The geographical diversity of economic opportunities is one of Canada’s many advantages in this era.
If things did not work out well in a job, heretofore we Canadians have been able to pick up and move to another place.
As work opportunities diminished over the last few years, there always was the opportunity to move, say to Saskatchewan or Alberta, where employment opportunities were plentiful or, more recently, to the Atlantic provinces that were booming.
Mobility is a part of our economic dream. We have had a flexible, dynamic labour market. Now this is changing. One reason is the drastic fall in the housing market as prices have declined on average by at least 25 per cent.
A significant number of homeowners owe more on their mortgages than their homes are worth in today’s market, but many were unable to sell their homes at all. Of course, others are reluctant to sell their homes as that might entail big losses on an investment that they were led to believe was safe.
Houses are being foreclosed now, although the newly evicted are not free to move. That is unfortunate, but although jobs are in short supply, being mobile at least can increase the odds of obtaining work.
Many years ago, Andrew Oswald, of the University of Warwick in Britain, stated that excessive home ownership destroys jobs.
He cited the fact that European nations with high rates of home ownership had much higher unemployment rates than those where people rented.
That was more important than other factors in employment opportunities.
Immobile workers can become stuck in jobs for which they are not well suited.
That is inefficient: it raises prices, reduces incomes, makes some jobs uneconomic and results in widespread discontent. Nowadays, too, the difficulties of moving are compounded by the problems in obtaining adequate health care: getting on a physician’s list in a new location is onerous.
Many homeowners, therefore, opt to commute long distances. That makes for traffic congestion, and getting to work on time becomes a major headache.
Of course, renters can just pack up and move.
Canada clearly subsidizes home-ownership.
Owner-occupiers pay no capital gains taxes, and interest rates on mortgages are kept artificially low. As well, recently a tax deduction was offered for house renovation.
The hardships of moving have slowed internal migration; fewer Canadians are moving than in the previous decade.
Being immobilized is only adding to the effects of the present economic downturn.