HELP MOVING

Given the important role neighborhoods play, both for finding good jobs and for raising children, helping people to move is another important policy.

In the United States, scaling up Moving to Opportunity for the entire nation (making it possible for everyone to move to a good neighborhood) is not really possible, but supporting workers to change regions or jobs should be.

A more ambitious (and expensive) program would give displaced workers automatic access to a much longer period of unemployment insurance. They would have time to train and look for good jobs, and therefore not need to accept the first available low-paid job or go on disability. Such a program would give them access not just to short-term training options, but also to more advanced programs, perhaps in colleges or community colleges, with full scholarships. We need to start thinking of the challenge as not just of finding a job but rather of finding a career. An RCT in the United States recently evaluated three programs that tried to do just this. The core idea was to extend the training of unemployed workers to several months, to develop specialized skills in sectors where workers were in short supply (such as healthcare and computer maintenance), then match the workers with sectors that needed them. The results after two years are very promising. During the second year of the evaluation, after they had completed their training, participants were more likely to be employed, and when employed, in better jobs than comparable workers who did not participate in the programs.

Importantly, these programs also helped with relocation. For disadvantaged job seekers and workers, they provided help with childcare or transportation or a referral for housing or legal services, either during training or at the beginning of the new job. Such help could be expanded to provide short-term housing, and finding schools and daycare for the children. Housing vouchers, smaller than those provided by Moving to Opportunity, could help make good neighborhoods more affordable.

It may also be important to help companies that need workers to look outside the immediate neighborhood and local referral networks. Most programs seeking to help facilitate the process of pairing workers and jobs focus on the workers. But for an employer the process of finding the right worker is also time consuming and costly. A survey suggests that recruitment costs (vacancy posting, screening, and training new workers) range between 1.5 percent and 11 percent of the yearly wage of a worker. Large companies often have a human resources department, but for small businesses those recruitment costs could be a real barrier. A recent study in France showed recruiting costs are big enough to slow down hiring. Researchers teamed up with the national unemployment agency to offer recruiting assistance to firms. They posted vacancies on behalf of the firm and generated and screened promising job applications; they found that companies offered these services posted more vacancies and hired 9 percent more permanent workers than those that were not.⁸² Services like this could allow employers to move beyond the purely informal referral channel to an expanded pool of candidates.

Programs like these might pay for themselves—new skills and better matching between workers and employers are valuable to any economy—but even if they don’t, the gains in terms of reducing anxiety and restoring dignity in our society would be profound.

For example, the Obama administration’s supposed “war on coal” was seen as a war against the coal workers. It may be that coal workers are particularly proud of their specific line of work and believe nothing could replace it, but it is worth remembering that until relatively recently coal workers fought against their employers, not alongside them as they do today. They have precisely the kind of physically dangerous and hazardous jobs most Americans think should be done by machines. The same goes for steelworkers; it must be possible to conceive of jobs less dangerous that carry the same level of pride.

Despite that, when, in March of 2016, Hillary Clinton icily announced that “we are going to put a lot of coal miners and coal companies out of business,” coal workers perhaps not unreasonably felt this was callously undercutting their way of life without ever feeling the need to apologize or compensate them for the loss. Clinton immediately followed by talking about the need to take care of the miners, but the “we” opening this sentence clearly framed the debate as an “us” versus “them” issue. That sentence was aired in political ads for months afterward.

In fact, each and every transition can and should be a chance for government to signal its empathy for the workers who have to suffer it. Changing careers and moving are both difficult, but they are also an opportunity for the economy and for individuals to find the best match between talent and occupation.

Many European countries invest much more in their job transition programs than the United States. For the 2 percent of GDP Denmark spends on active labor market policies (training, job finding assistance, etc.), it gets high job-to-job mobility (going straight from one job to another) as well as lots of transitions in and out of employment. The rate of involuntary displacement is similar to that in other OECD countries, but the rate at which displaced workers find a job is much more rapid: three in four displaced workers find a new job within one year. Importantly, the Danish model survived the 2008 crisis and recession, with no large increase in involuntary unemployment at that time. Germany spends 1.45 percent of its GDP on active labor market policies, and this went up to 2.45 percent during the crisis, when unemployment was much higher than usual.⁸³ In France, on the other hand, notwithstanding claims about how it wants to do more for the unemployed, expenditure on active labor market policies has been stuck at 1 percent of GDP for more than a decade. The corresponding measure for the United States is just 0.11 percent.⁸⁴

In fact, the United States also has its own model it could follow. The Trade Adjustment Assistance program, discussed in chapter 3, provides workers at approved firms money to pay for training and extended unemployment insurance while they get the training. This program is quite effective, and furthermore it did exactly what a program of this type should do: it helped workers in the most disadvantaged places move. Its effect on future earnings was twice as large for workers whose original employer was located in a distressed region. And workers who received TAA assistance were also much more likely to change region and industry.⁸⁵ But instead of becoming a template of what could be done to help workers manage various kinds of difficult transitions, the TAA has remained tiny. How could that make sense?