We’re going to take a short break from Dave’s series on the science of sleep. He’ll finish up this topic later this week.
I’ve gained several important insights from his WorkPuzzles on this topic. If you haven’t read these posts, take some time to catch up before his final article. But, don’t stay up late reading them—you need the sleep!
Today, I’ll start a short series on several of the hiring trends (in the employement market at large) that we’ve noticed over the last few months, and how these trends could impact real estate recruiting.
The first trend was recently documented by Richard Florida in The Atlantic Cities online magazine. Richard points out that the number of people who are willing to relocate (ie. move their residence) to obtain a new job is at a near record low.
Americans are moving less and less these days. Last year, just 11.7 percent of us (a near record low) packed up and moved across town or the country, a huge decline from the ferment of the 1950s and 1960s.
…Most moves are local, from neighborhood to neighborhood in the same city or county, and are largely driven by seeking better housing or more proximity to family and friends.
But long-distance moves between states are different. These interstate moves are typically driven by those seeking better job opportunities.
So, if long distance moves are not happening as frequently, what does that tell us about the job market? The National Bureau of Economic Research makes this basic observation in a recent working paper:
Controlling for a wide variety of economic, social, and demographic factors, the study finds that none of the usual suspects – including a higher rate of home-ownership – can fully explain the simultaneous decline in job and residential mobility.
Instead, the evidence suggests that Americans are moving less because they're changing jobs less often, and they're changing jobs less often because the money to be gained from doing so just isn’t as good as it was in the past.
Bottom line: Americans are moving less—and not as far—because it's not nearly as worthwhile economically.
If you dig into the numbers even further, you’ll find that the economic benefit (or lack there of) can actually be quantified.
Looking in more detail at three cohorts of workers from the National Longitudinal Study of Youth covering the late 1970s to the late 2000s, the authors find that the economic benefits of changing jobs has indeed decreased.
For the oldest workers studied, the gains from changing employers added up to about 7 percent. For the two later cohorts, the benefit to switching jobs had fallen to about half that level (about 3%).
Finally, there is one more factor worth considering. It may be that the nature of jobs is changing. Jobs that used to require relocation, either are going away or no longer require relocation to perform the function.
Overall, the authors conclude, our results point more towards the idea that fewer location and job changes are needed in today’s economy. [This] does not necessarily indicate that economic activity in the U.S. has become less dynamic.
It may be due to changes in the employment practices of firms or it may be due to more efficient sorting of workers into positions. Or both.
A few take-ways from today’s discussion:
Job-related relocations will likely stagnate or continue to decline. If your real estate company is heavily dependent on relocation business, there may not be a lot of growth ahead. Of course, there are other types of relocation (ex. retirement migrations to warmer weather), but job-related relocation is not a growth business.
Without job-related relocations, hiring real estate agents becomes easier. This employment trend is another nail in the traditional corporate job coffin. If companies are no longer willing to relocate employees, this leaves many more talented employees open to considering real estate as a career option.
In essence, almost all of the individuals in the labor force are considering jobs they can do without relocating because relocating doesn’t have much of a financial upside and it’s not worth the hassle.
While talented employees used to look regionally, nationally, and maybe even globally to find the best job, they are now more focused on finding local positions. The local talent pool is the place real estate companies have always found agents. Now, the pool has more fish in it.
In my next WorkPuzzle, we’ll spend some time looking at the unemployment numbers. Again, there is good news for real estate companies coming from the broader job market.
Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle.
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