The Corner

Economy & Business

Relocation Subsidies Can Help Workers and Struggling Regions

Americans aren’t moving like they used to. This is exacerbating economic inequality between different regions of the country because geographic mobility has been one of the key ways that wages across different parts of the nation converge and lagging regions see their economic fortunes improve.

Regional inequality is animating populist frustration. The divergence between coastal urban centers and struggling industrial and rural areas is real — West Virginia’s unemployment rate is over twice as high as San Francisco’s, even in today’s strong economy — and has led both conservatives and progressives to attack capitalism itself. Tucker Carlson, for example, recently ran a (misleading) segment on his Fox News show arguing that “hedge funds are destroying rural America.”

Better policy can help workers in lagging regions, and those regions themselves, as I discuss in my latest Bloomberg column. Land-use restrictions and occupation licensing are just two policies that create barriers to geographic mobility. Another idea:

Offer long-term unemployed workers — those who have been unsuccessfully looking for a job for at least six months — in lagging economic areas a federal subsidy to offset the costs of moving to a better-performing region.

Moving is a major investment. Even workers who want to move to a city with improved economic prospects may be deterred by the need for so much up-front cash. The subsidy could help overcome this constraint.

It is attractive because it directly addresses the problem: If you’re worried about regions being permanently left behind, and if a key driver of regional disparities is too little worker mobility, then subsidize mobility so that you get more of it.

Check out my column for my full argument. Your comments, as always, are very welcome.

Michael R. Strain — Michael R. Strain is the director of economic-policy studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute.  

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