Episode 3: Go West, No Longer
Runtime: 17:21 — For decades, Americans took this famous advice: “Go West, young man!” But fewer are today. Interstate migration has been dropping for years. People aren’t moving, even from bad economic situations or places with no future. The question is whether the unwillingness or inability of people to move is worsening regional economic and social divisions.
A quote attributed to 19th century newspaperman Horace Greely gives some famous advice: “Go West, young man!” But his exhortation wasn’t just about heading for a new adventure, it was about leaving a place with dying prospects to start fresh. For decades, Americans took this advice. But fewer are today.
Interstate migration has been dropping for years. People aren’t moving, even from bad economic situations or places with no future. The question is whether the unwillingness or inability of people to move is worsening regional economic and social divisions. Some economists say it is, but others aren’t as sure.
On this episode of Six Hundred Atlantic, we’ll talk to Minneapolis Fed economist Abby Wozniak to get her take on how migration impacts geographic disparities. We’ll also hear from Katheryn Russ from UC-Davis about the trade shocks that send regional economies reeling in the first place. We’ll ask, “Why aren’t people as willing to go West?”
A quote attributed to 19th century newspaperman Horace Greeley gives some famous advice: “Go West, young man!”
This quote has endured long after settlers went as far west as they could because it captures an American ethos: Don’t be afraid to step out, good fortune awaits.
But this quote is about more than its most famous four words. Here it is in full:
“Washington is not a place to live in,” Greeley said. “The rents are high, the food is bad, the dust is disgusting, and the morals are deplorable. Go West, young man, go West and grow up with the country.”
Greeley wasn’t just advising people to head toward something. He was also telling them to leave someplace else. That also captures an American attitude.
Go West. You can leave that dead-end town behind.
Go West and escape the failures or misfortune around you.
Go West and get a new start.
For decades, Americans took this advice. But fewer are today.
Interstate migration has been dropping for decades. People aren’t moving, even from bad situations. They aren’t leaving that dead-end town.
The question is whether this unwillingness—or inability—of people to move is affecting “geographic disparities” in the U.S.
Geographic disparities refer to differences in social and economic well-being between areas of the country. Some economists believe interstate migration has historically played an important role in minimizing them.
Federal Reserve Bank of Boston President Eric Rosengren explains:
So, if people were willing to easily move, and could easily move, then you wouldn't get geographic differences, because areas that were doing well would immediately attract labor force and people to move to that area, and there wouldn't be much of a problem.
Economists have plenty of theories why people don’t “easily move” anymore. But nobody has nailed it down.
Here’s Boston Fed economist Christopher Foote:
There may be some cultural factors going on, nobody's really quite sure what's happening. But the idea that migration has declined is certainly consistent with the idea that the country's getting farther apart in a sense that if you're in a declining area, it's just harder for you to get out and move to an area that's doing better.
This is Six Hundred Atlantic, a podcast produced by the Boston Fed’s communications team. I’m your host, Jay Lindsay.
In this episode, we’ll take a closer look at this decades-long decline in interstate migration.
We’ll ask whether this is a major contributor to increasing geographic disparities. Because some economists aren’t sure it is.
And we’ll cover the trade shocks that send regional economies into tailspins in the first place. Why aren’t more people these days moving to escape them?
Why aren’t they as willing to “Go West?”
So, what is a trade shock?
The definition starts with a surge in imports—could be tires, could be toys. But that surge alone isn’t enough to make it a trade shock.
Kadee Russ, an economist at U-C Davis, said a trade shock also depends on the number of workers in the industry being directly impacted by those imports.
If it's a huge industry, then we might think an increase in imports would be small compared to overall domestic output, and wouldn't be so much of a problem for the domestic industry. But if the increase in imports is large relative to the number of workers, then this competition is more likely, perhaps, to have an adverse impact on employment in the United States.
The most relevant and impactful trade shock of recent decades is the China Shock. This is a surge in imports from China that happened between 1990 and around 2011.
Chinese imports were growing after 1990, but this growth accelerated after China joined the World Trade Organization in 2001.
Before then, buyers couldn’t be certain whether other countries would suddenly raise the tariffs they charged on Chinese imports.
But there are limits on the tariffs one World Trade Organization member country can charge another.
So once China joined the W-T-O, the prices on goods from China had a lot more certainty. And U.S. importers began buying a lot more of them.
U.S. buyers began to look to China to supply textiles, and clothing, footwear, household audio/visual equipment, toys and games, a whole host of products that they could now find at lower prices if they imported from China. And so, whereas these industries prior to China's immense and rapid globalization probably would have been produced in low-wage areas within the United States, especially in the Southeast, instead, buyers started looking to China.
That meant significant job loss in the U.S.
Russ notes the most impacted industries tended to be in the so-called “elite” stage of their lifecycle.
“Elite” sounds good, but it simply means the industry has been around a while and matured. Production has been standardized, so it doesn’t need to be in an innovation center with a highly educated workforce. It can reduce costs by moving to a lower-education, lower-wage area.
That can be great for efficiency. But it also means when a shock hits, the local industry can’t innovate their way out of it with new services or more sophisticated manufacturing processes.
It also means that displaced workers tend to have less education and a tougher time finding new work.
Russ says the China Shock accelerated an exodus from places where industries were already moving out for cheaper locales.
We typically think of the China Shock as being a phenomenon that hit the Southeast hardest, and that's because those were the places that had the biggest growth exposure, so they had the most employment in the industries where China started competing directly. But the places that seemed to have this extra disproportionate effect because of the aging out of the industries with nothing to replace them, those were up in the manufacturing belt: Pennsylvania, some places in Upstate New York, the Northern Ohio River Valley.
U.S. Manufacturing employment fell by a devastating 33 percent between 1999 and 2010.
Industries left and communities were hollowed out. Some have yet to recover.
And economists learned some surprising thing about interstate migration.
The China Shock created exactly the kind of conditions that economists expected people to move away from—a lack of job opportunity and related declines in living standards, including essential health or education services.
But people stayed put.
That's what we learned from the China Shock, the labor force is just not as mobile as we thought. I think economists across different parts of the discipline had been noticing this already, but that really brought it to the fore because you would have these massive shocks to small communities, and still you saw very limited movement away from those communities.
That lack of mobility during the China Shock followed a national trend. Census data gives a clear picture of declining mobility in America over recent decades.
In the 1980s, the percentage of people who moved within the U.S. at some point in the year averaged about 17 percent. By 2017, it had dropped to 10 percent.
During the same period, the percentage who changed states—potentially moving into new labor markets—also declined substantially. That drop was from 3 percent to 1-and-a-half percent.
These are significant declines. There are numerous theories—but little certainty—about why.
Some economists point to high housing prices. They say the costs in certain prosperous and highly educated regions make it impossible for people in a depressed area to move toward opportunity. Here’s Eric Rosengren:
If you don't have high educational attainment and you're looking for a way to have a reasonable income, you're going to look for a lower cost area rather than a higher cost area. And so the economic differences that started many years ago have now become wide enough that it makes it much harder for people to choose to move.
Another hypothesis cites a general decrease in social trust. Some say that has made people uncomfortable exposing themselves to new people in new regions.
Here’s Abbie Wozniak, an economist who heads the Minneapolis Fed’s Opportunity and Inclusive Growth Institute.
The idea is that if there's just an overall decline in trust in new situations, which we know has been the case actually in the U.S., but in other developed countries as well, and that's really clear in the data that there's been this overall decline in levels of social trust, then that could apply really to both sides. Workers might not be as willing to undertake something risky, like a long-distance move and a job change, employers will be a little bit more reluctant to bring new people on board.
The impact of this declining migration is as uncertain as the reasons why it’s happening.
An important trend that’s occurred in parallel with the migration decline is a slowing in what’s called “regional convergence.”
In economics, convergence is the narrowing of a gap between two groups.
Before the 1980s, the income gap between different regions of the country, say the richer states and poorer states, always seemed to be converging. Then, suddenly, that stopped. Now, that income gap is a major component of existing geographic disparities.
But is slowing income convergence tied to the simultaneous decline in interstate migration?
Many policymakers have made the connection, though Chris Foote notes there is a lot of debate:
I think the implication of declining migration for policy, it's tricky. Some people are critical and have been critical of economists for always pointing to migration as the solution to regional disparities. I've heard one planner I believe in Akron, Ohio, refer to that view as the ‘U-Haul School of Urban Policy.’
Nevertheless, though, when you look at rural America, … It's just really hard to fight the idea that migration there is taking the young people out, leaving behind a lot of older people who need social services, but the younger people have left along with the taxes that they paid. So this migration spiral can still exist.
Wozniak doesn’t rule out a link between slowing migration and income convergence. But she thinks it’s overstated and unproven.
Wozniak says certain historical migrations were clearly made by people moving toward better opportunity, and they evened out geographic disparities along the way. The Black migration to northern cities in the early 20th century is one example.
But Wozniak added internal migration has never been enough to completely close regional income and opportunity gaps. And she doesn’t see evidence right now that a lack of migration is making geographic disparities worse.
I certainly think migration is an important thing to think about as a response to those gaps, but it's probably equally important for us to recognize that migration alone is not going to eliminate them. That's never been the case in the history of the U.S., and so folks will want to think about other policies in the face of those.
In fact, what policies are needed to close geographic disparities is a critical question amid the divergent views and uncertainty.
Chris Foote says policymakers in general should focus more on geographic disparities and their possible underlying factors—including whether slowing migration is a major part of the puzzle or just a small piece.
It’s one reason why the Boston Fed wanted to focus on geographic disparities in its annual policy conference last year.
If their causes and effects are ignored, these disparities will only harden. That could exacerbate the inequality, hopelessness, and division that can come with them.
Now—because there's less migration … Now—because these underlying forces that are giving rise to inequality are important … Now people are saying, ‘Okay, this place is going to have a tough time getting back on its feet unless we do something.’ And I think taking together the data that's come out, the vibe that you get by sort of traveling around to different parts of the country, are all pointing to the idea that this is an area—these geographical disparities—are an area where policy may very well be required.
So far this season on Six Hundred Atlantic, we’ve looked at the costs of geographic disparities, and it’s clear some costs are easier to measure than others.
For instance, we learned in Episode Two that life expectancy in metropolitan areas is longer than in non-metropolitan areas. That’s a black and white statistic.
But what about the more subjective impacts of geographic disparities? Things like happiness or general life satisfaction that are tough to get a handle on, but can really impact quality of life? Can economists even measure those?
The answer is “yes.” Economist Carol Graham has charted and studied the “well-being” gap. She knows the characteristics of people who tend to be on the right end of that gap. And on the wrong end.
They tend to be people who have fallen behind. They have dropped out of the labor force, so they aren't just looking for a job, they're not unemployed and unhappy, they're beyond that. They tend to be very isolated, they tend to not have strong communities, and they have a very large gap in terms of their well-being, which is everything from life satisfaction, to reported stress, to optimism for the future, and everybody else.
They live in what Graham calls a “geography of desperation.”
What causes a well-being gap? Who is most impacted? And how can economists hope to close it?
We’ll take a closer look, and we’ll also dive deeper into the undeniable and worrying health impacts of these geographic disparities.
That’s next time on Six Hundred Atlantic.
Thanks for listening to Six Hundred Atlantic, and please check out the rest of our debut season, which includes five episodes and a bonus episode. Learn more and subscribe to our mailing list at bostonfed.org/six-hundred-atlantic. Listen and subscribe to Six Hundred Atlantic on Apple Podcasts, Spotify, Stitcher, and TuneIn.
Most of the interviews and reporting for this season of Six Hundred Atlantic were done prior to the onset of the COVID-19 pandemic. But the trends discussed are decades in the making and are particularly relevant during a time of economic upheaval. The pandemic’s impact on these trends are the focus of a special bonus episode of Six Hundred Atlantic, which features a discussion with urbanist Richard Florida and Harvard economist Ed Glaeser. We invite you to listen.
The producers would like to thank our expert contributors for lending their time and insights. They are Christopher Foote, Carol Graham, László Kulcsár, Christopher Mayer, David Neumark, Jonathan Skinner, Eric Rosengren, Katheryn Russ, and Abby Wozniak.
Six Hundred Atlantic is a Federal Reserve Bank of Boston podcast hosted by Jay Lindsay. Produced by Jay Lindsay, Allison Chase, and Peter Davis. Executive producers are Lucy Warsh and Heidi Furse. Recording by Steve Osemwenkhae. Engineering by Steve Osemwenkhae and Alex Cronin. Project manager is Allison Chase. The chief consultant is Christopher Foote. The podcast is written by Jay Lindsay and edited by Christopher Foote, Allison Chase, and Nicolas Brancaleone. Graphics and website design by Meghan Smith and Stephen Greenstein. Production consultants are David West and Thomas Stranberg.