Employment opportunities and wages play an important role in domestic migration. People considering moving to a new state “are presumably responding to regional differentials in employment opportunities, real earnings, or quality of life,” as one pair of economists put it.[59] People may switch to jobs that pay more, or that are a better fit for their skills, or that provide better nonmonetary benefits, such as morale, time off and flexible work schedules. In terms of pay, real earnings adjust for the cost of living in an area, restraining how far a person’s income will go.
One paper finds that “a stable labor market environment clearly emerges as an important factor for localities that seek to attract migrants.”[60] When considering whether to move for a new job, people consider not just the wage and cost of living, but also the risk of losing that job in the future. Thus, the stability of employment matters as well as the wage.[61] A 2001 paper examines the role of wage and employment rate differences between two states and estimates a significant increase in per-capita income is necessary to induce workers to move to a state with a higher unemployment rate.[62]
A main driver of higher wages is greater worker productivity. Part but not all of this productivity is determined by education levels of the workers.[63]
As noted above, a shortage of workers is a general challenge nationally.[64] This seems to be a particular problem in the Midwest. In a paper addressing the economic troubles of the American heartland, researchers point out that a large percentage of working-age men in the Midwest are either unemployed or not looking for work. “Pro-employment policies, such as a ramped up Earned Income Tax Credit, that are targeted towards regions [where not working has been historically high], however financed, could plausibly reduce suffering and materially improve economic performance,” the authors suggest.[65]
A major state-level policy that impacts the labor market is unionization law. For example, a 2016 paper finds that right-to-work states have more productive businesses and also more population growth than non-right-to-work states.[66] Researchers generally find no negative impact of right-to-work on wages.[67] One paper calculates that right-to-work laws generate higher worker satisfaction and more positive economic sentiment.[68] In a border-pair discontinuity analysis designed to isolate the causal effect of right-to-work adoption, another paper finds right-to-work increases employment and labor force participation, spurs net in-migration, and improves outcomes for those in the bottom income quartile.[69] A 2014 Congressional Research Service review identifies the employment gains in right-to-work states and notes, “In the past decade, aggregate employment in RTW states has increased modestly while employment in union security states has declined. It is unclear if this growth is attributable to RTW, other pro-business policies (which tend to be concentrated in RTW states), or other factors.”[70]