By James Clary
The Fall edition of the Hampton Roads Economic Quarterly examines how the economic situation has lead to the rise of the “stay put” economy. This term was coined by business journalist Derek Thompson, and it refers to how the both the financial and housing aspects of the most recent recession have conspired to decrease the mobility of households, of labor, and of money throughout the country and the region.
The most frequently discussed aspect of the “stay put” economy revolves around the moribund real estate market and underwater households (homes where the mortgage(s) exceed the current value of the property). While this contributes to lower labor mobility and freezes the population, exacerbating unemployment in hard hit areas, there are other elements to this phenomenon. One important aspect involves workers staying at their current jobs for longer periods of time because of the economic uncertainty, and this keeps wages lower, and allows employers to demand increased productivity from those who are still employed. Another aspect of the “stay put” economy is the development of the long term unemployed, which has been more significant this recession then in other post World War II recession.
Lastly, the economic situation has resulted in businesses and individuals from deciding to go ahead with decisions with long term impacts: businesses not hiring new workers or investing in new equipment, consumers putting off large discretionary purchases, and individuals at all stages of life putting of the next stage (buying a home, marrying, retiring, etc).