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As Job Flow Slows, Americans Get Stuck in Place

Author: Peter R. Orszag, Adjunct Senior Fellow
May 22, 2013
Bloomberg.com

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Most Americans believe that the job market has grown more turbulent, with people changing employers ever more often. In reality, the opposite is happening.

This, in turn, largely explains why fewer Americans than ever are moving across state lines. And as intergenerational income mobility also declines, U.S. families may be in for a new era of restricted opportunity.

Consider the evidence on job changes. After analyzing combined data from four employment surveys conducted from 1998 to 2010, Henry Hyatt and James Spletzer of the U.S. Census Bureau concluded that "rates of job creation, job destruction, hiring and separation declined dramatically, and the rate of job-to-job flows fell by about half."

In 1998, various surveys suggested that 8 percent to 10 percent of American workers switched jobs. In 2010, just 5 percent to 6 percent did. This trend predated the last recession (although declines are always larger during recessions). And very little of it can be explained by shifts in the demographic makeup of the U.S.

Similarly, economists Steven Davis of the University of Chicago, Jason Faberman of the Federal Reserve Bank of Chicago and John Haltiwanger of the University of Maryland have found that from 1990 to 2010 the rate of job change gradually declined. As the authors note, their finding indicates that U.S. labor markets have become "less fluid and dynamic."

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