Inter-Regional Variance

Kiwis are heading to Australia in record numbers. The United Kingdom is fretting over brain drain, particularly in the "thriving videogame development and publishing industries". (Pay attention to that talent migration, Pittsburgh.) Here in the States, emigration doesn't seem to be an issue. In fact, many of the typically geographically mobile are currently stuck with an albatross of a mortgage in a collapsing real estate market. However, the current economic crisis still should inform a new pattern of inter-regional migration:

Imbalances that can emerge among different multistate regions in the U.S. can also play a role in achieving “full employment.” An industry shock to a particular sector that is highly concentrated in one region may displace workers whose job opportunities may be emerging in another region. Past Midwest experiences are a case in point. The region suffered inordinately through the double-dip national recessions of 1980 and 1981–82. The chart below compares the District’s unemployment rates with those of the nation from two periods: the 1980s and the current decade. By the end of 1982, the nation’s unemployment rate approached 11%, while the District’s unemployment exceeded 13%.

This wide gap of the early 1980s came about from underlying currents having distinct geographical accents. In particular, high oil and natural gas prices were buoying energy exploration activities in many parts of the West and Southwest; rapidly expanding federal spending to rebuild national defense stocks were lifting many regions of the South and West; and the rapidly rising value of the U.S. dollar contributed to moribund exports of farm products and manufactured goods from the Midwest (as well as to stiff import competition).

In contrast, the recession of 2001 and its immediate economic aftermath had fewer inter-regional differences. As seen above, unemployment rates between the District and the nation were very similar. As the remainder of the decade unfolded, however, the profound structural changes going on in the automotive industry did begin to negatively affect District labor markets; the District’s unemployment rate began to rise higher relative to the national average. The Detroit Three automakers (Chrysler LLC, Ford Motor Co., and General Motors Corp.) and their suppliers experienced significant losses to foreign-domiciled auto plants located in other regions and to imported automotive products as well. While (post-2001) job levels largely recovered in the District, Michigan experienced continuous year-over-year job losses.

Now, amid a sharp regional downturn, employment statistics will be keenly watched to help guide our decisions regarding job search, education and training, local investment, home sales, and migration.

The domestic migration of foreign born workers is probably the best indicator of the looming population shift. The ability to move where the jobs are located is a distinct advantage in any labor market. The most geographically mobile demographics will dominate boomtowns and immigrants are well aware of the best relocation strategies.

But given how talent is tethered to home ownership, enterprise starved for highly-skilled workers will be scrambling to fill open positions. Global migration patterns suggest raiding foreign labor pools, which is why I think Pittsburgh headhunters should be scouring the UK. But I also think we will see a lot of domestic boomerang migration. Of all the regional victims of the great out-migration of the early 1980s, Pittsburgh is in the best position to benefit from this talent flow.