DECLINE IN JOB MOBILITY RAISES CONCERN

Lower turnover and fewer start- ups may signal slower economic growth long term, experts say.

WASHINGTON — Despite steady job growth and a low unemployment rate, the U. S. recovery trails in one key area: the labor market dynamism that helped transform the country into the world’s economic superpower.

One telltale sign — workers change jobs at a slower pace than before. There also has been a long decline in the number of new, innovative firms that have powered job creation in the past.

Short term, this slowdown in the so- called churning of jobs could indicate that employment has stabilized for the better. After all, during the second half of the 20th century, when the country achieved levels of growth and prosperity greater than at any time in its history, workers commonly stayed with the same employer for years.

But longer term, economists worry that the lower turnover signals stagnation, not stability: Workers stay put because they see few jobs worth moving for or face other barriers that lock them into their current positions.

Less job movement could bring slower gains in overall employment, wages, productivity and, ultimately,

economic growth.

Job openings and new hires have picked up in the last two years, but the rate that people are moving in and out of jobs has slowed — and has been doing so for a long time.

In the 1990s, about 6 in 100 workers took on new jobs every quarter while 5.5 left their jobs.

Since the Great Recession in 2007, an average of 4.5 in 100 workers have moved into new jobs every quarter. Just 4.4 left their jobs, according to an analysis by W. Michael Cox, former chief economist at the Federal Reserve Bank of Dallas.

“We’re slowing down. We’re following the path downward in terms of job dynamism,” said Cox, who now teaches at Southern Methodist University.

Two other related trends point to a similar conclusion: The formation of new companies — considered big job generators — has slowed significantly.

New f irms — those less than a year old — accounted for about 13% of all companies in the late 1980s, but that has dropped to about 8%.

Making matters worse, a small but significant part of the drop- off has come from start- ups with the fastest growth and highest job cre- ation, according to a recent paper from the National Bureau of Economic Research.

“Evidence shows that high- growth young f irms have disproportionately accounted for job creation and productivity growth,” the researchers wrote. “Now the U. S. has a much lower pace of start- ups, and those that do enter are less likely to be high- growth firms.”

That could be one of the reasons people can’t — or won’t — move.

Census data show that people moving to another state — a good indicator of job changes — fell to between 1.4% and 1.7% of the population since the recession. In comparison, the rate hovered about 3% from 1947 to the middle of the last decade, with few exceptions.

To be sure, the aging of the U. S. population accounts for part of this slowdown. Older people are less mobile and less likely to switch jobs too. And baby boomers such as Cara Black often face difficulties finding a new job.

The south Orange County resident thinks age discrimination is a factor in her husband’s inability to land a job despite a master’s degree and two years of looking after leaving his job at a dental care company. “I worry quite a bit about our situation,” she said.

It isn’t just older workers. The slowdown in labor dynamism cuts across demographics as well as industry, according to Federal Reserve and private economists.

Josiah Kadle, who lives near Harrisonburg, Va., left his phlebotomy job in March after being recruited by an acquaintance in property management. But the 31year- old said he would have switched jobs earlier had he seen openings that paid more.

He searched more than two years, but in his area, the pay for blood- draw specialists was pretty much the same everywhere, Kadle said. With a working wife, two small children and a house, moving out of the region wasn’t an option.

“When I was looking, there wasn’t much out there in this market. Wages have been stagnant,” he said.

Experts also blame government policies for suppressing job creation and labor market mobility, whether through taxes or burdensome regulations.

Government restrictions on who can work in which jobs have expanded over time, said academic economists Steven Davis and John Haltiwanger, who have written extensively on labor market f lows.

Citing other research, they note that the share of workers required to have a government- issued license to do their jobs rose from less than 5% in the 1950s to 29% in 2008. Even librarians and funeral workers today must be licensed in some states.

Taken together, the slowdown in job- to- job movement, geographical mobility and new- firm formation has economists worried that the U. S. may be losing something called “creative destruction.”

The term, coined by economist Joseph Schumpeter in the early 20th century, describes the idea that a healthy capitalist system grows bigger and stronger because it is constantly creating better companies and products while destroying older ones that are falling behind the curve.

In this view, the pace of job creation and destruction has long been a hallmark of the American economic vitality. Although painful for some people, it produces more good in the long run.

The nation’s energetic and f lexible labor market, compared with other countries, is considered a major reason the U. S. economy has continued to outperform almost all others over time.

But what Schumpeter called this “gale of creative destruction” has turned into something more of a breeze in the U. S., raising concerns about the underlying vigor and productive future of the economy.

At least for the immediate future, lower job churn may seem like a good thing. It can mean less uncertainty for workers. It also could reduce costs for employers who don’t have to spend as much for hiring and training new workers.

Some analysts wonder whether the Internet and other hiring and job- finding tools have helped make better matches between workers and jobs, resulting in less turnover. But many economists don’t view the decline in job f lows as benign or inconsequential.

Sophia Koropeckyj, a labor economist at Moody’s Analytics, sees a potentially vicious cycle at work. If people are staying in their jobs longer and not acquiring more skills, they are not only less likely to earn higher wages, but also not freeing up jobs for others.

“It’s a big deal,” said Davis, a professor at the University of Chicago Booth School of Business. “For many workers, the way they build careers involves a lot of mobility, especially early in their career. On balance, it’s harder for someone to enter the job market … to move up, improve skills and raise their pay.”