Should Poor Whites Just Move?

There’s been a hulabaloo recently about relocation and poverty, essentially driven by conservative writers applying a similar critique to poor rural whites they’ve (we’ve) long applied to poor urban blacks: the alleged solution to poverty is something to “break the cycle,” and that something is probably migration. There’s no shortage of precedent for this claim. The pro-mobility and pro-opportunity effects of migration are pretty well documented. I myself have written on the topic.

This relates to a question I wrote about a while back, in my post on why we should let cities (or towns) die. But I wanted to take another crack at this. Now, since I’m currently traveling, I don’t have all my fancy charts and graphs. And my internet connection is abysmal, so I’m not really offering links either. Just narrative. But if you want specific points illustrated with data, just highlight or leave a responsive note, and I’ll naturally do some follow-up posts when I’m stateside again, as I usually do.

So, to the question at hand: is relocation a solution to poverty and, if so, should the government actively support relocation through “relocation vouchers?”

There are four angles on this I want to hit. First: Why do we have a social safety net at all? Second: Why don’t people move on their own, if doing so is good for them? And third: What happens to people left behind— are they worse off? And then finally: What if things do get worse for those left behind — what happens to those places??

Two Kinds of Safety Net

Bouncy or Comfy — It Makes All the Difference

There are two different ways we can conceptualize safety net/welfare/social assistance programs like unemployment, disability, EITC, TANF, etc. We can think of these programs as trying to help poor people survive and live better lives, or we can think of these programs as trying to make there be fewer poor people. Neither view is, in my mind, inherently wrong or bad. Indeed, at face value, it seems obvious that a just society would want to help poor people survive and live comfortably despite poverty, and would want to help them become non-poor.

But going a bit deeper, these two goals, of guaranteeing a quality of life versus encouraging economic uplift, can be in tension. The reasons are many: sometimes economic uplift requires short-term discomfort, sometimes people (even very smart people) resist what’s in their best interests, some people prefer familiarity and poverty to unfamiliar environments conducive to success.

Consider the case of migration. If the goal of social assistance programs is to provide for a standard of living for poor people, then we should want poor people not to move very much. Geographic fixity helps them form social networks that ease the burden of poverty, make them easy for social workers to find and help, ensure few wasted resources in costly transitions, and they can settle in poor areas with lower cost of living. Yes, poverty can be expensive, but on the whole low-income areas usually have low prices too, especially for housing.

So if the goal of welfare is merely to ensure that people of a given income have maximized consumption, then Appalachian poverty is a huge success story. Relatively small government programs (compared to the big entitlements and the military) have succeeded in allowing hundreds of thousands of people carve out entire economies based on little more than government largesse and occasional private-sector supplementation. By living in Appalachia, individuals succeed in surrounding themselves with a community and a network that understands their needs and interests and provides for them (such as well-developed SNAP-for-cash trading networks), and they live in areas where the cost of living, and stigma to receiving welfare, are very low.

But there’s a problem. These peoples’ children will not know better lives. They will experience the same system, even more entrenched, with even fewer opportunities. Most of us recognize that multiple generations in a row depending on government support for survival to a greater and greater degree is not a desirable outcome.

This is because most of us, on some level, view social assistance programs the other way. They are at least partly not about making poor people comfortable, but about making poor people not be poor. This was the idea behind workfare in the 1990s at least, and the underlying reasoning behind a “social safety net” rhetoric: it’s there to catch you when you fall, so you can get back up.

If the goal of social assistance is to increase the market incomes of recipients beyond the welfare-eligibility threshold, then we may want poor people to move. We don’t want poor people, in this model, congregating in high-poverty areas where they all compete for a few bad jobs. We want them moving into areas with more jobs, better wages, probably higher rents. This program is costlier to administer in the short run, because we expect poor people not to minimize costs. We may want to encourage movement, even though it makes programs harder to administer and track, because that movement may bring poor people into greater contact with employment opportunities.

So when we think about weighing the pros and cons of relocation vouchers, you can see how people could land on different sides.

On the one hand, these vouchers couldbe a key part of welfare recipients or the unemployed making a new life. On the other hand, they may be a waste of money pulling poor people away from affordable, socially-connected living based on false promises of uncertain riches.

Poor People Are Poor, Not Stupid

So If Migration Is So Good, Why Isn’t It Happening?

There’s a huge question out there in the migration literature right now: why has migration fallen in recent years? Why, despite a sharp divergence in economic fortunes, has migration not responded more aggressively? There’s a lot of research on this, but none of the conclusions are perfectly convincing.

I’ve argued that the unprecedented generosity of unemployment benefits may have delayed migratory responses. Academic researchers have suggested increased occupational licensing, or changes in employer-employee relationships. A recent study suggests that declining “societal trust,” i.e. the degree to which Americans trust strangers and people they don’t know, may have reduced migration. If that last one is true, then Americans may view jobs in other places as less valuable than in the past, because they don’t view the people in those places as being as trustworthy. If true, this explanation would be a bombshell, as it suggests that our fabric as a nation is fraying to the extent that our integrated labor market is breaking off in chunks.

But there are other explanations for the very poor. They may stay in place because establishing residence and eligibility for welfare in a new location is burdensome and, once established in one place, it’s easiest to stay. If a new job somewhere else doesn’t work out, it’d be a shame to have to do all the residency work again. Plus, many welfare benefits prohibit saving and include asset tests. Because migration is costly, this makes it logistically difficult for recipients of public assistance to get the resources to migrate even if they know it is beneficial.

In other words, there are plenty of reasons why it may be good for a person to migrate, and yet they may rationally choose not to. Arguing that it would be better if more poor people relocated is not an argument that poor people aren’t smart enough to guide their own fate. It’s an argument that there are barriers to their rational self-interest. Because establishing residency is hard for the poor, because local networks are hard to replace, because not all public benefits transfer easily across state lines, because occupational licensing blocks off some job fields, because society-wide trust is breaking down, there are costly barriers facing the would-be low-income migrant.

He or she may need help overcoming those barriers. And that is where relocation vouchers come in.

Some programs like this already exist. Consider the EITC. The EITC boosts incomes for poor working families. Not all poor families, just poor working families. The idea is that boosting the incentive to work can increase labor supply by drawing in workers who otherwise would be disincentivized from work due to welfare phase-outs. It’s a pretty good idea.

But apparently not many people have thought about what it means to “increase labor supply.” Sure, it could mean taking more hours at a given job. Or it could mean taking a job in a given area. But welfare recipients are disproportionately likely to be working minimum-wage jobs where their ability to control their hours may be constrained, or else may reside in areas with very few jobs at all. By increasing the returns to work, the EITC increases the returns to high-employment-for-low-wage-earners places versus low-employment-for-low-wage-earners places. I know from anecdotal evidence back home that at least some of the increased labor supply from a more generous EITC comes from migrant labor: that’s migrant labor from Appalachia, by the way. More properly they’re often considered “commuters,” maintaining residency in their home county, commuting every week or two.

It would be more efficient just to subsidize relocation directly, and leave the EITC aimed at its core goal of boosting worker-income rather than relocating workers.

Those Left Behind

There’ll Be a Reckoning

The last question is one Adam Ozimek and I have butted heads on several times. Say we offer relocation vouchers. And say many poor people take them, heading to better places. And say they really are better off. That’s all well and good. But not everyone is gonna take the vouchers. And those left behind will, surely, be even worse off, right?

Bereft of all those potential workers, an even smaller population and tax base remaining, won’t these old locations be even worse off?

I don’t think so. I say this based on the extraordinary extent of research on international migration. Most labor economists who study the issue find that international migration does not make sending countries worse off. In some cases, it may even make them better off. For those (lookin’ at you Adam!) who think outflows will make those left behind worse off, I think the burden is on them to spell out exactly how.

What burden will be made worse? What currently not-failed system will now fail?

When migrants leave home, they don’t sever all ties. They still have family, friends, and social or economic ties of many kinds. They may still visit, attend marriages and funerals and celebrations, follow local politics, support local community projects. I know many Appalachians outside of Appalachia who live this kind of diaspora life. If you’re a first-generation immigrant in the US, you probably live this kind of trans-local life.

Internationally, a key mechanism we study is remittances: the direct transfer of cash. There’s no data on domestic remittances, nor am I aware of any good studies on it, but I wager that poor people who leave home and “make it” probably don’t always totally forget their roots. I suspect that at least some of them send money home to friends and family (or church). I truly wish we had data on this, but, alas, we don’t (to my knowledge).

There’s more. Consider legacy costs like infrastructure and pensions. A smaller population base can’t shoulder these costs. But that’s not entirely a bad thing. Legacy costs are often massively inflated due to capture of local governance by interest groups anyways. No reasonable person looks at Chicago or Detroit and Puerto Rico and sees anything other than liabilities desperately in need of restructuring. As the tax base shrinks due to out-migration, that process may be sped up. U.S. municipalities and states are not like developing countries where sovereign powers can keep postponing the inevitable — our states and cities are ultimately bound to rules of financial conduct that will bite them sooner or later. So exit from the system is a powerful vote in favor of an earlier reckoning with bondholders, or unions, or taxpayers, or whatever group it is that is driving fiscal or managerial dysfunction in failing economic areas.

Altogether, I wouldn’t claim that those left behind are better off in the short- or medium-term. I’m not sure they’re worse off, but probably not better. In the long-run, however, yes, Puerto Rico will be better off if it could just declare bankruptcy. Detroit is better off having tough reforms forced on it. Illinois would be better off if it could just renegotiate its pensions. And in areas like Appalachia where the legacy costs are actually not all that big all things considered, I’m fairly confident the negative impact of out-migration is minimal.

All Cities Are Tent Cities

I Say Again: We Should Let the Cities Die… Eventually

I was on a call with a reporter a few months back and he asked me what should be done about a certain city. I asked him if he had ever been to the Parthenon in Athens, or to the Decapolis in Israel, or to Macchu Picchu. He said, yeah, I’ve been to Macchu Picchu. I said — great, was anybody living there? Answer: no, it’s abandoned. Why was it abandoned? Because the Inka Empire fell, and it was a palace resort, so it didn’t have a purpose.

And that’s the way cities go. The Parthenon is abandoned. Chan Chan is a ruin. The temples of Tenochtitlan were thrown down to make Spanish plazas. Who now cries for the great mercantile city of Ugarit, pride of its time, whose ships and fleets fled Hattusa of old?

No one cries for Ugarit.

Ugarit outlived its time. The Parthenon outlived its time. Chan Chan outlived its time. Across some span of time, every city is a nomad camp.

The reporter replied that he could see why I wasn’t that popular on the urbanist speaking circuit. Fair enough.

This is a fairly grim message, but understand I’m not counseling hopelessness for struggling cities, just rationality. Cities exist because they are useful for production of traded goods and services, that is all. Economies grow and prosper through specialization and trading with other economies, through increasing efficiencies of scale and scope and networks, through growing variety of goods and services, etc. When a given place has the right conditions to make the production of these goods and services at a given scale easy, it prospers. When it doesn’t, it doesn’t.

Consider a simple model of the economy with two industries: farming and mining. An area, call it Kentucky, has a given amount of agricultural produce it can make. That produce can be sold to support the livelihoods of a given number of people.

But then, minerals are found! Minerals can be sold for more, but only once extracted. We could move workers from farming to mining, but we could also bring in more workers, to mine, even as we also farm. Population rises. The economy grows. Maybe other goods and services crop up to provide consumption for rising incomes.

But eventually, the ore runs out. The mining stops. So what then? Either we need another mine, or we need to invent a new economic sector, or we need to spread the wealth from remaining agriculture more thinly, or the miners have to go. So what’s it gonna be?

Obviously, “invent a new economic sector” is ideal. Maybe the next “mining boom” is software companies. Or craft breweries. Or furniture manufacturing. Or high-end bowling balls. But they’re all just “mining booms,” using a newly-discovered local fitness for production of a given good until such a time as the “ore” runs out: because the workforce changes, or demand slackens, or inputs get expensive, or the competition is even better, etc.

A developed economy has more than 2 sectors. And it’s a complex beast with enormous resilience. But on some level, this basic model holds. When major industries collapse, there are just a few solutions: redistribute fixed remaining wealth, innovate to create new industries, or reduce the resident population. The first option doesn’t really work, the second is fiendishly hard to engineer (and sets localities against one another in attracting investment), so that really leaves option #3.

What population can Appalachia support without having a major traded goods or services sector? Now of course, I simplify, Appalachia has tourism, and timber, and craft goods, and music and entertainment, all of which are traded; and transportation through the area amounts to a kind of traded good. But these sectors don’t yet have the heft that coal did. And given a much-reduced ability to produce income, the land of Appalachia (or Detroit) must either redistribute more, innovate more (hard given poor areas often don’t have strong knowledge-clusters), or have fewer people.

I lean towards have fewer people, because I think it is the most plausible to achieve.

Worse than the bitter medicine I suggest is the snake-oil of false hope that some snazzy new policy can save your town if you just pay another consultant to come advise you.

Plus, for rural and scenic areas, low population means increasing returns to some of the most potentially vibrant industries: agriculture, tourism, and timber. With fewer people around, it’s much easier to set up nature preserves, consolidate farms, and manage forests. The empty spaces of the world can be quite productive for a sufficiently small population.

Conclusion

So. Should poor whites pick up and move? Well, they should be given the chance to do so. We should work to offset barriers to movement. Meanwhile, we should work to facilitate local efforts to innovate and to unburden themselves of legacy costs.

But in the long run, we need to keep an eye on the historical horizon.

Eventually, a major American city will be gone. Whether climate change, economic shifts, war, natural disaster, plague, or something else, the day will come when the map looks different. I think it’s best we build policies aimed at helping people thrive after the next mega-Katrina or industrial collapse, rather than extraordinary industrial policy aimed at picking regional winners and losers.

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I’m a graduate of the George Washington University’s Elliott School with an MA in International Trade and Investment Policy, and an economist at USDA’s Foreign Agricultural Service. I like to learn about migration, the cotton industry, airplanes, trade policy, space, Africa, and faith. I’m married to a kickass Kentucky woman named Ruth.

My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research. More’s the pity.