Guest Column

Grand Rapids helps fuel growth

January 26, 2018
| By Greg Kaza |
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The U.S. economy has expanded since June 2009, according to the Cambridge-based National Bureau of Economic Research (NBER), making its duration the third longest in American history. This expansion includes Michigan nonfarm payroll employment, up 15 percent versus the U.S. average (12 percent), Bureau of Labor Statistics (BLS) records show. Payroll employment is important because it is the broadest economic indicator at the state level.

A subplot is the strong growth of Michigan's professional and business services sector, which has expanded at a greater rate (35.4 percent) than the national average (27.3 percent). BLS records show professional and business services has one of the highest growth rates among Michigan sectors in the expansion, trailing only manufacturing (39.5 percent).

The news for Grand Rapids is better. The Grand Rapids MSA's professional and business services sector expanded at a higher rate (41.4 percent) than national and state averages, growing from 58,400 (June 2009) to 82,600 (November 2017).

This is not your proverbial man in the gray flannel suit sector. Professional and business services has a distinct hi-tech flavor, described in BLS' Monthly Labor Review (November 2009) as pushing "to keep businesses competitive and profitable" with services like "management, scientific and technical consulting" and "computer systems design and related services" needed "to develop and implement new technologies, ensure compliance with government regulations, provide computer security and develop, improve and maintain computer networks." The sector also includes areas like administrative support and temporary help but is 21st century in its commercial outlook.

Another remarkable development is that this Michigan hi-tech sector has reversed course from the previous expansion (November 2001 to December 2007) when it shed jobs.

Micro-data illustrates the growth of Michigan hi-tech employment in the current expansion.

In the preceding expansion, Michigan computer systems design and related services contracted (45,553 to 40,463), according to quarterly data reported by the Michigan Department of Technology, Management and Budget. Michigan management and technical consulting services also declined in the period (25,926 to 19,847).

By contrast, both components have expanded in the current expansion, with computer systems design and related services (36,771 to 51,700) and management and technical consulting services (19,288 to 29,914) reporting strong gains.

Another component, scientific research and development services, reported smaller gains.

Technology's importance to Grand Rapids' economy continues to grow, with the sector creating hi-tech jobs and paychecks in its wake. Manufacturing, in the 20th century, was Michigan's largest employment sector, but professional and business services employs more today (677,200 versus 603,900).

The growth of Michigan and Grand Rapids' professional and business services sectors is a remarkable story for international markets.

Michigan native Greg Kaza is executive director of the Arkansas Policy Foundation.

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