First, Americans move much less than they used to, and economic mobility has declined along with geographic mobility. The share of Americans moving between states fell by more than half since 1970, from 3.5 percent per year to 1.4 percent. Moreover, as recently as the middle of the 20th century, Americans used to move toward productivity and jobs. In the 1920s, “the creation of a single automobile plant … boosted Michigan’s population by creating more than 100,000 workers,” Tim Noah wrote. But today, the most popular destinations for movers aren’t productive cities, but rather cheap sunny suburbs.
This has to do with the second cause. High housing costs in the most productive metro areas have turned places like Silicon Valley and Manhattan into playgrounds for plutocrats. Tighter land-use regulations in rich metros pushed up housing values, as the Harvard economists Peter Ganong and Daniel Shoag have written. That means that lower-income families, who would benefit from living near these bustling job centers, can’t afford to move there. As a result, rich young college graduates have clustered in a handful of cities while the rest of American movers are going to sunbelt suburbs with cheap housing. Moving toward affordability has replaced moving to opportunity.
Third, the growth of large companies has clearly sapped some of the dynamism from the U.S. economy. As I’ve reported, the decline in entrepreneurship has coincided with the rise of new monopolies—across retail, healthcare, and tech—that make it harder to start a new successful firm in these industries. Starting in the late 1970s, antitrust regulators stopped cracking down on large companies as long as they provided cheap products for consumers. Since 1978, the share of U.S. firms that are startups has fallen by 50 percent.
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