Another Sign of America’s Declining Dynamism in a Chart (or Two)

Job tenure is the average time a person with a job has held that particular job. And at least before reading Tyler Cowen’s, “The Complacent Class,” I probably would have been surprised to find out that US job tenure has been rising.

So would have economist Tim Taylor, at least before seeing some new Census Bureau research showing an increase in job tenure. Two illustrative Census Bureau charts from a recent Taylor blog post:

Taylor (bold is mine):

What’s going on behind these numbers? Hyatt and Spletzer forthrightly answer: “While there is ample evidence that the labor market is shifting toward more stable jobs, the causes and consequences of declining dynamics and increasing stability remain unknown.” But they do massage the data in way that offers some clues. For example, they note that older workers tend to have stayed at their jobs longer, and the US workforce is getting older. So they ask: To what extent does the rise in job tenure just reflect an older workforce? Or they note that the US economy has been experiencing a slowdown in the start-up rate of new companies for about 20 years now, so more workers are with older firms. Again, to what extent does the rise in job tenure reflect the the fact that US firms are older? … But overall, the picture that emerges is that job tenure rates aren’t up because of workers who are more productively  matched to stable jobs. Instead, job tenure rates are up from a combination of a less dynamic economy and a less fluid labor market, combined with a Great Recession that caused more workers to cling to the job they had.

And since I mentioned it above, here is the opening bit from my podcast with Cowen on his book:

PETHOKOUKIS: Now, in the past you’ve written about America’s economic stagnation, and the great stagnation, and averages over, and I guess this book broadens the thesis. Instead of calling it “The Complacent Class” you could have titled it “The Stagnant Society.” I think your thesis is, since the 1980s, American society has become less dynamic, more risk averse. We’re not starting businesses, we’re not moving, and this is a bad thing. Is that about right?

COWEN: Yes, it’s a bad thing but it’s quite tricky. Mostly, we’re doing this because it makes us happier. Life is safer, more convenient and more comfortable – no one wants to say those are bad things. But, at the margin, if you don’t take enough risk, there does come a time where you start moving backwards, can’t pay the bills, or have decent governance. So over the longer run it’s a bad thing.

I was thinking of the movie “Network” from the 1970s. A famous speech in that is the “mad as hell, I won’t take it anymore” speech. But that’s actually part of a longer dialogue: “We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’”

There’s also a little bit of the world just seems like its going crazy: we have automation, we had a great recession, a financial shock, the Iraq War. Some of that [reaction] is withdraw from society.

Yes, some of that is fear and protection. But I see the ’60s, the ’70s as very volatile, dynamic, but also chaotic decades. Crime was high and Americans reacted against this, starting around 1980. And mostly they made this a better country. The ’80s and ’90s are, for the most part, a remarkably pleasant, and calming, and crime-reducing time. And now there are so many Americans who had these decades as their formative experiences. When they see 9/11 and the financial crisis as their first warning shocks of these decades unraveling and, I think now, the dysfunctionality of our governance is the third warning shock. We’re going to have those periodic, shock events that will appear stranger, shocking, or surprising. Goodness, who expected 9/11 or Donald Trump as president.

But they’re going to accumulate into this broader pattern, revealing into much of our social capital in a particular way. That’s how I see where we’re at right now.

What are the key data points you think which would support the idea? First, that we’re a complacent society.

Most of the book looks at different ways in which change in the United States has slowed down. So, for instance, we move across state lines at much lower rates, about 50% lower, that we used to, we medicate ourselves much more frequently, we’re not so willing to let our children even play outside, there are schools that have banned the game of tag because it’s too violent, startups are a percentage of overall businesses activity, our rates of productivity growth, innovation, as we best can measure them – they too are down, our physical infrastructure has barely progressed in many parts of the country, it’s gotten worse, travelling is harder than it used to be.

So we’re in this world where there’s one wonderful, souped up sector – information technology — but we’re using those games to just slow down change in so many other parts of our world. Segregation by income and sometimes even race – that’s gone up in this country. Not what we would have expected a few decades ago.