The number of Americans relocating for a new job has collapsed during the last several decades, a significant change since the 1980s, when over one-third of job seekers were prepared to move for new economic opportunities.
Over the past decade, just 11 percent of Americans relocated for work, compared to nearly 19 percent of workers who relocated for new jobs in the previous decade, according to a new report by global outplacement consultancy Challenger, Gray & Christmas, Inc.
In the first half of 2018, about 10 percent of job seekers relocated for work, said the firm, which found that the relocation rate has stalled since the first half of last year. The rate in the third quarter of 2017 increased to 16.5 percent, the highest quarterly rate since 2009. By the fourth quarter of 2017, the rate of relocated job seekers printed at 7.5 percent, with the final year average roughly around 11.2 percent.
“The dot-com bubble that left companies flush with cash in the second half of the 1990s, allowing them the potential to offer generous relocation packages to attract talent, burst in 2000. That burst led to an increase in job cuts nationwide, and this period seems to delineate the end of the relocation trend. As companies found themselves in cost-cutting mode, it seems many chose to find local candidates and spare the expense of relocation reimbursement in the years following,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.
In 2000, the relocation rate was 22.9 percent, the last year the rate hit above 17 percent. Since then, the annual relocation rate for job seekers has averaged 12.7 percent.
As shown below, in every boom/bust cycle, the relocation rate tends to expand with favorable economic conditions and contract in a slowdown.
“The one-fifth to one-quarter of workers who were moving to find positions in the late 1990s is nothing compared to what we saw in the mid-to-late 1980s, when nearly one-third of workers were moving for new positions. Much of that movement could be attributed to economic recovery policies after the 1982 recession,” said Challenger.
With the current relocation rate of 10 percent is about 72 percent lower than in the mid-to-late 1980s. The average annual relocation rate from 1986 (the first year of Challenger tracking) to 1990 was 35.2 percent.
Challenger said after a severe recession in 1982, the economy sustained the most extended bull market since WWII between 1983 and 1987. As housing prices expanded, it allowed people to relocate for better opportunities.
“We saw something similar in 2009, when housing prices began to rise after the Great Recession and the annual relocation rate hit 13 percent,” said Challenger.
Challenger offered some ideas behind today’s depressed rate:
“There is a lot of risk involved in picking up your life and moving to another area. Especially now, in such a tight labor market where jobs are plentiful, job seekers don’t have to leave the security of their homes to find new employment,” said Challenger.
“Meanwhile, technology has made it so that workers can work from virtually anywhere. Even workers who are offered relocation packages may forego the hassle if they and their employers agree their jobs can be done remotely.
“This expansion in technology has also allowed companies to grow exponentially, giving opportunities to workers across the country. Over the years, in many cases, companies have found it more beneficial to go to where the workers – and favorable business conditions – already exist rather than have talent come to them,” he added.
With the American bull market in stocks about to be the longest ever on Wednesday, the bearish trend in the relocation rate could be a forward indicator that the business cycle is about to end.