It’s no surprise that the U.S. Bureau of Labor Statistics report on state unemployment is grim reading. Unemployment is up in 49 of 50 states (go Louisiana!).
It may also be telling us something troubling about the prospects for recovering from this recession quickly. The states with low unemployment aren’t exactly the most exciting places to live, and even if you were prepared to move there’s the not-so-small matter of trying to sell your home in the middle of a housing crisis.
The states with the lowest unemployment include Wyoming, North and South Dakota, and Nebraska — far from the coasts where populations — and unemployment — are higher. Which brings us to the Oswald Hypothesis (don’t worry — we didn’t know what it was either until JP Morgan economist Michael Feroli mentioned it). Higher homeownership rates may increase the natural unemployment rate, essentially because that makes it harder for people to pick up and move.
Feroli pointed out that the housing crash may be playing a bigger role in unemployment in this recession because people who owe more on their mortgages than their homes are worth have a particularly tough time selling. Almost 20 percent of U.S. households with mortgages fall into that category, he said.
“For these underwater households to move, they would have to incur a large capital loss,” Feroli notes. “This may preclude the option of moving in search of better job opportunities.”