News Story

During the 'Lost Decade,' Michigan Shed More Jobs Than U.S. as a Whole

(In a Sept. 23 interview, the Democratic candidate for lieutenant governor, Lisa Brown, said, "I think the Granholm years, you know, weren’t as bad as we think.” This article is part of a Michigan Capitol Confidential series examining how the state’s economy actually fared during Michigan’s "lost decade.")

When the Great Recession hit the U.S. in December of 2007, state economies buckled.

But in the four years preceding it Michigan was the only state to lose jobs overall. The state lost 148,100 jobs from 2003 through 2007 while the U.S. added 7.6 million jobs.

Over the entire decade, from 2000 to 2009, the state lost 805,900 jobs, or 1 in every 6 – a 17.2 percent reduction in employment. The next closest state to bleed that many jobs was Ohio, which lost 9.9 percent of its jobs in those years.

Nationwide, the U.S. began the decade with modest declines in employment, but then job growth picked up strongly through 2007. It fell off a cliff in 2008 and 2009; overall, the U.S. lost 786,000 jobs from 2000 to 2009. While the Great Recession job loss in the United States was bad, Michigan’s decline began much earlier and was catastrophic. The Wolverine State lost more jobs over the decade than the net job loss for the entire nation

Christopher Douglas, an associate professor of economics at University of Michigan-Flint, said Gov. Granholm's policies were highly counter-productive.

But it is just so hard to know exactly how many job losses are attributable to her policies, Douglas said. "I think you can make convincing arguments that the yearly budget crisis and can-kicking contributed to job losses, as businesses hate uncertainty, as well as diverting state resources towards crony capitalist endeavors such as movie studios, green energy, and so forth."

Douglas placed most of the blame for job losses on the rising gas prices that choked demand for SUVs and the major auto companies being caught flat-footed to the changing consumer preferences as legacy costs started to kick in.

"The sheer magnitude of the poor management at these companies is staggering," Douglas said.

The state auto manufacturing sector played a role in Michigan's recession, but possibly less than many imagine. The state lost 219,000 jobs in the "transportation equipment manufacturing" category, which represented about two-thirds of Michigan jobs in that sector, but this was just 27 percent of Michigan's overall job loss during the decade.

The state has emerged from the recession with a more diverse job market. The auto industry accounted for one of every 13.5 jobs in Michigan in 2000, but just one in 24.5 jobs in 2014.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.