The potential benefits of moving to parts of the country with higher pay are being wiped out by high rent costs, meaning that youngsters are staying put more than they were 20 years ago, according to new research.
Indeed, the analysis by the Resolution Foundation, funded by the Nuffield Foundation shows that the number of 25 to 34 year olds starting a new job and moving home in the last year has reduced from 30,000 in 1997 to 18,000 in 2018.
The report suggests that, given the stronger tendency of young people today to live in privately rented accommodation rather than in social housing, this makes the findings all the more surprising.
There has been a drop of around two thirds when it comes to the propensity to relocate for work for young private renters, and while a greater share of private renters today have children, which can make it harder to move, this only explains a tiny part of the fall in job mobility for young private renters, the report explains.
The analysis offers an alternative explanation for falling job and home mobility, highlighting the fact that there is now less incentive financially. In some cases, this has had a positive impact, as employment gaps are being filled by those who were previously forced to move away, and there is now less of a gap between the best and worst regions for employment than there was in 2000.
On the flipside, it also reflects the fact that private rents have risen fastest in higher paying areas of the country, rising by almost 90% among the highest paying local authority areas, compared to just over 705 among the lowest paying. This has significantly reduced the living standards uplift from moving for work once housing costs are factored in.
The report finds out that once housing costs are deducted, in 1997, the average private renter moving from an area of low pay to an area of mid pay would have seen financial gains of 16%, whereas last year the same person would have gained just 1%. Similarly, to go straight from an area of low pay to one of high pay in 2018 would have produced financial gains of -3%, compared to 26% in 1997.
The Foundation notes that there are likely to be a range of non-financial reasons for falling job and home mobility, such as people preferring to stay close to their parents and local networks.
Meanwhile, older homeowners are facing similar issues, with many having to downsize significantly to make up the deficit caused by the disparity in house prices.
However, before any housing costs are considered, a typical pay rise for those who move areas is over three times higher than for those who stay put in the same job. The Foundation suggest that this underlines just how young people’s pay and career prospects are stunted by this lack of mobility.
It also argues that the economy is negatively impacted by lower job mobility, as firms have restricted access to skilled labour, and so policy makers should prioritise finding a way to improve job mobility.
‘Young people today are often stereotyped as being footloose when it comes to work. But in fact they are moving around for new job opportunities far less frequently than they used to. A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs,’ said Lindsay Judge, senior policy analyst at the Resolution Foundation.
‘Of course there are many good reasons why people don’t want to move around for work, from better job opportunities closer to home, to wanting to stay closer to friends and family. But for young people in particular, there are real advantages to moving when it comes to trying new roles and developing skills and housing should not be a barrier that prevents them doing this,’ she added.