One of the common developments in “the olden’ days” of five years ago and earlier was the concept that American workers typically had the ability to be mobile — to move from one geographic area to another, from one state or city to another — in order to fill an open employment position. What helped in previous years was the fact that one could likely sell their home for more than they paid for it and/or a new employer would provide a reasonable relocation package to assist one’s effort to move.
That was then — this is now
The movement of Americans is at its lowest level since World War II (The Associated Press). Weak housing markets of the past 4-5 years now find millions of people buried in their homes, with no chance of selling at a profit. Note that roughly one out of every four homeowners across the nations is “underwater” on their home; they owe more on their mortgage than the home is worth.
In addition, pressures on profitability have found fewer companies willing to provide attractive relocation packages. Even fewer employers are willing to take a hit on the prospective new employee’s current residence.
More young people who have recently graduated from college continue to live at home or move back in, given currently limited employment opportunities for younger workers. More and more stay in the communities where they went to school.
This has profound implications for the American economy, with perhaps the greatest impact on manufacturing firms around the nation. A recent survey conducted by Deloitte & TouchÉ and The Manufacturing Institute noted that American manufacturers cannot fill 600,000 skilled positions, or 5 percent of all current manufacturing jobs (NADCA). Such a number works out to an average of 12,000 open and available manufacturing jobs per state. Such a number also keeps the nation’s unemployment rate higher when compared to prior economic expansions.
The survey showed that 67 percent of manufacturers have a moderate to severe shortage of available, qualified employees, noted a Deloitte & TouchÉ spokesperson. The survey also noted that 64 percent of manufacturing executives lament the lack of skilled workers, which is making it more difficult to expand their operations or boost productivity.
One reason is the fact that many older skilled workers took early retirement in recent years and don’t want to move to fill a position. The other factor is that noted above —they simply can’t get away from the house that binds.
The lack of mobility has also had a major impact upon traditional retirement locales such as Arizona, Florida and Nevada. If people can’t sell their homes in colder climates following retirement, they can’t easily move to warmer destinations.
This reality has contributed to the real estate busts or painful price corrections in one retirement community after another in Phoenix, in Tucson, in San Diego, in Las Vegas, in Miami, in Naples, etc., over the past four years. It has not been unusual to see initial home or condominium prices down 40, 50 or 60 percent and sometimes even more in these communities.
The old mindset for a retirement community developer was “if you build it, they will come.” The mobility issue rendered that view flawed in recent years.
Reference is frequently made to the BRIC nations — Brazil, Russia, India and China — four nations with considerable geographic size, large populations and enormous economic potential. The past few years have seen China garner most of the attention, as that nation of 1.3 billion people just surpassed Japan as the world’s second largest economy.