Economy
11:06 am
Wed October 16, 2013

Staying Put: Why Income Inequality Is Up And Geographic Mobility Is Down

Transcript

MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, former San Diego mayor Bob Filner pleaded guilty yesterday to charges of false imprisonment and battery. We'll ask the Beauty Shop ladies to weigh in on that story as well as on other news of the week. That's in just a few minutes.

But first, we want to talk about the country's ongoing economic problems. Now recently, we've been very focused on the battle over the shutdown and the debt ceiling. But while that is going on, the country still faces the issue of stagnant wages, too little job creation and growing and pronounced income inequality. In the past, when the numbers didn't add up, many families would pack up. Americans used to be exceptional for how often they moved, writes Timothy Noah in the Washington Monthly. But that time is no more. In a piece titled, "Stay Put, Young Man," he says that the fact that Americans are not moving as often is a problem few people are talking about. And he's with us now to tell us why. Tim Noah, thanks so much for joining us.

TIMOTHY NOAH: Thank you, Michel.

MARTIN: Your recent Washington Monthly article is titled "Stay Put, Young Man." Very different from the old adage of go West, young man, which you explain. What's going on?

NOAH: Well, we used to be a country that would move to opportunity. That was one of the defining parts of the American character. Horace Greeley famously said, go West, young man, and, you know, we learn in high school that he was expressing the ethic of Manifest Destiny. But that's not quite right. What he was expressing was that the economy of New York, where he was, was in horrible shape after the Panic of 1837, which was the worst economic calamity in the United States until the Great Depression. People were literally starving in the streets. So he wasn't saying, gee, the West is something we need to settle. He was saying, get out of New York. There are no jobs here. You have to go somewhere else. And that has been the way that our economy has grown over the centuries, and it's also been the path towards equality. People have gone and found opportunity, and that's not happening anymore.

MARTIN: In the early 1950s, you say in your piece, about 3.5 percent of all American households moved from one state to another in any given year. You said that this held up through the '70s and then started to fall around 1980. You're saying that the latest available data shows that interstate migration is stuck at about 1.7 percent. This is about the lowest level in...

NOAH: Yeah.

MARTIN: ...about, what, three decades?

NOAH: Yeah. Less than half.

MARTIN: Now a lot of people would say that's because of the mortgage crisis. That they can't move because they're underwater in their homes and that they would lose money by moving. And you say that that's not true?

NOAH: Yeah. I mean, it would be a logical explanation if this was a trend that we could date back to, you know, 2008. But this has been happening for decades. It was happening when home prices were going up, and presumably, people were quite free to sell their houses and move somewhere else.

MARTIN: And you also say that some people might argue that it's because the population is aging and that older people are much - you know, it's logical. Once you put down roots, kids are in school - less likely to move than other people. But you say that's not true either.

NOAH: That only accounts for a small portion of it. And it would - it would really only account for trends in the, you know, very recent years. But it doesn't account for anything like the entire trend.

MARTIN: So what does?

NOAH: Well, I think it's two things, and one is the familiar story of income inequality. And the other is - has to do with housing prices. Incomes have been stagnant for, really, going back to the late 1970s. They've been stagnant relative to the income growth that we saw before 1979, and they have been literally stagnant for about a dozen years. Median income is now a little below what it was in the late 1990s. And you combine that with rising housing prices, then it becomes difficult for people to move to jobs because they can't afford to live where the new jobs are. I mean, we had a collapse of the housing market in the United States. But housing prices are still going up much more than income.

MARTIN: It's interesting. We reached out on Facebook, and - 'cause we wanted to hear what kinds of experiences our listeners were having. And we got, you know, hundreds of responses in a short period of time. We asked people if you wanted to move or if you couldn't afford to move. Interestingly enough, many of the people who wrote to us were people who did move. We connected with one of them. This is Daniel Blake. He's a packaging designer from Ohio, and this is what he said.

DANIEL BLAKE: I had been laid off. I was surviving on Ohio unemployment and living at my parents' house at the time. And then, eventually, I had got set up with a talent recruiter here in Chicago. And as we're getting ready for dinner, I get a call saying that I had been placed at a nine-month contract position. I have to be in Chicago the next morning. So I hustled straight to Cleveland airport and had to borrow some money from my family and came to Chicago. And I've been here for the last four years and found my beautiful wife. And everything's been great since.

MARTIN: You know, what's interesting about this is this kind of a traditional pattern of migration. You know, somebody who's in an area where there aren't a lot of jobs, there's not a lot of opportunity. So he moves to major urban area which is considered to be kind of bustling and filled with opportunity - Chicago - and it's great. But we also heard from Jacinta Baca. She lives in Mamaroneck, New York in Westchester County which is one the most expensive areas in the country. Jacinta is a single mother of two who earns $42,000 year. She wrote that she earns too much money to receive aid, but she feels trapped. You know, living paycheck to paycheck doesn't allow her to earn enough money to move. Does that sound right to you?

NOAH: Yes, that sounds to me like a very common experience. And yes, obviously people are moving, you know, but in the aggregate, people are moving a lot less than they used to. And, you know, when you look back through American history, I mean, you sort of think - American history really is the story of a succession of movements. There was the westward movement. There was the movement, in the early part of the 20th century, from farms to the cities. There was the great black migration of the early and middle 20th centuries. There was the move to the Sunbelt in the 1970s. That was really the last time people were, in large numbers, moving to jobs. People are still moving to the Sunbelt today, but now it's not moving to jobs. They're moving there for the warm weather or for the cheaper housing.

MARTIN: Well, it's interesting because you would think that because Jacinta lives in the New York area, which you'd think would have a lot of opportunity, she's saying she would prefer to leave. She would prefer to leave this high-cost area and move somewhere else, but she cannot. That's a point that you make in the piece. You say that people are actually moving out of the wealthiest states today. You say that Maryland has the highest median household income at $70,000 year, but 8,000 more people moved out last year than moved in. Now some would argue that that's because it's a high-tax state. It's a state with a liberal-progressive, if you will, political tradition. The Democrats dominate all levels of government, and some would argue it's because it's a high-tax state.

NOAH: Right, well, and that is a conservative argument, that all is being driven by taxes. And they're mostly talking about income taxes. Now, of course, the problem with attributing it to income taxes is the people we are talking about, who are mostly moving less, are people who are not affluent enough to really be pinched very much by income taxes. They are pinched by other kinds of taxes - regressive state taxes, sales taxes and so on - and that may be a factor. But, you know, states that don't have high income taxes tend to depend more rather than less on those regressive taxes. So I think taxes are unlikely to be a significant factor here.

MARTIN: So why are more people moving out of Maryland than moving in, in your opinion?

NOAH: Because it's expensive to live there. It's very expensive to live there and because the opportunities available in Maryland are limited to high incomes. You know, let's look at Maryland. Let's look at Baltimore City - used to be Sparrows Point was a major employer of working-class people. Now it's shrunken down to - I don't how big the workforce is there now. I think it's close to nonexistent. One of the reasons that Maryland is so affluent is because in the Washington suburbs, you have so many professionals - lawyers and others, lobbyists, and others who are making, you know, hundreds of thousand of dollars, occasionally millions of dollars. Not - the Washington area really isn't a place with, you know, many billionaires, but it's got quite a lot of extremely affluent people, enough so that the median income is higher in Maryland than anywhere else.

MARTIN: So you're saying that the cost of living is higher in places with higher incomes. And, well, even though there might be some economic opportunity there, the mismatch is such that people who make less need to move. And even if they're moving to places, you're saying they're moving to places with even lower incomes just to get a lower cost of living.

NOAH: Yes. When an individual state is experiencing economic growth or prosperity, that economic growth and prosperity is not shared as widely as it used to be. Therefore, if I'm a plumber and I want to move to San Jose - yeah, plumbers in San Jose probably make a little more than they do in other places. But they don't make a lot more, and the housing is a lot more expensive. The opportunities in a place like Silicon Valley are for software engineers, not for everybody.

MARTIN: So what's the answer to this? I mean, your argument is that this trend supports the growing income inequality that many people have talked about in his country. Now, obviously, there is a political disagreement about whether this is a real problem or not, or whether this is - is this a problem or just a circumstance?

NOAH: Well, I would start by saying, this is a - this is an illustration of why income inequality is destructive for the country. There might be some people who don't think income inequality is a problem. But I doubt there are very many people who would say that it's okay that people are no longer migrating to where the opportunities are. I mean, that's just bad economics. And so I think that it's a very vivid illustration that income inequality really is very destructive to the economy at large. What to do?

You know, I'm kind of new to this subject. I didn't even know that this trend existed until a couple of months ago. But certainly, you know, I wrote a book about income equality and proposed a lot of solutions to reducing income inequality. And I think those remain relevant. We need to raise taxes on higher incomes. We need to improve our education system. We need to revive the labor movement. Those are just three things. I also think - you know, this is a little more pie-in-the-sky - but I think we need to create a federal jobs program because I don't think the private economy is capable of providing enough jobs for working-class people.

MARTIN: You can read Timothy Noah's article "Stay Put, Young Man" in the Washington Monthly. It's online now. Timothy is also the author of "The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It." And he joined us in our Washington, D.C. studios today. Tim Noah, thanks so much for joining us.

NOAH: Thank you, Michel. Transcript provided by NPR, Copyright NPR.

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