Sunday, June 20, 2010

Out-migration as a solution to high unemployment

In a recent piece, Understanding Society discusses Jobs and people in Michigan and provides an unorthodox but logical outline of a solution for high unemployment rates. There are two components: job creation and out-migration.

This is based on research showing that when unemployment rises rapidly in a particular state (in the USA), a lot of people leave the state permanently to find jobs. Essentially a local economy of state size doesn’t seem to be able to generate enough new jobs in a short enough time to allow laid off workers to simply stay put and wait for new jobs to appear.

In the case of Michigan, the number of unemployed now is so great that the prospect for the creation of enough new jobs to absorb these unemployed is remote. The author of the linked piece suggests that a reasonable target for the state is to have the unemployment rate adjust to the national rate by 2020, based on a forecast that the national rate will drop to 6% by then. The unemployment rate in Michigan now is 14%.

Based on the state’s demographics, this would take

“150,000 new jobs and 250,000 out-migrants from the labor force. And assuming that each worker has one dependent on average, this means a loss of about 500,000 people from Michigan’s current population of about 9.9 million–for a total population of 9.4 million in ten years.”

That’s a large number of people leaving; but over ten years that amounts to shrinkage of 0.5% per year, which is in the range of what the state has been experiencing recently.

Overall, this line of thinking implies that the state benefits from significant out-migration, when a major economic crisis occurs. In Michigan’s case the crisis has been the auto industry restructuring triggered by the national financial crisis. It seems unlikely that public officials in any state would explicitly encourage out-migration as a solution to high unemployment rates, as economic sectors secondary to the one at the center of the crisis would be affected negatively.

1 comment:

Anonymous said...

I think this analysis underestimates the problem. Outmigration has been a force in Michigan for years. The difficulty, from an unemployment perspective, is that those most employable are the first to leave. The remaining unemployed tend to be those least employable, under-educated, under-skilled, under-motivated.
Am I missing something?