Relocation Surges to Near Two-Year High
9.4% OF JOB SEEKERS RELOCATE FOR NEW JOBS IN FIRST HALF OF 2011
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The percentage of unemployed managers and executives relocating for new positions jumped to its highest level in nearly two years, possibly signaling increased willingness by job seekers to take a loss on the sale of their home. Similarly, the increase may indicate willingness by employers to help the newly hired relocate.
Over the first two quarters of 2011, an average of 9.4 percent of job seekers finding employment relocated for their new positions. That is up from an average relocation rate of 7.6 percent during the same period a year ago, according to the latest Challenger Job Market Index, a quarterly survey by global outplacement consultancy Challenger, Gray & Christmas, Inc.
The percentage of job seekers relocating plunged in the wake of the housing market collapse. Beginning with the fourth quarter of 2009 through the end of 2010, the quarterly relocation rate averaged just 7.5 percent. In fact, the 7.5 percent rate averaged in 2010 was the lowest annual average since the firm began tracking job-seeker relocation in 1986.
“The 9.4 percent relocation rate in the first half of 2011 is still low by historical standards, but the increase does indicate that job seekers are finally beginning to loosen the stakes that have kept them tethered to a specific region,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.
Prior to the recession, job seekers were significantly more open to relocation. From the first quarter of 2005 through the third quarter of 2007, just before the recession began, an average of 16.1 percent of those finding employment each quarter relocated for the new positions.
Relocation began to sink along with the economy in the last quarter of 2007. From the fourth quarter of 2007 through the end of 2008, the average relocation rate dropped to 11.5 percent. It rebounded to an average of 15.3 percent over the first three quarters of 2009, only to fall off a cliff at the end of 2009 through 2010, when the housing market continued to weaken, even as other segments of the economy began to slowly improve.
“Since there has been little improvement in the housing market in 2011, one might conclude that the increased relocation in the first half of the year is due to the fact that prolonged unemployment is compelling more job seekers to relocate, despite the challenges of selling a home in this market. At some point, the job seeker may simply conclude that it is worth taking a loss on a home sale to get back on the payroll,” said Challenger.
“Banks have also been a little more willing to work with financially distressed homeowners on renegotiating the terms of the mortgage, making it possible for the unemployed to sell their home and relocate.”
According to Challenger, the employment situation is beginning to slowly improve in a growing number of cities across the country, which may keep relocation rates relatively low in the coming quarters as job seekers are better able to find positions without moving.
“However, at the moment, there are definitely parts of the country that are recovering faster than others. Job seekers who are willing to expand their searches to other states and cities are significantly improving the chances of success by opening themselves up to a much wider number of opportunities. Basically, when you cast a wider net, you are more likely to catch more fish,” he said.
The latest data from the Bureau of Labor Statistics show that in June 26 states saw nonfarm payroll employment grow, with the biggest gains coming in Texas, California, Michigan and Minnesota. Between those four states alone, payrolls experienced a net gain of 92,000 new workers.
As of May, according to the Bureau’s latest data on metropolitan employment, 42 cities had unemployment rates below 6.0 percent. Another 49 had unemployment rates between 6.0 percent and 7.0 percent.
“Texas may be one of the best targets for job seekers considering relocation. It is booming right now, thanks to having a good mix of the types of industries that are currently doing the best in this recovery, including technology, health care and energy. They are luring employers from other states with low taxes and other incentives, so it will need to continuously expand its available labor force,” said Challenger.
“The job market in Texas and other states are expected to continue improving in 2011. However, if these state economies improve faster than their housing markets, current relocation rates will be unable to provide enough supply of workers to meet demand. This could ultimately be the biggest obstacle to achieving lower unemployment,” warned Challenger.
“Demand for new workers is not at a level that would force companies to bring in talent from outside their region. However, as the local talent pool starts to become depleted as the economy improves, companies will be compelled to cast a wider recruiting net. Unfortunately, the immobility of the workforce may mean that some employers will have to delay expansion plans, thus slowing the recovery,” he said.
“There have been a few examples of employers paying for the most talented candidates’ relocation costs, including covering any losses incurred by selling a home that is under water. However, those examples are few and far between, as most companies continue to keep a tight rein on costs.
“As the economy continues to improve, more large companies might have the financial ability to increase their relocation budgets and help offset the difference between the home value and selling price. However, small- and medium-size companies, where most of the new job growth is expected to occur, probably will be unable to cover the costs of relocation and make up for a candidate’s lost home value,” said Challenger.
The Challenger Job Market Index is based on a quarterly survey of approximately 3,000 job seekers, many of whom are managers and executives, from a wide range of industries and occupations nationwide.
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Percentage of Job Seekers Relocating
1986 – 2011
Q1 Q2 Q3 Q4 ANN AVG
1986 45.0% 43.0% 40.0% 39.0% 41.8%
1987 37.0% 32.0% 34.0% 35.0% 34.5%
1998 37.0% 36.0% 34.0% 36.0% 35.8%
1989 35.0% 36.0% 31.0% 32.0% 33.5%
1990 30.0% 34.0% 31.0% 27.0% 30.5%
1991 30.0% 28.0% 26.3% 21.0% 26.3%
1992 30.2% 28.3% 28.2% 20.5% 26.8%
1993 36.4% 49.2% 30.5% 25.0% 35.3%
1994 20.5% 21.3% 15.5% 24.7% 20.5%
1995 17.1% 17.2% 20.4% 24.1% 19.7%
1996 19.4% 20.5% 29.1% 24.1% 23.3%
1997 19.8% 21.5% 18.7% 20.1% 20.0%
1998 18.3% 27.1% 23.3% 23.7% 23.1%
1999 25.5% 25.3% 22.4% 25.9% 24.8%
2000 20.4% 21.6% 23.5% 26.2% 22.9%
2001 17.1% 16.6% 17.3% 17.0% 17.0%
2002 14.0% 12.1% 15.8% 15.2% 14.3%
2003 15.1% 14.9% 12.9% 12.7% 13.9%
2004 13.2% 16.5% 14.9% 14.2% 14.7%
2005 16.0% 16.4% 16.2% 15.2% 16.0%
2006 16.4% 18.2% 16.1% 15.4% 16.5%
2007 16.6% 15.4% 15.6% 11.0% 14.7%
2008 8.9% 11.4% 13.4% 12.6% 11.6%
2009 14.4% 18.2% 13.4% 7.3% 13.3%
2010 7.4% 7.7% 6.9% 8.4% 7.6%
2011 9.3% 9.5% 9.4%
Source: Challenger, Gray & Christmas, Inc.