Over the past 30 years, there has been a significant workforce trend that has impacted the ability of companies to hire talent, and talent’s ability to advance their careers. What’s the trend? Fewer Americans are relocating than ever before.
In 1995, 30.5% of job seekers were willing to relocate for a new job. Today, that number has dwindled all the way down to 11.3%. What is the cause of such a dramatic resistance to relocation? Let’s take a look.
Before we get into the weeds about why people are resistant to relocating for a new job in today’s business climate, it’s important to note that, in general, people are psychologically resistant to change. Most people begin to process change by experiencing fear psychologically. Change interrupts our connection to the status quo, evoking said fear.
There’s a great deal of change involved in relocating. Moving to a new place for a job requires finding a new home, routine, social circle—even mundane things such as new coffee shops, grocery stores, and restaurants require change.
While people have always been resistant to change, one of the modern contributors to people being less likely to move is the financial element of relocation. When you look at the data and see when the sharpest decline in willingness to move occurs, it’s right around the early 2000s. Thinking of the economic trends of the time, it’s a period that represents the dot.com bubble bursting. Extrapolate that out, and you can deduce that companies are unable to offer as competitive of relocation packages as they were previously.
In the 1980s and 90s, relocating employees found themselves receiving generous relocation packages that cover most of the moving costs. Some even provided employees with a full package that would include buying their previous home, so there was no stress and pressure to sell the home while preparing to move. In today’s market, that has become quite rare.
Piggybacking off the expense of relocation, is the volatility of today’s housing market. For the past few years, housing prices have skyrocketed across the country and inventory has plunged, making it challenging for relocating people to find a new home. Housing prices are growing at twice the rate of inflation, making it incredibly difficult for people to pick up and move. Even for people who feel secure enough to face the market financially, there’s the issue of low inventory that dissuades people from considering a move.
When it comes to changing markets for work, the highly variant cost of living prices from one city to another is also contributing to people being less likely to relocate. To financially justify the move, employees would need to receive significant pay raises to account for the higher cost of living. A 100k salary in Cleveland differs greatly from Austin, and Austin differs greatly from San Francisco.
What role are employers playing on the downward trend of relocation? Each of these reasons could potentially be mitigated if employers offered compensation packages that made a move worth it. However, that can be hard to justify. A company can simply hire talent within their market and save 20-35% on relocation/compensation incentive.
The tradeoff that companies make by neglecting to seek out relocation candidates is that they limit their applicant pools. One interesting trend some companies are deploying to combat both the unwillingness of talent to move and shrinking applicant pools is to do the relocation themselves. By moving to cost-friendly and talent-rich cities, companies can leverage a strong base of talent and offer more competitive relocation packages to out-of-market talent.
In today’s labor market where talent is hard to find, some companies may have to seek talent outside of their area. With talent being less likely to relocate than in year’s past due to a resistance to change, high moving expenses, volatile housing prices, and disappearing relocation packages, companies will have to be proactive and competitive when wooing out-of-market talent.
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