News Story

Major Sectors Growing as Michigan Unemployment Hits 15-Year Low

'A tightening job market may do a lot to increase wages'

Employment in Michigan has grown in nearly every job sector since 2009. In addition, the state’s unemployment rate is the lowest it has been in 15 years. Since July 2009, Michigan gained nearly 576,000 jobs in major job sectors, according to the Bureau of Labor Statistics. The only sectors that lost jobs were education, which lost 1,900, and government, which lost 37,200.

When identified by the North American Industry Classification System (NAICS), the sector that gained the most jobs was professional and business services, adding 172,000 jobs since 2009. The manufacturing sector gained 164,800 jobs, while the health care and social assistance sector gained 62,000.

The leisure and hospitality sector added 53,800 jobs, finance added 27,000 jobs, and construction grew by 26,500. Smaller gains came in the information sector, with 3,700 jobs; “other services,” with 1,000 jobs; and mining/logging, with 200 additional jobs since 2009.

In percentage terms, Michigan’s manufacturing sector increased 38.1 percent, professional and business sector grew 35.2 percent, construction went up by 19.3 percent, and finance increased 14 percent. Leisure and hospitality grew 13.3 percent; health care and social assistance grew 11.7 percent; and trade, transportation and utilities grew by 9.1 percent.

Government employment shrunk 6.3 percent, while education was down 2.6 percent.

Gary Wolfram, a professor of economics and public policy at Hillsdale College, pointed to the state’s tax policy as one factor in overall job growth.

“Michigan’s tax structure was greatly improved by the elimination of the Michigan Single Business Tax and its replacement with the corporate income tax,” he said. “There has been much more certainty with regard to the state’s tax policy in the last six years than there was during the Granholm administration. Of course, the national recovery has had a benefit, particularly for the manufacturing industry.”

Michigan repealed the Single Business Tax and implemented a corporate income tax in January 2012.

“It is useful to put the job numbers in perspective, as total nonfarm employment is 4.4 million,” Wolfram added. “The loss in education is probably due to a decline in public school enrollment of 72,000 students over the time period. The number of government employees in July 2016 is still 601,500, so a drop of 37,000 is still quite small.”

From July 2009 to July 2016, the period looking at employment by sector, unemployment in Michigan dropped from 14.7 to 4.5 percent, according to the BLS.

James Hohman, the assistant director of fiscal policy at the Mackinac Center, said trends haven’t really changed and professional jobs, although many temporary, are increasing in number.

“Beyond making vehicles, Michigan is a place for professionals, with growing demand for architects, engineers and technical consultants,” he said. “Gov. Rick Snyder is also right when he says that there are growing opportunities in the skilled trades.”

“But there are also more low-skill, entry-level jobs available. A tightening job market may do a lot to increase wages in these fields,” Hohman added. “Michigan has a lot of people without college degrees; increasing their opportunities for gainful employment and better wages will help the state.”

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.