News Story

Gov. Whitmer Says Michigan Carmaker Jobs Up; They’re Not

And subsidized job projections not the same as actual jobs

Michigan Gov. Gretchen Whitmer claimed credit in a recent Detroit Free Press essay for a rise in state auto-related employment.

The governor wrote: “In 2019 we created thousands of good-paying auto jobs across Southeast Michigan that open up opportunities for families across the state.”

But employment in the auto industry did not rise last year, it declined slightly. James Hohman is a fiscal analyst at the Mackinac Center for Public Policy. He says, “The economic news about the auto industry is that unit sales are down from peaks, while auto and auto part manufacturing jobs are down across the country and more so in Michigan.”

Hohman points to numbers recently released by the Bureau of Labor Statistics. According to the BLS, employment in auto and auto parts manufacturing in the Detroit Metropolitan Statistical Area dropped by 4,900 jobs from November 2018 to November 2019, a decline of 4.4%.

Statewide numbers show a decline as well. Michigan lost 5,300 auto jobs during the same period, a 2.6% decrease.

Whitmer’s essay also pointed to recent announcements from Ford, Fiat-Chrysler Automotive, General Motors and Waymo, all promising thousands of new jobs, plant expansions, new facilities and billions of dollars in new investments here. These companies are all benefiting from lucrative state subsidies.

“These investments will help more families get ahead, boost our economy and solidify us as a world leader in mobility,” Whitmer wrote.

But job announcements are not the same as job creation, says Christopher Douglas, chair of the economics department at the University of Michigan-Flint.

“The track record for companies creating the promised number of jobs after receiving government subsidies is not good,” he said, citing the 6,000 jobs GM promised to create at its Detroit-Hamtramck assembly plant but never delivered.

“There are two problems that job creation like this runs into,” he said. “First, the jobs promised often never materialize, or materialize in much smaller numbers than promised. Second, the cost per job created is extremely high.”

According to Douglas, Fiat Chrysler Automobiles received land worth $107.6 million from Detroit and the state, in addition to $223.5 million in state tax incentives. If FCA delivers on its promised 6,400 new jobs, the cost per job created will be nearly $52,000.

Hohman has written that the private sector — not government-subsidized corporations — produces the bulk of employment growth. These jobs are created quietly under the radar, without fanfare or newspaper op-eds from government officials.

“Lawmakers promote their efforts to land jobs because jobs remain popular,” Hohman said. “It’s much easier to plug the companies that received taxpayer money and ignore the problem that the state has a bad track record of converting job announcements to actual jobs.”

“Policy can improve or hamper the direction of the economy, and politicians have the power to derail economic progress,” Hohman said, “but growth comes from the ground up, from individuals finding better ways to get people what they want. Lawmakers can’t do that for them.”

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.