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Is A Moving Subsidy A Good Idea?

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Like Erik’s, my initial reaction to Dylan’s Matthews’s assertion that conservative think tanks are where people who really care about mass unemployment can be found was to be as incredulous as Matthews’s post is credulous.  Still, it’s true that not all of these ideas are as obviously bad as offering more subsidies to employers so they can further exploit labor.  One idea (hire more people directly) is a perfectly good one even if it’s being nominally favored by the auteur of Dow 36,000; the problem is just that it’s an AEI proposal in the same sense that the ACA was a “Heritage Foundation proposal”. That is, there’s less than no chance that any conservative think tanker or national public official would support it if it had any chance of being enacted.

Another idea that seems potentially reasonable, and has generated an interesting discussion in threads: “Offering relocation vouchers to the long-term unemployed in high-unemployment areas.” I guess I can theoretically imagine a program sufficiently robust — say, full moving expenses and enough for three month’s rent — that might be a net benefit. But for a variety of reasons I’m dubious about the idea and don’t find it surprising coming from the AEI when you step back a little:

  • Even if we assume (implausibly) that even a Congress under Democratic control — let alone the one we have now — could pass a voucher worth enough to make moving practical for a non-trivial group of people, it’s worth noting first of all that a month’s rent isn’t all you need to rent housing.  Especially in a tight rental market — and most boom areas by definition are likely to be tight rental markets — renters generally have to pass credit checks that the long-term unemployed are very unlikely to pass even if they have jobs at their new location.  And those subsidized movers who do qualify for decent housing are driving up prices for current residents.
  • There are often numerous practical reasons why moving is difficult even for people who could afford it.  Working-class parents — especially single parents — often have to rely on networks of family and friends to help care for their children, especially given the unusual and unpredictable hours many employers demand.  People may also have to care for relatives and friends. Labor mobility as a solution ignores a lot of practical problems.
  • And these problems exist even if the voucher was very generous.  If we assume more realistically that a voucher would defray only part of the moving expenses for any cross-regional move, it would almost certainly just act as an inefficient subsidy for people who were going to move in response to economic incentives anyway.  It’s hard to imagine this being the best use of scarce resources.
  • There’s also the problem that what appears to be an economically robust area now may not be even in the near future.  I happen to be reading George Packer’s The Unwinding.  My far from original take on the book is that there’s not much in the way of big picture analysis and that as what is (chronological fracturing and shuffling aside) a collection of essays the quality is uneven.  But the best parts of the book are first-rate reporting, and the strongest and most essential is a report on the boom and bust in Tampa.  Huge numbers of people flocked to metro Tampa for the promise of employment and cheap but rising real estate values in what many Americans (unlike me) consider to be ideal weather.   But, of course, the apparent prosperity was the product of a real estate bubble.  When the bubble burst, many people who had left behind their social networks found themselves with suddenly worthless houses in near-vacant subdivisions with no amenities far from any remaining employment.  The fact that relocation vouchers would exacerbate such bubbles should also give us pause.  Sun Belt booms and busts should also remind us that relocation in itself is not insulation from economic catastrophe.

Overall, then, I don’t find the advocacy of housing vouchers at all surprising coming from an AEI guy; it’s very much consistent with the narrative than mass unemployment is primarily an individual responsibility.  Fundamentally, it’s a means of evading the problem rather than addressing it even if we assume that the proposals are being made in good faith.

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