Health care has replaced the auto industry as Michigan’s jobs leader, but the automotive capital of the world remains the economic engine that drives the state.
In 2011, health care and social assistance generated 543,900 payroll jobs to place first among Michigan’s private industries; the auto industry and other manufacturers finished second with 506,100 payroll jobs.
Manufacturing still creates the most economic activity of any industry in Michigan, generating $61 billion in gross domestic product in 2011. Health care — hospitals, outpatient clinics and nursing homes — finished a distant third at $35.1 billion behind real estate, rental and leasing at $44.8 billion.
“GDP is what generates income,” said Patrick Anderson, founder of the East Lansing-based Anderson Economic Group.
Health care’s rise helps to better diversify Michigan’s economy, which has surged and fallen with the hiccups of the auto industry.
While health care provides a steadier source of employment, its inferior productivity compared with manufacturing means each job packs far less of an economic wallop, said David Littmann, senior economist with the Mackinac Center for Public Policy.
“One of the reasons Michigan became a rich state was it exported expensive goods to other states,” Anderson said, adding that most health care spending occurs between individuals or companies in the state and very few services comparatively are sold out of state.
Health care officially and quietly overtook manufacturing as the state’s employment leader during the depths of the recession in 2009, according to the Michigan Department of Technology, Management and Budget. That year, both General Motors and Chrysler declared bankruptcy and manufacturing lost nearly 109,000 jobs — a 19 percent drop from 2008.
Health care has slowly but surely expanded its employment ranks since the turn of the century. In 2000, manufacturing dominated the state with 897,100 jobs — more than double the 447,800 health care positions.
But in nine years, manufacturers shed 432,300 payroll jobs — a 48.2 percent drop — while health care added 82,300 jobs or an 18.4 percent gain.
In 2009, when health care overtook manufacturing, it had 65,300 more jobs than manufacturing.
The gap is closing. The two industries are now separated by 37,800 jobs, according to the state.
It’s unclear whether manufacturing can keep up the pace to regain its No. 1 jobs status.
Michigan manufacturing jobs grew 6.4 percent last year from 2010, compared with a 1.8 percent growth rate for health care and social assistance jobs.
“That’s a dramatically higher growth rate than in any industry in any other state,” said Delaney Newberry, director of human resource policy at the Michigan Manufacturers Association. “It will slow down some, but we still see manufacturing being on top of other industries.”
An economic forecast this year by the nonpartisan Michigan House Fiscal Agency predicted state manufacturing jobs will increase 5.2 percent this year, but slow to a growth rate of 2.5 percent in 2014 .
The report did not estimate health care job gains.
At the national level, manufacturing jobs are expected to decrease by 73,000 during the next eight years , according to a federal estimate. By comparison, health care and social assistance jobs will climb by 5.6 million positions, according to the Bureau of Labor Statistic’s most recent employment outlook.
Among the largest job gainers will be registered nurses, physical and occupational therapists and medical assistants, said Deloris Hunt, chief of human resources for the Detroit Medical Center’s corporate office.
“With our population living longer, people are going to start looking to have greater health,” said Hunt, who added that more patients will need hospital care than outpatient care in the next decade.
“The historic health care model in the U.S. is to provide acute episodic care to individuals when they show up at the hospital doorstep,” said Brian Peters, executive vice president of operations for the Michigan Health & Hospital Association.
But Peters predicts the industry will evolve in the next decade to focus on preventive medicine and chronic care management.
In addition, Metro Detroit seniors are expected to increase 86 percent by 2040, according to an April forecast by the Southeast Michigan Council of Governments. And they will require more medical services, experts said.
But hospitals, clinics and nursing homes won’t have the same economic sting, with the exception of specific, high-productivity areas such as life sciences and areas related to helping people live longer, Anderson said.
The phenomenon of medical travel — getting self-insured companies to send their workers to Michigan’s medical facilities to cut costs — and a possible increase in research money could help grow the state’s health care industry, Peters said.
That situation could help lessen the impact of downturns in manufacturing, Anderson said.
“Manufacturing is going to be a lot more cyclical than the health care industry, especially the primary care employment,” he said.
Manufacturers and health-care sector representatives agree that there’s no disputing which industry holds the best potential to drive Michigan’s economic activity back to pre-recession levels.
“Michigan has and always will be a manufacturing state,” Newberry said. “We’re all winners here in Michigan when that happens.”
By: Karl Henkel, The Detroit News