No Longer “Going West”

Timothy Noah has a great piece in Washington Monthly looking at why Horace Greeley’s famous quote “Go West, young man” is no longer relevant in modern days because moving to places “where the money is” hasn’t helped much with upward mobility:

A construction worker can generally make more money in San Francisco than in suburban Fresno. But it won’t likely be enough more to make up the difference in the relative cost of living. Indeed, few working-class people earn enough money to live anywhere near San Francisco anymore, to the point that there is now a severe shortage of construction workers in the Bay Area. David Hayes, CEO of Skyline Construction, recently told the local business press that his biggest challenge is “[r]ecruiting, recruiting, recruiting. We have started relocating candidates from Southern California and recruiting out-of-state candidates, along with asking retired workers to return.”

If labor markets were operating efficiently, construction workers, along with electricians, plumbers, nurses, nannies, elementary school teachers, and other working-class Americans, would receive enough compensation to live near the places where their work is most needed. But our labor markets are not efficient; rather, they are rigged and skewed, offering too much compensation to people with some skill sets (merging companies and writing derivatives, for example) and not enough to others whose skills are often just as hard to learn (e.g., brick laying and teaching children to read) and often more vital to society.

Ganong and Shoag provide a data series that captures the bottom line. In 1940, the income of “lower-skilled” workers captured 88 cents of every dollar increase in state per capita income. That share began to decline in the 1970s, and by 2010 it was down to 36 cents. Put another way, working-class people in the richest regions of the country have a much lower share of the income around them than they once did. That, more than any other reason, is why they have such a hard time moving to where incomes are highest. Incomes aren’t high for them.

One exception to this is the move to North Dakota, where an oil boom has drawn a significant amount of workers hoping to land job with a decent payday (remember those reports of McDonald’s offering employees $15 an hour to attract people to work there?). But overall, the data is showing that the trend is not “going West” in search of opportunity, but staying put.

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.