Economy
11:07 am
Thu October 24, 2013

Economic Mobility: America's Frontier Blocked?

Transcript

MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. We are going to talk a bit today about people on the move. Around the world and throughout time, people have moved from one place to another in search of better lives. But how they're doing it and how much they're doing it are changing. Coming up, we'll look at how thousands of Central Americans are trying to pass through Mexico to the U.S. border every year by clinging to the tops of rusty cargo trains.

It's known as riding The Beast, and it is just as dangerous as it sounds. We'll hear more about that in a few minutes. But first, we want to talk more about people on the move this country. Last week, we talked with journalist Tim Noah about why more Americans, who used to be famous for packing up and seeking greener pastures, now seem to be staying put. We heard from hundreds of listeners on the topic, and a lot of their stories were like Dan Jensen's (ph).

DAN JENSEN: I had a job that I enjoyed, but there wasn't any room for me to get promoted. I was, at the same time, underwater on my house. So I was pretty much stuck in that job.

MARTIN: As I said, we heard from so many of you on this that we decided to dig a little deeper into why so many Americans feel like they're stuck. So we've reached out to somebody who studied these issues extensively. Richard Reeves is policy director for the Center on Children and Families at the Brookings Institution, and he's with us now. Thank you so much for joining us.

RICHARD REEVES: Thank you for having me.

MARTIN: First of all, based on your analysis, is this a problem? Are Americans really stuck?

REEVES: Well, it's certainly true that Americans aren't moving as much they were across state lines, and the piece that you've already referred to showed that. There's less geographical mobility across the United States than there used to be. And then the next question is, is that a problem?

MARTIN: Right. Exactly.

REEVES: Right? And who is that a problem for? So why is it happening and why do we care? And I think it's probably happening for a mixture of economic reasons, which may be slightly negative but also some social reasons, which may be slightly more positive. And then I guess the question is, what the implication is. This is very much framed as an economic question at the moment, right. It's bad for the economy, and may be bad for the people concerned as well. But there may be some social questions you want to ask there, too.

MARTIN: All right. I want to hear more about your perspective on this. As I mentioned, we spoke about this with journalist Tim Noah last week who is - as he would readily admit - not an expert on this, but just came across this information and started digging into it a little deeper. His theory is that it's housing costs and the costs of living are the driving force here. Now, one of our listeners Kara Myer (ph) echoed that. After being out of work for a year during the recession, she moved from North Carolina to Tennessee for work, and this is what she said about her experience.

KARA MYER: Nashville wasn't necessarily the goal at the time, but it was the only place we could find a job. And we're basically back into the same boat because we live in a city that's very expensive. It's very hard to get out of. It's very hard to find other jobs right now 'cause even though we're better economically as a country, we're still not where we were with employment. So there's not as many options. So right now, we're kind of in that stuck place once again wanting to move, wanting to take that jump and just not being able to.

MARTIN: What do you think about that? Do you think that that's true? The high cost of living in a number of the places that actually offer the most opportunity are actually kind of - it's counterintuitive that people are actually looking for cheaper places to live even if there aren't as much opportunity there.

REEVES: Right. That is true. I mean, we know that something like 20 million households are currently paying more than 50 percent of their pretax income just for housing. And we also see big geographical differences in the affordability of housing in different areas. So the key question here is not just, how much can I earn if I go to California, San Francisco, New York? But then, how much will I have to pay for my housing when I go there? So the kind of affordability ratio is what really matters. And so you'll see, for example, that if you go to Akron, Ohio, 86 percent of the houses there are affordable to someone on a medium income. If you go to San Francisco, only 14 percent of the houses there are affordable to someone on a medium income. You see these really big gaps in terms of the ratio of affordability of the homes to the earnings. So it's the earnings-housing gap that really does start to matter.

So I think that is - that's definitely a factor. I would like to go there. That's where the jobs are, but I can't afford the houses there. And that's a question then of median earnings in those areas, too. It's not just enough those areas have got jobs - are those jobs paying enough for people to live there given what's happening in the housing market? And of course, it's about housing reform, too. It's actually all those zoning laws that are preventing housing development. Are there various other practices in the way - is the housing market working efficiently? Because if it was working efficiently - if there were enough people who wanted to live there - then the price of houses - more house would be built and houses would drop. But we know it's actually hard in those areas to build more houses, and that's partly about zoning, as well.

MARTIN: Some people feel that it's in part about attitude and expectation. It's like, what is it that you expect to have versus what it is that you already do have. And a lot of people feel that the expectations of Americans are sometimes out of sync. And I just want to play a short clip. This is Jennifer Taylor (ph). She's 27 years old. She's a police officer in South Carolina. She'd like to go back to school, but is having trouble finding the money to do that. Let's listen to what she had to say.

JENNIFER TAYLOR: I had an IRA set up for myself when I was in my early 20s and I ended up having to empty that out just to put money down on my home and day-to-day life. It seems like my aspiration to be able to leave the state and go back to school or get another job - a better paying job - it just doesn't really seem feasible right now, unfortunately.

MARTIN: So here's the dilemma here. I mean, on one hand, it says she's doing, quote-unquote, all the right things. I mean, she owns a home. She's tried to save. She has a job. She has a career. But she still feels like she can't get ahead. And I'm just wondering, how do you hear this? Is this an expectations issue or is there really a policy issue here that should be - that somebody like her, who's ambitious and has her head on straight, should be able to - should feel differently about her life?

REEVES: Right. I mean - well, I think we all feel as if we should be able to kind of move to a new place, new horizons, the frontier and so on. But there are some hard economic factors here, too, which is what's happening to earnings and what's happening to the housing market. And what you heard there was a story of - that was an economic story, which is about affordability. But I think there's another intersection here with a social story, which I think it is worth mentioning, which is, there are households whose incomes are going up, but they're the dual-earner households, right. So since 1980, dual-earner households have seen, like, about 30 percent increase in their income. Those who've only got a single-earner basically are flatlining in terms of their earnings. So the houses that have got the money to buy the houses in the expensive places are very often those that have got two earners. And, of course, having two earners makes it harder to move. Right?

MARTIN: Interesting.

REEVES: Because it's no longer just the case that you've got - stereotypically, it was the male breadwinner and what was called the trailing spouse, right? And I know a bit about being a trailing spouse 'cause you can tell, I've come here from elsewhere, right? But that was - the situation was one person's career mattered and actually also the kids would just be expected to pack up and go, and that was it, right? So he would go for his job. Now you've got dual-earner couples. You have a huge proportion of households where men and women are kind of earning a lot. In many households, the woman is now earning more than the man. So that doesn't work. So you've got two people to move. So there's an irony here, which is that it may be that people with the most economic power, who can afford to move, are the ones who socially find it hardest to move because you haven't just got to move one job, you've got to move two. And so I also think that the rise of the dual-earner household is part of this story of immobility, as well.

MARTIN: So the calculation is different when there's a dual-earner household. You may have one person who hates his or her job or is not advancing at his or her job...

REEVES: Right.

MARTIN: ...And feels stuck, but then you might have another family member or part of the equation who is doing OK. And so you're saying, so you're weighing both factors...

REEVES: Right.

MARTIN: ...Before you make that decision to move.

REEVES: Yeah. I'm saying there's another variable in the equation, right? So you're sitting down, you're thinking about all the equations and suddenly, you've got another variable, which is that you have two careers. And finding a moment when it's a good idea for both of you to move is tougher. And it was interesting the example that we just heard from, that was someone who's on their own. So if you're the only earner in the household, even if you're just a one-person household, that nonetheless, you've got to pay for that house on your own. If there's two of you - it's a little bit easier to do that - but if there's two of you and your both earning, it's harder to move, as well. So I think that there's probably an intersection here of economic and social factors going on.

MARTIN: If you're just joining us, our guest is Richard Reeves. He's an economic studies fellow at the Brookings Institution. That's a research institute in the Washington, D.C. area. We're talking about economic mobility, and we're talking about the barriers that may block many Americans from moving upward. Focusing today on physical mobility, Americans used to be famous for how often they moved, how willing they were to move from place to place in search of opportunity. And we're finding that the number of Americans moving is at a historically low level - the lowest it's actually been in decades. Do you think that - is it a fact that Americans are less upwardly mobile than they used to be, or is it that we value it so much that when that doesn't occur, we feel something's desperately wrong in a way? I guess what I'm asking you...

REEVES: Yeah.

MARTIN: ...Because you have an international perspective...

REEVES: Right.

MARTIN: ...Is it in part our perspective as Americans that we have an expectation and belief that this is - it's almost a right.

REEVES: Right.

MARTIN: Right.

REEVES: So if the question is, is it that American mobility is not as high as elsewhere or is it that Americans have higher expectations about mobility? The answer is yes. Both of those things are true. There's - actually levels of upward mobility in the U.S. now are no better than other countries. It's lower than in Canada. There's some evidence that even the country I come from, Britain - you know, the place that brought you "Downton Abbey" - is actually, on some dimensions, more mobile than the U.S., particularly from the bottom. Upward mobility from the bottom of society is a particular problem in the U.S.

MARTIN: And why is that?

REEVES: It's a kind of - people talk about this as a stickiness...

MARTIN: Stickiness.

REEVES: ...At the bottom of the income distribution and it seems to be true (unintelligible). Well, interesting, I think that is partly for some of the geographical reasons we've been talking about, which is that America is more divided geographically, both between cities and states and within cities and states, as well. So you see more segregation along income lines, racial lines, housing tenure lines, etc. in the U.S. And so what you do is you actually - you can actually get, not just worrying about people moving across states, which is the data that Tim talked about in your earlier piece, but movement across ZIP codes.

You know, we're seeing generations being raised in the same neighborhoods that their parents were raised in - very low-income neighborhoods in many places. In the sense, that's the sort of geographical immobility that then really starts to worry policymakers because that's then about people who, in a sense, almost can't escape from, quote, a small neighborhood environment. I think that contributes to the lower levels of mobility that Americans both want and expect in their society. But it's also the case that people are starting to question the American dream. And that actually - that's almost self-fulfilling because you have to believe in opportunity to seek opportunity. And so...

MARTIN: People give up. You're saying if they don't see anything changing - what happens? They give up.

REEVES: I thing it's a dangerous fatalism, right? And so actually, to some extent, the American dream is only as good as it feels as if it is, right. We have to - actually American optimism - and that's I think reflected in some of the discussion we've had about geographical mobility, as well. If optimism starts to get replaced by fatalism, then it's a self-fulfilling prophecy. Then social mobility will worsen.

MARTIN: I want to talk a little bit about - more about the kind of the argument about what it is that policy could be doing to address some of these issues other than kind of the hard economic issues, like - but I just want to focus on one other thing. Culturally, you talked about how some of the things that affect mobility today aren't necessarily a bad thing - or depending on your values. For example, the emphasis that many parents now place on their children's feelings...

REEVES: Right.

MARTIN: ...Or their happiness...

REEVES: Right.

MARTIN: ...The children's happiness, their children's desire not to move...

REEVES: Right.

MARTIN: ...To change schools, particularly if they're about to finish, you know, school and go on...

REEVES: Yeah.

MARTIN: ...To the next stage of life. So you're saying that might make people more, you know, less willing to move. But is that necessarily a bad thing? What do you say about that?

REEVES: Well, that's why I think we do have to be careful here about just assuming this is a problem. It may well be a problem, but let's just be clear about why it's problem. And even if it's a problem for the economy, it might not necessarily be a problem for society. So if people are a bit more child-centered now in the way they think and make these decisions - and there's some evidence that people are - that actually people do weigh children's welfare more strongly in the balance now than perhaps they did in the past. In the past, you know, it was dad, as we've mentioned. Dad's got to go for a job. Sorry, you've got to move schools again. Yeah, I know you're in the middle sixth grade or eighth grade, but off we go, right.

Now I think people are much more inclined sort of to try and keep their kids stable if they can and keep them in the same school if they can. They're more attentive to their friendship networks. We are more focused on our children's well-being than perhaps in previous generations in that sense and wanting more stability. If that's part of the reason, right - I have no evidence for this all right. If it's true, that's a good thing.

MARTIN: And well, it could also be the fact that the population is aging and that being near elderly parents is also a major factor here because people are saying to themselves, well, you know, I cannot be across the country when I have 80-year-old parents.

REEVES: Right.

MARTIN: I mean, that has always been a factor in certain places that are extremely family-oriented.

REEVES: Right.

MARTIN: We found that out after Hurricane Katrina when whole extended families were forced to be uprooted, and it had, you know - people saw the effect...

REEVES: Right.

MARTIN: ...That that had on their...

REEVES: You get the kind of sandwich generation, right. They want to be near their parents, maybe to look after them. They don't want to move their kids, and so they stay there. If that's the reason why people are less likely to move, then that would be - it might have a negative economic effect. But actually that's, in a sense, a much better reason for lower-levels of mobility than the other ones we might have had. And let's not forget, one of the reasons why there was - Tim said this - people used to go, it was out of desperation. It was out of economic necessity, right. It was that they didn't necessarily want to move, but they had to move. Maybe now people could move but are choosing not to. And that's a very different kind of problem.

MARTIN: So let's conclude our conversation where we started it. We have a couple of minutes left. Do you think this is a problem? Weighing all factors. You know, weighing all the factors we've talked about. The fact that, you know, that dual-income households may have more opportunity to move but may be less inclined to move just because they're weighing two careers, things of that sort, you know, people taking other people's feelings into account, and the high cost of living in some places that even if you wanted to move, you can't.

REEVES: Right.

MARTIN: So weighing all this together, from your perspective, is this a problem?

REEVES: Right. Well, you're asking someone from Brookings, and I'll say more research is required. But I think what we should do is we need to understand - we need to understand why, right. So what we're seeing is lower levels of people moving around - that's interesting in and of itself. We need to know why, what's driving that, before we can say for sure whether it's a problem. I will say this, it's a problem for the economy if the people who are best-fit suited for jobs don't go for them.

That will damage productivity in the long run. That is bad for everybody. And it's a problem if the disjunction between earnings and the housing market is preventing people from moving, that's a problem. If this is people who could move choosing not to, for some of the reasons we've discussed, then that may have consequences, but that's not the same kind of problem. So the jury is out on whether overall it's bad. It's bad for the economy. Is it bad for society? Well, for some of your listeners, clearly, but maybe not for everyone.

MARTIN: In fact, I'm saying that - just to remind people - we had hundreds of responses in a matter of hours when we asked if you were interested in moving, if you felt you could move or what your experiences were with that or why you'd move, why you wanted to move. I mean, literally, hundreds - it clearly struck a chord with people. One other thing I wanted to mention is that we've previously spoken with scholars. We've talked about this, the so-called marriage crisis. We've talked about the propensity of Americans to not get married as often as they used to or to not get married - to not have a stable marriage as they used to. This affects different ethnic groups differently.

But the low marriage rate among African-Americans is one that has been cited by policymakers, politicians and cultural figures as being of a particular issue. We've talked with scholars who say that the high cost of living, the high cost of housing in key areas where African-Americans are more likely to live is also a factor in the marriage rate. And as a consequence of that, they're calling sort of for policy measures to address this question. I wanted to ask you, is there any energy around that? Is this the kind of thing that scholars and policymakers are actually talking about in your circles?

REEVES: Certainly. And I think that the marriage crisis should probably be called the marriage gap because well-educated Americans are marrying in greater numbers and staying married. They're re-tasking marriage, right. And then our dual-earner - much more egalitarian, chosen later - to have kids later, etc. So that's a very different kind of marriage, right. But that kind of marriage is flourishing in certain parts of America - in more affluent America. But you'll see marriage declining in other parts of America, too. And the great irony is that it's the areas where you most need two earners in the household where marriage is very often not to be found. And so that's the real - whether it's marriage or cohabiting is a difference matter. But just, you know, some of the stuff we talked about is - this stuff's easier when there's two people in the household sharing the earning and the caring. It's just easier. It's better economically and socially.

MARTIN: Richard Reeves is a policy director for the Center on Children and Families at the Brookings Institution. That's a research institute in the Washington, D.C. area. And he was kind enough to join us in our Washington, D.C. studios. Richard Reeves, thank you so much for speaking with us.

REEVES: Thank you for having me. Transcript provided by NPR, Copyright NPR.

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