Washington, DC, August 21, 2012 --  

The American Dream isn't dead for working class Americans, but it has moved to different places. Unemployed workers would be wise to do the same.

When a plumber recently offered to charge me $750 to replace two outdoor taps and two interior valves, I was more annoyed than shocked by the price. Years of living in America's high-cost capital city have worn down my sense of outrage at the hourly rates of local tradesmen. One man recently bid $3000 to paint my dining room ceiling over three visits. Even when accounting for materials, insurance, taxes and other costs, the bids suggest skilled labor rates well over $200 per hour in Washington, DC. Residents who get high bids count themselves as lucky -- many tradesmen won't even call back.

For plumbers and painters, this is a great deal. But such anecdotes stand in stark contrast to national reports.

Americans celebrating Labor Day yesterday did so with a sense of malaise and apprehension. The unemployment rate remains stubbornly high at 8.4 percent,¹ with pain disproportionately born by the working class. In blue collar Detroit, infamous for its shuttered auto plants and abandoned neighborhoods, unemployment stood at 13.4 percent in July, well above the 11.4 percent rate for the greater Detroit region.²

Analysts have for years bemoaned the decline of America's working class, with industrial wages stagnating over the past two decades even while Americans' household incomes increased 20 percent.³ Many think these changes spell the end of the American Dream for the working class.

Such trends would seem to apply to the nation's capital, where the District of Columbia's unemployment rate stood at 9.1 percent in June⁴. Yet digging deeper reveals a real dichotomy. Including suburban counties, unemployment is a mere 5.7 percent⁵ reflecting a regional economy flush with "knowledge industries" -- legal services, high tech and health care -- all driven by federal government spending.

The high unemployment rate for the District of Columbia reflects growing class divisions. Washington, DC lost its black majority last year for the first time in half a century⁶. College-educated professionals (diverse but predominantly white) have been moving in, and working class blacks have been moving to the suburbs, leaving a large unskilled urban underclass.⁷

Now completely missing form the city are people with skilled blue collar professions who are able to replace a tap or paint a house. As a result, residents must pay hundreds of dollars an hour to convince tradesmen to drive in to the city from the fringes of the metro area.

This scenario highlights a mobility problem amongst working class Americans. Jobs for skilled workers are easy to find in areas like Washington DC (fueled by government spending) and North Dakota (fueled by an oil and gas boom) while unemployed workers with the necessary skills are stuck in places like Detroit and Los Angeles. Why don' these workers just move?

Left-leaning analysts have explained this by focusing on the housing market downturn and the large number of mortgages that are "underwater", making it impossible for unemployed residents to sell their houses and move. If only the government would push for more write-downs of these mortgages, the argument goes, workers could move to new cities. This sounds good, but a recent study showed that the mortgage crisis has had a negligible impact on employment relocation.⁸

Conservatives blame workers' reluctance to get new jobs on unemployment benefits, which have been extended by the federal government to extend coverage for 99 weeks.⁹ It's unclear whether this makes a difference in relocation patterns, this certainly does provide a disincentive to move to another city to get work versus collect unemployment at home.

But the biggest explanation probably comes from working class American's simple desire to stay put. Unlike college graduates, about half of whom move to work in a different city than they were born¹⁰, America's working class has in recent decades been much more likely to remain in their home towns. While the economy is bad in many areas and better in others, the difference probably just isn't enough to compensate for the real costs and personal hardships associated with moving.

A century ago, black workers living in the South were living in intractable poverty, and had ample incentive to move to booming cities up north like Washington and Detroit. And even with such large disparities, everybody didn't move at once -- the Great Migration took decades.

Current opportunities for American workers in places like Silicon Valley and the Washington region are more diffuse and less dramatic than newly built factories in Chicago and Detroit. But there is no doubt that they are there.

For those who say that the American Dream is dead for blue-collar workers, it is important to note that this simply isn't true for those with skills. Engineers in Silicon Valley and Lawyers in Washington will always need plumbers and painters. For skilled tradesmen in the right place, the American dream is live and well indeed.

Notes:

1. Bureau of Labor Statistics, Civilian Labor Force and Unemployment by State, Selected Metropolitan Area, and Metropolitan Division, August 29, 2012

2. Ibid.

3. Davidgyoung.com, Sustaining the Unsustainable, June 2, 2009

4. Bureau of Labor Statistics, Unemployment in the Washington Area by County -- June 2012, August 10, 2012 http://www.bls.gov/ro3/urwash.htm

5. Ibid.

6. New York Times, A Population Changes, Uneasily, July 7, 2011

7. Washington Post, Income Inequality Gap in D.C. One of Nation's Widest, March 8, 2012

8. Wall Street Journal, Study Finds Lack of Mobility Not Holding Back Employment, February 8, 2012

9. New York Times, U.S. Winds Down Longer Benefits for the Unemployed, May 28, 2012

10. Marketplace, Why Geography Matters in Fixing U.S. Unemployment, May 31, 2012