It's not talked about a lot, but I'll bet there were a lot of pharma/biotech chemists affected by the housing market. Here's the latest Case-Shiller measurement of various housing markets across the country, courtesy of the Calculated Risk blog:
You'll note, of course, that 3 of the 5 (?) major pharma/biotech hubs (SF, SD and Boston) have sustained fairly drastic hits to their prices: 38%, 37% and 15% drops (respectively.)
It seems obvious to me that there are a significant (but unmeasured!) number of scientists who are underwater on their homes and cannot participate in the national labor market. Granted, they might not want to move, but unless their new company in Boston can help them out, a Bay Area chemist might just choose to stay a Bay Area chemist.
It also seems obvious to me that this is bad: labor mobility is one of the great attributes of the American economy. If the government wanted to do something useful, aiding people who want to get out from under their home and move somewhere else for a job would seem like a good start.*
*Look, I know this is going to help out some people who were stupid with their money, but that's the price of getting things going again.
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| Chart credit: Calculated Risk. |
It seems obvious to me that there are a significant (but unmeasured!) number of scientists who are underwater on their homes and cannot participate in the national labor market. Granted, they might not want to move, but unless their new company in Boston can help them out, a Bay Area chemist might just choose to stay a Bay Area chemist.
It also seems obvious to me that this is bad: labor mobility is one of the great attributes of the American economy. If the government wanted to do something useful, aiding people who want to get out from under their home and move somewhere else for a job would seem like a good start.*
*Look, I know this is going to help out some people who were stupid with their money, but that's the price of getting things going again.
Chemjobber. I want to agree, but ..For starters, when does it all end? Let's say things hit the fritz and chemists find themselves moving 2-3 times a year, hell even once a year. Moving an entire family can amount to 20% your take home if you have a GOOD job. Who has the resources for that? Especially if your salaries seem to get less and less.
ReplyDeleteBefore I went to grad school, moves were generally done at the discretion of the employee and at the employers expense, Usually only if the employee felt comfortable with a change of venue. These days, the relocations are at the expense of the employee, are usually quite painful, and more often than not for a reduced salary.
I am the first one who says the government needs to get involved to regulate something, or at least enforce something to preserve the American middle class and our way of life, if not western civilization. Yet I don't really agree that the government should pay money to subsidize intangible living expenses.
There is also the issue that states are not going to want to get rid of their "skilled labor force" without a fight. They have (perhaps up until recently) the highest potential for generating revenue in already strapped budgets. Most governors in crappy economies sell their budgets as "investments", a massive brain drain from state and local municipalities is not an investment. Nobody wants their constituents to to turn tail and run (not to mention all the abandoned buildings)
Ideally? I would be happy with a fume hood, in the city of my choice, and an internet connection with journal subscriptions. I would be just as productive there than any po-dunk town they would try to drag me to, at of course my personal expense.
Uhm, the analytical equipment, we might have to work on.
A7:05a: Here's a tossed off suggestion:
ReplyDeleteIf someone has a job offer in hand, the gov't offers to pay/tax deduct/whatever 25-50% of the difference. They still take a bath, but not as much of one. But labor mobility still has a chance to live.
Maybe assign a punitive tax to the state that is taking in workers as a source of revenue to help offset the cost of the relocation subsidies?
ReplyDeleteHell, it might provide incentives for states to train and educate their own damn skilled labor(I'm looking at YOU Texas and the rest of the south). Instead of farming skilled technical labor from states that take the tax burden on themselves and educate their own populace.
Maybe it would feel less despotic to actually move to these states too.
Moving costs can be used as a deduction on income tax. I think the catch is you have to work at the new place for about 9 months. I'm not a tax professional, but it's something I've heard.
ReplyDeleteThe moving once a year thing has already become very common. New grads don't have to deal with houses, but older people have had some very bad problems selling their homes. I remember the predicament at as far back as 2006 already becoming common.
The government subsidizes many people to get in and out of housing. It seems that the only people it does not subsidize are those moving to find productive work.
ReplyDeleteI moved out of one of the major pharma/biotech hubs for a stable job in chemistry. While people not paying their mortgages got to foreclose or short sale their underwater homes tax free (without paying fed. taxes on the capital gain between the value of the house and that essentially paid by the bank), I continued to pay my mortgage with no help from the gov't. I got a renter in my previous home, and promptly found out if my home ever rents at a gain, the state I used to live in will promptly take 7% of the gain as landlord tax. This is in the same year the state gave out first time home buyer stimuli on top of the fed first time home buyer stimuli. (Oh and if you refi a rental property it is standard for banks to require you to have 30% equity on the CURRENT value of the home).
How is it right for people taking on huge burdens to move to obtain stable work in their fields having to subsidize people staying on unemployment to get out of their mortgages? Why should those with huge mortgages have to pay taxes to subsidize people getting homes at rock bottom prices and interest rates? While some mortgages during the bubble era were risky and questionable, many of the people who bought did so within their means with fixed rates and a sizable down payment. Why should anyone be penalized for doing things the right?
The silver lining is that prices are starting to go up (or at least flatten out) in the biotech/pharma hub cities. These cities will be among the first in the nation to recover.
Moving expenses can be deducted, and you don't have to itemize the take the deduction. (One of the few deductions that's available to non-itemizers.) You have to move at least 50 miles and work in your new location for 9 months, although you can take the deduction before the 9 months have passed if you expect to be there for enough time into the next year. I always had relocation packages with my pharma jobs, but when I took a government job I had to pay for the move myself. The tax deduction helped a little bit at least. However, the cost of selling your house (or breaking your lease if you're a renter) are not deductible.
ReplyDeleteEven though I agree that the housing market keeps people from moving, as a renter I get a little frustrated when so many benefits go only to homeowners. Renters pay taxes too! I always thought I would own a home eventually, but chemistry doesn't make that easy with the frequent job changes and the high cost of living in most of the chemist-friendly cities. One of the reasons I changed jobs was to move to an area where I could afford to buy a home with only one income, but the job market didn't cooperate.
I don't know how it's going to work out, but health care has also been cited as a significant restriction on employment mobility, though as employers dump it, it may be less of one in the future - we'll all be poor, wherever we live.
ReplyDeleteI think subsidizing job mobility might help, but the real problem is that there aren't enough jobs. It might make it easier to play musical chairs if housing costs were partially subsidized, but there's still going to be a lot of losers, educated at massive gov't expense and living examples for further generations that spending years on technical degrees is a dead end, unless you want to work making pieces of financial fiction for Chinese, Indian, and Russian investors.
My optimism is showing.
Perhaps Chemists could form a labor union?
ReplyDeleteI'd be the first to cry union in most situations, but I don't think that it's wealth sharing that is the issue. It's the dismissal that chemists have anything to offer society. Ultimately R and D is too long term, and with the pharmaceutical company not able to make marketable products, it's just a hard sell. The major money makers STILL, after a global recession, is the god damn money market. Everything else is just kind of floundering, especially many fields involving highly paid skilled technical labor.
ReplyDeleteWell, I tried to be moderate about it, but I guess we'll just have to settle for revolution, then. ;)
ReplyDelete