Misallocation of Labor

One of the logistical conundrums in America is the misallocation of labor.  It happens consistently.  Back in the Great Depression, people traveled all over the country looking for work.  The Okies that left Oklahoma for California to pick fruit and harvest crops are the most famous.  My own family did it.  My grandfather couldn’t find work anywhere in the South and would drive anywhere to earn income at a variety of menial jobs.  Cotton picking to labor.  He finally found steady work as a welder in New Orleans during the war.  Post-war, the family moved north to Michigan where he found work and my grandmother worked in a factory.

A few years ago, you’d read about how there wasn’t enough labor in the oil patch of west Texas and the oil patch in North and South Dakota.  They aren’t exactly garden spots but you could make up to six figures.

Government transfer payments certainly play a role.  If you are unemployed, you can qualify for benefits that will help you survive in between jobs.  At the same time, sometimes those benefits go on too long or are too rich which don’t give the beneficiary the incentive to change, move, or try something new.  I think those programs could be restructured.  They shouldn’t be restructured to be punitive, but to create incentives so people will want to work.

I am wondering if COVID 19 will entice people to look for different places to work.  If I am used to getting work in an urban area, will I uproot my family and look for work somewhere else.  It’s pretty clear the economic recovery will be very uneven.  Because urban areas gave you an exponentially higher chance of getting sick, will people exit for other areas?

I know for a fact that in “high season” rural areas have a very hard time getting enough skilled labor.  Carpenters, plumbers, electricians, and other trades are in high demand.  The problem for tradespeople is usually they set up a base of operations and build a reputational business.  It’s hard to go into a new market where you don’t have a network, don’t know anyone and don’t have a reputation.  Not to mention the difficulty in uprooting your family and finding housing in the new place that will most likely be short term.

But, if a lot of people suddenly decide to change course and try out the rural lifestyle, it will be interesting to see if skilled tradespeople follow.