Moving on up: Has Britain’s housing crisis made us a less mobile nation?
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Young people are less mobile today in terms of changing jobs and moving homes compared to previous generations. While compositional changes in the population should have led to increased mobility, the gap in employment rates and wages between local areas has narrowed, reducing incentives for people to move. In particular, the rate of private renters aged 25-39 changing jobs and homes has fallen by two-thirds. Although earnings may be converging nationally, housing costs have risen faster in more productive areas, potentially limiting mobility. Those who do move tend to relocate to lower cost housing areas, and commutes have increased, suggesting people make compromises to balance housing and work.
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Moving on up: Has Britain’s housing crisis made us a less mobile nation?
- 1. June 19@resfoundation 1 Moving matters Housing costs and labour market mobility Liz Truss MP, Chief Secretary to the Treasury Alan Manning, Professor of Economics, LSE Rain Newton-Smith, Chief Economist at the CBI Lindsay Judge, Senior Research and Policy Analyst at the Resolution Foundation Chair: David Willetts, Executive Chair of the Resolution Foundation #eventhashtag Wifi: 2QAG_Guest Password: Welcome_Guests
- 2. 2 Young people are moving jobs less frequently today… Proportion of working population starting a new job in year, by age group: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey
- 3. 3 Proportion of working 25-34 year olds changing job and residence in year (two-year rolling average): UK @resfoundationSource: RF analysis of ONS, Labour Force Survey … and they are less likely to move jobs and homes
- 4. 4 Proportion of working 25-34 year olds changing job and residence in year (two-year rolling average): UK @resfoundationSource: RF analysis of ONS, Labour Force Survey … and they are less likely to move jobs and homes
- 5. 5 Proportion of working 25-34 year olds changing job and residence in year (two-year rolling average): UK @resfoundationSource: RF analysis of ONS, Labour Force Survey … and they are less likely to move jobs and homes
- 6. 6 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 7. 7 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 8. 8 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 9. 9 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 10. 10 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 11. 11 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 12. 12 Compositional effects on average change in job-plus-residence mobility rates of those aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey But compositional change should have increased job- plus-home moves
- 13. 13 Standard deviation of employment rates across local authorities @resfoundationSource: ONS, Local area Labour Force Survey (1997-2003); ONS, Annual Population Survey (2005-18) The employment gap between areas has shrunk, reducing the ‘push’ to leave
- 14. 14 Coefficient of variation of weekly median earnings by local authority: UK @resfoundationSource: RF analysis of ONS, Annual Survey of Hours and Earnings; ONS, Annual Population Survey Earnings between local authorities have also converged, reducing the ‘pull’ to move
- 15. 15 Proportion of 25-34 year olds renting privately changing residence and jobs in year (two-year rolling averages): UK @resfoundationSource: RF analysis of ONS, Labour Force Survey 1996-2018 The propensity of young private renters to move jobs and homes has fallen by two-thirds
- 16. 16 Compositional effects on average change in job-plus-residence mobility rates of private renters aged 25-39: UK @resfoundationSource: RF analysis of ONS, Labour Force Survey Compositional change plays a very small role in explaining fall in private renters’ mobility
- 17. 17 Change in median earnings, by 1997 local authority earnings decile: England, 1997-2018 @resfoundationSource: RF analysis of ONS, Annual Survey of Hours and Earnings; Resolution Foundation private rents data series Earnings may be converging across the country…
- 18. 18 Change in median private rents and earnings, by 1997 local authority earnings decile: England, 1997-2018 @resfoundationSource: RF analysis of ONS, Annual Survey of Hours and Earnings; Resolution Foundation private rents data series … but rents have grown faster in more productive areas
- 19. 19 Hypothetical increase in disposable earnings (median earnings less median rent) as a result of moving local authority @resfoundation What could that mean in practice?
- 20. 20 Share of cross-local authority residential moves by housing costs bracket: England @resfoundationSource: RF analysis of Office for National Statistics. Social Survey Division, Northern Ireland Statistics and Research Agency. Central Survey Unit. (2018). Labour Force Survey Adult Datasets, 2002-2018: Secure Access. [29/05/2019]. 14th Edition. UK Data Service. SN:6727 Those who are moving are heading to areas with lower housing costs
- 21. 21 Mean travel time from home to work in minutes, by age: England @resfoundationSource: RF analysis of Office for National Statistics. Social Survey Division, Northern Ireland Statistics and Research Agency. Central Survey Unit. (2018). Labour Force Survey Adult Datasets, 2002-2018: Secure Access. [29/05/2019]. 14th Edition. UK Data Service. SN:6727 Longer commutes suggest other compromises are being made
- 22. June 19@resfoundation 22 Moving matters Housing costs and labour market mobility Liz Truss MP, Chief Secretary to the Treasury Alan Manning, Professor of Economics, LSE Rain Newton-Smith, Chief Economist at the CBI Lindsay Judge, Senior Research and Policy Analyst at the Resolution Foundation Chair: David Willetts, Executive Chair of the Resolution Foundation #eventhashtag Wifi: 2QAG_Guest Password: Welcome_Guests
Editor's Notes
- Called the new research we are releasing today moving matters because it really does Might be good reasons not to move – emotional attachments to communities, practical considerations like having 2017 colleagues estimated that those who stayed in your existing job – 2% pay rise New job different firm 7% Those wage gains from moving job are especially important at the beginning of one’s working life
- Grey line – 10% to 6% Purple line – younger cohort 13% to just under 9% - a fall of around a quarter Note that not post crisis If moving jobs is good for your living standards moving jobs and area is even better,
- 1 = sedentary nation 2. Absolute terms fallen by about 40%
- Also fallen in relative terms when we measure Meh – dog that didn’t bark in the night Really we’d expect it to look v different Reason why is because the composition of young people we are interested in has changed We know for example that YP today form stable couples a bit later and have children a bit later too
- It’s not – its actually fallen by close to 40%
- So why do we think this has occurred? We have 3 propositions – 2 positive and 1 less so
- Doesn’t mean that those pay gaps aren’t still considerable Average weekly pay was 62 per cent higher in UK local authorities in the top earnings decile in 2018 compared to that in the bottom pay decile. But this ‘productive area premium’ has fallen over time: in 1997, the higher-paying areas offered an average weekly wage 80 per cent larger than the lowest-paying local authorities. SO IT STILL PAYS TO MOVE TO A HIGHER EARNING AREA _ OR DOES IT? Think back to the decomp charts showed that rising share of YP renting privately should have driven up mobility rates
- Absolute terms – fallen by more than two thirds Something has gone on with private renters Again, worth being alert to role composition could play – talk a lot about growing number of PRs with children
- Another thing we talk about a lot is the burden that rising rents place on incomes
- Not only have rents grown faster in higher earning areas They have actually outpaced earnings in the top 5 deciles What this means for mobility is not only has the relative wage pull diminished, the livings standards pull to move to more prosperous areas has weakened – and ins ome acses may ahev even disappeared
- Health warning - Trust me that hundreds more possible combinations Haven’t included London deliberately These are hypotheticals – lets’s look at some real moves
- Housing costs are influencing people’s non-behaviour – but also actual behaviour To conclude, worth reflecting on living standards impact of this First thing is if move to less productive area May choose to move and stay in post – implications for commuting
- So if moving matters for living standards, then policy to tackle falling rates of mobility matters too.