migration, shown in Census data to be released Thursday, is among the sharpest since the Great Depression. It marks the end of what Brookings Institution demographer William Frey calls a migration bubble.
Migration typically slows during recessions. But in past downturns, the slowdown has been more regional in scope, with workers fleeing weaker job markets for places where companies were still hiring. In the deep 1980s recession, for instance, laid-off auto workers fled the industrial Midwest for energy-rich states in the South with more plentiful jobs. What's unique this time is migration has slowed almost everywhere.
The bureau found that the number of people who changed residences declined to 35.2 million last year, the lowest number since 1962, when the nation had 120 million fewer people.
Moves between states plunged the most, to half the rate recorded at the beginning of this decade.
The U.S. citizen is generally a very flexible person, who is willing to move cross country, both by choice and necessity. In the past recessions (minor or major), job seekers would move from areas of the country with a dearth of work to those holding up well. That said, this has not been a normal recession - and the degree of job loss is close to unprecedented. Hence, aside from Texas & Washington D.C., there have not been regional clusters of strength in major population areas. The states/cities holding up best have been the type with lighter population (Nebraska, Dakotas, Wyoming, etc) - so even if people could move; there are only so many jobs in that size of economy. As the great job purge of 2008-2009 finalizes, this situation in housing will have an impact on the traditional movement around America - and will place many more of those in underwater homes facing tough decisions. Yet another reason we can expect strategic defaults to continue to surge.
As an aside, if you did not read this piece on the global migration trends we posted last summer - it has some very interesting factoids as well. [Jun 8, 2009: WSJ - Global Migration Reverses for 1st Time Since Great Depression]
WSJ: Recession Alters Migration Pattern in the U.S.
- The recession has had a profound effect on migration patterns in the U.S., reversing the flow of people to former housing-boom states such as Florida and Nevada, the latest data from the Census Bureau show.
- In the year ending July 1, 2009, Florida -- once the top draw for Americans in search of work and warmer climes -- lost more than 31,000 residents to other states. Nevada lost nearly 4,000. The numbers are small compared with the states' populations, but they reflect a significant change in direction: In the year ending July 2006, Florida and Nevada attracted net inflows 141,448 and 41,640 people, respectively.
- The recession coupled with the mortgage meltdown stopped the dominant migration story of the last decade in its tracks, said William Frey, a demographer at the Brookings Institution, a Washington think tank. The real question is when the Sunbelt states are going to be able to come back. These new numbers suggest no end in sight.
- The census data provide the starkest illustration yet of a shift that began after the peak of the housing boom in 2006. Each year, the movement of people from states in the Northeast and Midwest such as New York, New Jersey and Michigan to job-producing states in the Sunbelt and West has lost momentum as house prices have fallen and jobs have disappeared.
- The exception amid the Sunbelt states is Texas, which has managed to avoid much of the housing malaise and unemployment that have plagued other states. (keep in mind, Texas was one of the states - much like the other states in the middle of the country that never had a housing boom - hence no offsetting bust) In the year ending July 2009, Texas gained 143,423 more residents from other states than it lost, making it the nation's biggest draw for the fourth year in a row.
- With no income tax and relatively inexpensive housing, Texas has attracted both entrepreneurs and large corporations. The bank Comerica Inc. moved its headquarters from Detroit to Dallas in late 2007, and BlackBerry-maker Research in Motion opened its U.S. headquarters in Texas soon thereafter. Surging energy prices in early 2008 helped the state's oil industry, and the state's large medical centers have provided stable employment.
- Between July 2005 and July 2009, Texas added 648,600 nonfarm jobs, according to seasonally adjusted data from the Bureau of Labor Statistics. As of November, the Lone Star state's unemployment rate stood at 8%, well below the national average of 10%.
Circling back to my point above:
- People's immobility could become an obstacle to the restructuring needed to sustain an economic recovery, as tighter credit and depressed prices make buying and selling homes a more daunting prospect. The flexibility of the labor market, underpinned by a relatively mobile population, has long been a crucial factor in the U.S. economy's resilience.
- A lot of people are stuck, said Steve Cochrane, an economist at Moody's Economy.com. If someone loses a job and can't move to seek a job somewhere else, that can keep the unemployment rate high and also make it hard for employers to find the labor they want when they need it.
There are even some political implications...
- As Americans' willingness or ability to move from one state to another wanes, other factors such as birth rates are having a bigger impact on states' relative populations -- a shift that has political implications. Minnesota's robust birth rate, for example, could prevent it from losing a representative when Congress reallocates seats next year, demographer Kenneth Johnson of the University of New Hampshire's Carsey Institute wrote in a report Wednesday. And Utah, which saw its population grow by more than 57,000 in the year ending July, thanks in large part to births, is likely to gain a congressional seat.
And as we discussed just yesterday:
- The recession also appears to have tarnished the U.S.'s image as a beacon of opportunity. In the year ended July 2009, the country attracted about 855,000 more new immigrants from abroad than it sent to other countries. That is 14% less than the nine-year annual average.
- Fewer people are coming into the U.S. because they know jobs are down, said Mr. Frey, of Brookings. Migrants from abroad are also sensitive to the economic ups and downs in the U.S.