Michigan’s economy shed jobs in the last U.S. expansion, an unprecedented development that is likely to be studied by future generations of economists. But Michigan’s jobs picture has reversed dramatically in the expansion that began six years ago, with the Great Lakes State outpacing the national average.
One subplot is that Michigan is succeeding at creating professional, scientific and technical jobs — a long-standing policy goal — even as manufacturing declines as a percentage of state total nonfarm employment.
Economic expansion is the natural state of the U.S. economy. An expansion occurred between November 2001 and December 2007, and another began in June 2009, according to the National Bureau of Economic Research in Cambridge, Mass. The nonprofit NBER is the arbiter of the U.S. business cycle within the field of economics.
The NBER’s Business Cycle Dating Committee does not define a recession as two consecutive quarters of declining gross domestic product: “Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Among those, nonfarm payroll employment is the broadest indicator at the state level.
Payroll employment is reported monthly. In essence, this represents a snapshot in time versus the series of pictures that emerges when the metric is analyzed across an entire business cycle.
How has Michigan’s jobs market fared?
U.S. nonfarm payroll employment expanded from 131.2 million to 138.4 million in the 2001-07 expansion, BLS data show. Michigan employment, by contrast, contracted from 4.5 million in November 2001 to 4.25 million in December 2007. It continued to contract in the Great Recession, dropping to 3.84 million in June 2009, when the NBER determined the next expansion started.
Michigan payroll employment has expanded by 442,500 jobs since June 2009, to 4.28 million in August 2015. Michigan’s 11.5 percent job creation rate in the current expansion has outpaced the U.S. average, up 8.6 percent in the same period.
Michigan’s advance has been broad-based, with all but one private industry supersector adding jobs in the period.
Trade, transportation and utilities, Michigan’s largest supersector, expanded from 715,700 in June 2009 to 768,200 in August 2015. Education and health services, the second-largest, grew from 610,600 to 660,200. Professional and business services, the third in size, expanded from 491,600 to 646,700. Manufacturing grew from 440,600 to 598,100.
Information, which includes publishing, broadcasting, movies and telecommunications, was the only private supersector to decline, dropping from 56,300 to 54,600. Government employment also declined from 647,200 to 589,800.
Michigan’s professional and business sector has been a standout within these supersectors. The BLS’ Monthly Labor Review, in 2009 (November), described the component’s employment demand as follows:
“The push to keep businesses competitive and profitable will increase demand for services within professional and business services. Management, scientific and technical consulting services; computer systems design and related services; and employment services are needed to develop and implement new technologies, ensure compliance with government regulations, provide computer security and develop, improve and maintain computer networks.”
Critics note that not all professional and business sector jobs are high-paying. The component includes administrative and support work such as temporary help.
The bigger picture is that professional and business services is now 15 percent of Michigan’s total employment, while manufacturing has dropped to 14 percent. Yet both sectors have created jobs at percentage rates greater than the U.S. average in the current expansion.
The factors contributing to the previous expansion’s loss of jobs and the current period’s growth will be debated by economists. The more important point is that Michigan’s economy is creating jobs at a rate greater than the U.S. average.
