High housing costs are stopping us moving for work – and it’s damaging the economy

Symbolism, yeah? Image: Getty.

Donald Trump tells us there are no protesters. He says it so often, he probably believes it. Which is worrying, but also fairly normal. There are stories we hear so often that we simply assume they are true.

Here’s one. Our communities are changing ever faster as more and more people move around for work, driven in part by growing economic gaps between richer and poorer places.

That’s the story – and then there’s the reality. In fact, we are almost a third less likely to move for work than our predecessors at the turn of the millennium. This is particularly true of the supposedly ever more footloose and fancy free youth. The number of young people (aged 25-34) moving home and starting a new job has fallen from 30,000 in 1997 to 18,000 in 2018.

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So why is everyone no-longer heading cross-country for work? There are many potential reasons, going far beyond the economic incentives we focus on in new research, to our family structures and social norms. There can be good reasons that job mobility has fallen, if people are no longer forced to upsticks; and there can be bad reasons, if we’re trapped from taking up opportunities we would like to seize. A look at how our country has changed suggests that economic change, both good and bad, explains part of our tendency to stay put.

First the clearly good. Repeating Norman Tebitt’s supposed call to “get on your bike” to find work in the 1980s would be a bad idea politically today, and it wouldn’t make much sense economically either. Ours is a much higher employment country than it was then – over 76 per cent of us are in work. This success reflects both the post-crisis jobs boom and a longer term trend of reduced worklessness.

Crucially, recent jobs growth has been strongest in areas that have long lagged behind employment wise – the fastest growth has been in Merseyside and South Yorkshire. The result is a more equal country jobs-wise: 39 local authorities had employment rates 10 per cent below the national average in 1999. By 2018 this had fallen to 18. While there are still places where a good job is too hard to come by, there are far fewer places where people have to move away to find any job at all.

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But moving for work isn’t just about getting a job, it’s often about getting a better job – doing something you’d prefer or earning a higher wage. Ours is a country with big gaps in earnings between places – the typical weekly wage is £670 in Richmond upon Thames but only £360 in Kingston upon Hull. But those gaps have shrunk in recent times, in part as the minimum wage has pushed up earnings at or near the bottom. Of course there are different stories for different groups, with different qualifications or in different industries. But the big picture is smaller earnings and employment gaps across Britain, adding to the picture that labour market incentives to move for a new job have decreased.

But what about beyond the labour market? Here we get to very bad reasons for reduced job mobility – housing.

We might expect rents to move in line with earnings in each area. If so rent rises would be annoying, but they wouldn’t impact on financial incentives for people to move for a better paid job.

But in fact, rents have risen fastest in areas that have the highest earnings levels – not the fastest earnings growth – rising by almost 90 per cent the among highest paying local authority areas, compared to 70 per cent among the lowest paying. This has reduced the living standards boost that people might receive from moving to higher paying parts of the country. And yes, this is about far more than London.

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To make this concrete we can provide some (very simplistic) illustrations of how the incentives to move from lower to higher paying places has fallen over time. While moving from a typical paying job in Scarborough to one in Leeds in 1997 might have seen a living standards boost of 29 per cent, today that figure is 4 per cent. Moving from Sunderland to York in 1997 would have meant a 6 per cent boost: today that move would entail a sizeable after-rent earnings fall of 24 per cent.

 

Our analysis focuses on rents, because that is the more likely housing cost faced by young people who move (or not). But rising house price gaps between places, relative to earnings gaps, also lock older and home owning workers out of moving should they wish to do so. Housing shifts may be trapping baby boomers, not just millennials, from moving for work.

These financial incentive shifts do appear to be changing our behaviour. Not only are we moving less for work, but those that are moving are more likely to head somewhere with lower housing costs. That may bring relief via lower costs, but it could also mean a lower paying job, or a longer commute to work. On average we’re spending 12 minutes more a day commuting than we were in the mid-1990s.

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So where does that leave us? Fewer people moving for work, which is good news when people are no longer forced to move for any work, but bad news for those trapped by housing costs so that they cannot take up opportunities they would love to seize. The latter problem matters for individuals – the typical pay rise for those moving areas for work is over three times higher than for those who stay in the same job – but it also means lower productivity for the economy as a whole, as fewer people move from low productivity firms to higher productivity ones.


Three lessons for policy makers stand out. First, they should seek to further close earnings and employment gaps. Second, housing is needed in high demand areas so that higher productivity delivers higher living standards not just higher rents. And third – remember to dig deeper to understand our country, rather than just believing the stories we’re told.

Torsten Bell is director of the Resolution Foundation.

 
 
 
 

What are Europe’s longest train journeys?

The Orient Express was a pretty long train. Image: Getty.

For reasons that aren’t clear even to me, a question popped into my head and refused to leave: what’s longer? Britain’s longest train joruney, or Germany’s?

On the one hand, Germany is quite a bit larger – its area is 70 per cent more than Great Britain’s. On the other hand, Great Britain is long, skinny island and Germany is much rounder – the distance from John O’ Groats to Lands End is over 1,400 km, but you never have walk over 1,000 km to cross Germany in any direction.

And it turns out these factors balance almost each other out. Britain’s longest train, the CrossCountry from Aberdeen in Scotland to Penzance in Cornwall, runs 785 miles or 1,263 km. Germany’s longest train, the IC 2216 from Offenburg in the Black Forest to Greifswald on the Baltic coast, is exactly 1,300 km. Germany wins by a tiny distance.

Except then I was hooked. What about the longest train in France? Spain? Italy?

So I did what anyone would do. I made a map.

The map above was all drawn with the Deutsche Bahn (Germany Railways) travel planning tool, which rather incredibly has nearly every railway in Europe. The data quality is better for some countries than others (the lines in France aren’t quite that straight in real life), and the measurements may be a bit off – it’s not always easy to find the length of a train service, especially when routes can vary over the year – but it gives us a good idea of what the routes look like.

Let’s start with the UK. The Aberdeen to Penzance route isn’t really for people who want to go all the way across the country. Instead, it’s a way to link together several railway lines and connect some medium-to-large cities that otherwise don’t have many direct services. “Cross-country” trains like these have existed for a century, but because they crossed multiple different company’s lines – and later, multiple British Rail regions – they tended to get ignored.

 

That’s why, when it privatised the railways, the government created a specific CrossCountry franchise so there was a company dedicated to these underused routes. If you want to get from Edinburgh to Leeds or Derby to Bristol, you’ll probably want a CrossCountry train.

The usual route is Edinburgh to Plymouth, but once a day they run an extra long one. Just one way though – there’s no Penzance to Aberdeen train. 

The longest train in Germany is weird – at 1,400 km, it’s substantially longer than the country itself. On the map, the reason is obvious – it takes a huge C shaped route. (It also doubles back on itself at one point in order to reach Stuttgart).

This route takes it down the Rhine, the biggest river in west Germany, and through the most densely populated patch of the country around Cologne and Dusseldorf known as the Ruhr. Germany’s second and third longest trains also have quite similar routes – they start and end in remote corners of the country, but all three have the Rhine-Ruhr metropolitan area in the middle.

You’re not meant to take the IC 2216 all the way from north east to south west – there are much more direct options available. Instead, it’s for people who want to travel to these major cities. They could run two separate trains – say, Offenburg-Dusseldorf and Griefswald-Cologne – but making it a single route means passengers benefit from a bit more flexibility and helps DB use its rolling stock more effectively.

France’s longest train exists for a very good reason. Most of France’s high-speed lines radiate out from Paris, and it’s very hard to get around the country without going to the capital. Usually to get from Marseille on the Mediterranean to Nantes near the Atlantic, you’d need to take a TGV to Paris Gare de Lyon station, then get the Métro across the city to Gare Montparnasse.

Once a day though, this TGV avoids this faff by stopping in the suburb of Juvisy and turning around without going into the centre. This lets passengers travel direct between the coasts and reduces the traffic through Paris’s terminals in the rush hour. The exact length of this route isn’t clear, but Wikipedia says it’s about 1,130 km.

Spain’s longest train is very different. This is the Trenhotel sleeper service from Barcelona to Vigo, and it’s pretty fancy. This is a train for tourists and business travellers, with some quite luxurious sleeping cabins. But it is a regularly scheduled train run by the state operator Renfe, not a luxury charter, and it does appear in the timetables.

Being dry, hot and quite mountainous in its middle, most of Spain’s cities are on its coast (Madrid is the one major exception) and as a result the train passes through relatively few urban areas. (Zaragoza, Spain’s 5th largest city, is on the route, but after that the next biggest city is Burgos, its 35th largest,) This is partly why overnight trains work so well on the route – without many stops in the middle, most passengers can just sleep right through the journey, although there are occasional day time trains on that route too if you want to savour the view on that 1,314 km journey.

Finally, there’s Italy. This is another sleeper train, from Milan in the north to Syracuse on the island of Sicily. It goes via Rome and travels along the west coast of... wait, it’s a train to the island of Sicily? How, when there’s no bridge?

Well, this train takes a boat. I don’t really have anything else to add here. It’s just a train that they literally drive onto a ferry, sail across the water, and then drive off again at the other side. That’s pretty cool.

(As I was writing this, someone on Twitter got in touch to tell me the route will get even longer in September when the line to Palermo reopens. That should be exciting.)

So those are the longest trains in each country. But they aren’t the longest in Europe.

For one thing, there are some countries we haven’t looked at yet with very long trains. Sweden has some spectacular routes from its southern tip up into the Arctic north, and although the Donbass War appears to have cut Ukraine’s Uzhorod to Luhansk service short, even Uzhorod to Kharkiv is over 1,400 km. And then there are the international routes.

To encourage the Russian rich to take the train for their holiday, Russian Railways now run a luxury sleeper from Moscow to Nice, passing through France, Monaco, Italy, Austria, Czechia, Poland, Belarus and Russia. This monster line is 3,315 km long and stretches across most of the continent. That’s got to be the longest in Europe, right?

Nope. Incredibly, the longest train in Europe doesn’t actually cross a single border. Unsurprisingly, it’s in Russia, but it’s not the Trans-Siberian – the vast majority of that’s route is in Asia, not Europe. No, if you really want a long European train journey, head to Adler, just south of the Olympic host city Sochi. From there, you can catch a train up to Vorkuta on the edge of the Arctic Circle. The route zigzags a bit over its 89 hour, 4,200 km journey, but it always stays on the European side of the Ural mountains.

Bring a good book.

Stephen Jorgenson-Murray often tweets about this kind of nonsense at @stejormur.


All maps courtesy of Deutsche Bahn.