Difficult economic backdrop makes workers less mobile

The current economic landscape, characterized by a tight labor market, rising housing costs, and a shift towards remote work, is undermining employee relocation. According to a recent survey by Challenger, Gray & Christmas Inc, the number of US job seekers who relocated for a new position hit a record low of 1.5% in Q4 2023, indicating a growing reluctance among workers to uproot their lives for employment opportunities.

One significant factor contributing to this trend is the value of low-interest mortgages financed during the pandemic.. Approximately 55% of US homeowners have mortgages with interest rates below 4%, making them hesitant to sell their homes and purchase new ones at the current higher rates of around 7%. Consequently, potential hires are demanding substantial relocation packages to compensate for the increased housing costs, with the average relocation expenses for mid-level managers rising to $78,330 for homeowners and $33,349 for renters in 2022.

The automotive industry in the southern US is particularly affected by this issue, as automakers and suppliers invest heavily in electric vehicle manufacturing facilities in the region. Despite offering competitive salaries and benefits, companies are struggling to attract experienced senior and mid-level managers from the Midwest, where the majority of the industry's talent pool is located. As a result, the demand for skilled managers is driving up costs and competition among employers, further complicating the process of workforce relocation in an already challenging economic environment.