Economy Blah To Depressing
GRAND RAPIDS — Michigan has suffered greater employment losses than any other Great Lakes state, with the loss of more than 300,000 jobs between 2000 and 2005. Some 50,000 jobs disappeared just in the first 10 months of this year.
Although the state’s unemployment rate declined slightly in 2005 to its current 6.6 percent, it’s still relatively high compared with the national average of 5 percent.
“We’ve never been here before. We never had six straight years like that before,” George Erickcek, senior regional analyst with the W. E. Upjohn Institute of Employment Research, told attendees of the 2006-2007 Economic Outlook for
The state’s population is still growing, but the growth “is timid at best and weak at worst” — at a rate of about 0.4 percent annually. In addition,
One of the trends Erickcek finds troubling is that nonfarm employment conditions in
The first “suspect” in the decline is the manufacturing sector, but in actuality the downward trend in manufacturing employment has been accompanied by a similar downward trend in the nation as a whole, he said, so manufacturing doesn’t appear to be the culprit.
Employment in selected service sectors such as occupational services, financial services, and business and professional services have helped drive the national economic recovery — but
“Maybe there are firms out there — and there are firms out there — that will actually bring new dollars into the state; new dollars that can help support state activities and new dollars that could replace the dollars we’ve been losing from manufacturing as it continues its downward trend. We might have to look long and hard for that driver to help pull the state out of its doldrums.”
Other cities in the nation have seen positive employment growth in the service-providing sector over the past three years, but the two biggest cities in
“It’s clear that something’s amiss when we see everyone picking up the service-providing opportunities except for those two areas of the state,” Erickcek said.
What’s the problem? Erickcek pointed to a 2004 demographic sketch of the region’s work force as the answer.
“We know that we’re moving to a knowledge-based economy; we know that indicates that a knowledge base is really, really important,” he said.
A strong indicator of a work force’s knowledge base is the percentage of the region’s population that has a bachelor’s degree.
Furthermore, 65 percent of bachelor’s degree holders in the
“What that says to me is that we haven’t been very successful in attracting new people to the area,” Erickcek said. “Clearly, we’re not doing a good job selling ourselves to the outside area.”
Among 16- to 19-year-olds, 8.8 percent are “just hanging out,” meaning they’re neither working nor in school. The average among other regions is 7.9 percent of that age group. Erickcek said that group makes him a little nervous about the future knowledge base of the region.
As far as the economic outlook for
The region’s unemployment rate is still higher than it was in 2000, but the trend is downward, Erickcek said. He said that if
Although manufacturing represents a smaller portion of the region’s economy, its importance here is double that of the nation. In 2001, 25 percent of people in
“It’s our concentration in manufacturing that has caused that gap to increase. As that concentration goes down, our economy is going to fall further and further behind because of our mix of industries, Erickcek said.”
He predicts that in 2006 and 2007 manufacturing in the region will be up slightly, private service producing will be up, and that construction will be down.
The outlook for the Grand Rapids-Wyoming metropolitan statistical area looks very similar. Manufacturing employment in the area has followed a pattern of decline similar to the nation’s, particularly in the automotive and furniture sectors, Erickcek said. Real incomes are not growing, though up slightly from 2003. However, the unemployment rate is now going down, he noted.