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.

 
 
 
 

Leeds is still haunted by its pledge to be the “Motorway City of the Seventies”

Oh, Leeds. Image: mtaylor848/Wikimedia Commons.

As the local tourist board will no doubt tell you, Leeds has much to be proud of: grandiose industrial architecture in the form of faux-Egyptian temples and Italian bell-towers; an enduring cultural legacy as the birthplace of Goth, and… motorways. But stand above the A58(M) – the first “urban motorway”  in the country – and you might struggle to pinpoint its tourist appeal.

Back in the 1970s, though, the city council was sufficiently gripped by the majesty of the motorways to make them a part of its branding. Letters sent from Leeds were stamped with a postmark proudly proclaiming the city's modernity: “Leeds, Motorway City of the Seventies”.

Image: public domain.

During the 1960s, post-war optimism and an appetite for grand civic projects saw the rapid construction of motorways across England. The construction of the M1 began in 1959; it reached Leeds, its final destination, in 1968. By the early 1970s the M62 was sweeping across Pennines, and the M621 loop was constructed to link it to Leeds city centre.

Not content with being the meeting point of two major motorways, Leeds was also the first UK city to construct a motorway through the city centre: the inner ring road, which incorporates the short motorway stretches of the A58(M) and the A64(M). As the council put it in 1971, “Leeds is surging forward into the Seventies”.

The driving force behind Leeds' love of motorways was a mix of civic pride and utopian city planning. Like many industrial cities in the North and Midlands, Leeds experienced a decline in traditional manufacturing during the 1960s. Its position at the centre of two major motorways seemed to offer a brighter future as a dynamic city open for trade, with the infrastructure to match. In response to the expansion of the roads, 1970s council planners also constructed an elevated pedestrian “skywalk” in an attempt to free up space for cars at ground level. Photos of Leeds from that time show a thin, white walkway running through blocky office buildings – perhaps not quite as extensive as the futuristic urban landscape originally envisaged by planners, but certainly a visual break with the past.

Fast forward to 2019 and Leeds’ efforts to become a “Motorway City” seems like a kitsch curiosity from a decade that was not always known for sustainable planning decisions. Leeds’s historic deference to the car has serious consequences in the present: in February 2019, Neville Street – a busy tunnel that cuts under Leeds station – was found to contain the highest levels of NO2 outside London.

City centre planners did at least have the foresight to sink stretches of the inner motorways below street level, leaving pedestrian routes largely undisturbed. Just outside the centre, though, the roads can be more disruptive. Sheepscar Interchange is a bewildering tangle of arterial roads, Armley Gyratory strikes fear into the hearts of learner drivers, and the M621 carves unsympathetically through inner-city areas of South Leeds with pedestrian access restricted to narrow bridges that heighten the sense of a fragmented landscape.

 

Leeds inner ring road in its cutting. Image: author provided.

 

The greatest problem for Yorkshire's “Motorway City” in 2019, however, is not the occasional intimidating junction, but the complete lack of an alternative to car travel. The dire state of public transport in Leeds has already been raised on these pages. In the early 20th century Leeds had one of the most extensive tram networks in the country. The last lines closed in 1959, the same year construction began on the A58m.


The short-sightedness of this decision was already recognised in the 1970s, as traffic began to build. Yet plans for a Leeds Supertram were rejected by successive Conservative and Labour governments unwilling to front the cost, even though smaller cities such as Newcastle and Sheffield were granted funding for light transport systems. Today, Leeds is the largest city in the EU without a mass transit system. As well as creating congestion, the lack of viable public transport options prevents connectivity: the city's bus network is reasonable, but weaker from East to West than North to South. As a non-driver, I've turned down jobs a short drive away that would be a logistical impossibility without a car.

Leeds' early enthusiasm for the motorway was perhaps premature, but there are things we can learn from the 1970s. Whatever else can be said about it, Leeds' city transport strategy was certainly bold – a quality in short supply today, after proposals for the supertram were watered down to a trolleybus system before being scrapped altogether in 2016. Leeds' rapid transformation in the 1960s and 70s, its grandiose visions of skywalks and dual carriageways, were driven by strong local political will. Today, the long-term transport strategy documents on Leeds City Council's website say more about HS2 than the need for a mass transit system within Leeds itself, and the council has been accused of giving up the fight for light rail and trams.

Whilst central government's refusal to grant funds is the greatest obstacle to Leeds' development, the local authority needs to be far more vocal in demanding the transport system the city deserves. Leeds' desire to be the Motorway City of the Seventies might look ludicrous today, but the political drive and utopian optimism that underpinned it does not.