Saturday, January 3, 2015
Michigan Jobs 2014-2015
Michigan reached a monthly average high of 4.68 million establishment jobs way back in 2000, followed by a long slide to a low of 3.86 million jobs in 2010, a decline of 813 thousand jobs over the decade. Job growth returned in 2011 until average monthly employment reached 4.11 million in 2013, an increase of 241 thousand jobs over the three year period. Jobs are up for the first 9 months of 2014, but at a slower pace of increase with only 12.9 thousand new jobs for the new year.
Michigan Governor Rick Snyder took office January 1, 2011 and after the 2014 election will continue until the end of 2018. His first three years in office included a significant improvement on jobs where 241 thousand new jobs equals an annual growth rate of 2.04 percent, higher than the national job growth rate and higher than the growth rate of forty-five of the fifty states and the District of Columbia. His re-election to a new term gives a good chance to make a mid-term assessment on jobs.
Michigan lost 422.6 thousand manufacturing jobs from 2000 through 2010 about 52 percent of the statewide decline in jobs. From 2010 to 2013 manufacturing employment increased from 474 thousand to 555 thousand, an increase of 81 thousand, or a third of the statewide increase in establishment jobs. The Michigan increase in manufacturing jobs was higher than any other state, even the five states that have higher non-farm employment than Michigan. As of 2013 manufacturing has 13.5 percent of statewide establishment employment compared to the national average of 8.8 percent.
Share Reversals – From Decrease to Increase
Manufacturing was part of the job reversals from 2010 to 2013. However, all three of the goods production industries, natural resource, construction and manufacturing, reversed from decreasing between 2000 and 2010 to increasing from 2010 to 2013. Goods production declined by 8.24 percent of statewide jobs over the decade ending 2010, but increased by 1.33 percent in the three years ending 2013.
Professional and business services are another group of industries that reversed direction in 2010 from a declining share to an increasing share of Michigan jobs. The professional and technical services component of these services have jobs in law, accounting, architecture, engineering, computer design, management consulting, scientific research, advertising, and veterinary services. Professional jobs were up from 222.8 thousand in 2010 to 260.7 thousand in 2013, an increase of 37.3 thousand jobs. The new jobs were up enough to raise their share of Michigan jobs by .57 percent to 6.3 percent by 2013, reversing a small decline from 2000 to 2010.
The administrative and support services component of professional and business services includes office and facilities support services, employment services, travel agencies, security services, and services to buildings and grounds. Administrative and support jobs were up from 242 thousand in 2010 to 284 thousand in 2013, an increase of 42 thousand jobs. The increase was enough over the three years to raise their share of Michigan jobs by .65 percent to 6.9 percent.
Percentage Share Reversals – From Increase to Decrease
When some industries have higher percent others must have a lower percentage, which guarantees other industries lost jobs or did not have enough new jobs to maintain their share of Michigan jobs. Job growth in health care, government and education faltered after 2010 even though these industries helped sustain Michigan employment with more jobs from 2000 to 2010.
Health care employment was up from 9.6 percent in 2000 to 13.8 percent of statewide employment in 2010, an increase of 4.2 percent, but health care lost a .11 percent of Michigan jobs by 2013. Government service including education dropped 1.85 percent of statewide employment from 2010 to 2013. The decrease includes a .96 percent drop in jobs for the public schools and universities.
Private school education also declined from 1.9 percent of statewide employment to 1.8 percent from 2010 to 2013. Combined public and private education was up by 1.7 percent to 10.5 percent of statewide employment in 2010, but after 2010 jobs dropped from 406 thousand to 384 thousand with a loss of 1.1 percent of statewide employment.
The New Direction
The new direction shows up primarily with an expansion of goods production, especially manufacturing, and professional and business services in exchange for less government services, health care, and education. Combined goods production and business and professional services increased from 27.6 percent of statewide employment to 30.2 percent in just three years. The combination of government services, education, and health care decreased from 32.3 percent of statewide Michigan employment to 30.1 percent from 2010 to 2013.
Jobs usually figure in elections. If that is true in the 2014 Michigan election then 2010 to 2013 job growth undoubtedly translated into positive votes for Governor Snyder. Job growth justifies his claim that Michigan’s job outlook improved during his first term.
If new jobs are a goal for newly elected politicians the safest strategy is to work for new jobs in all sectors of the economy. The Michigan mix of new jobs has a political component because the governor has taken steps to increase jobs in the private sector as he pressed for a reduction in government services, which have decreased jobs in government and education.
Lagging Service Sectors and Productivity
The expanded use of computers and digital technologies raises productivity and slows the growth of jobs across service industry sectors that make up a large share of Michigan jobs. For example, wholesale and retail trade made up almost 16 percent of jobs in 2000, but barely 15 percent now.
Productivity has also slowed the growth of other service industries like newspapers, broadcasting, phone services, and in financial services like banking, lending, insurance and real estate as America slowly shift to a paperless economy. Combined these sectors continue to have 21.3 percent of statewide employment but their slow growth, and sometimes decline, makes them an unlikely source for significant increase in the future.
Other small sectors like repair and maintenance services, transportation, utilities, arts-entertainment-recreation including gambling, accommodations including casino hotels, personal services and non-profit associations have small shares with a combined 9.4 percent of statewide employment in 2013, down about .15 percent from 2010. Gambling employment dropped a few hundred jobs to 7 thousand statewide jobs.
Government and education including private schools have 16.4 percent of statewide employment as of 2013, off 39 thousand jobs in the last three years. These remain an unlikely source of new jobs in the current political climate.
Restaurants reached their highest statewide employment in 2006 with 352.3 thousand jobs, but with moderate ups and downs it is 350 thousand in 2013 with 7.5 percent of statewide employment. The job changes over the last decade do not suggest restaurants will be a major source of future jobs, but it has been adding about 7 thousand jobs a year recently and may continue.
Health Care and Professional and Business Services
The combined total of the above service sector jobs comes to 54.6 percent, which leaves 45.3 percent of the remaining sectors as the most likely source of new Michigan jobs. Remaining sectors include health care with 13.7 percent of Michigan establishment jobs, professional and business services with 14.7 percent and goods production with 16.9 percent.
Michigan needs 80 to 90 thousand new jobs a year to sustain the growth of the last three years. Major sectors like trade and information services continue to lose percentage share and now education and government services are down for political reasons, which makes it essential to have replacement jobs from other sectors. To keep the job mill going health care, professional and business services, and goods production needs to grow a little faster than the statewide average to increase their share of jobs.
Michigan health care employment increased between 8 and 9 thousand jobs a year from 2000 to 2013, but the rate of increase has fallen below the statewide growth rate for the last three years. The pace of new jobs needs to increase so that Michigan adds 12 to 13 thousand health care jobs a year, which will help make up for other slow growth sectors. Michigan health care employment has 13.7 percent of statewide employment compared to 13 percent in the national economy, but it will be difficult for Michigan to meet its job needs unless it continues at 13.7 percent or ticks up toward 14 percent.
Professional and business services employment, which recall has the combination of professional and technical services, managerial establishments, and business support services, reached a statewide high in 2000 with 641 thousand jobs. It declined to a low of 501 thousand by 2009. Jobs started to increase the year before Governor Snyder was elected but has continued to increase to the present. The monthly average in 2013 was 602 thousand jobs.
Michigan professional and business services jobs were up between 32 and 35 thousand a years in the four year period. Except for legal services growth rates in these industries exceeded the statewide growth rate, often at double and sometimes at triple the statewide rate. Michigan already has 14.7 percent of its statewide employment in these industries when the national average is 13.6 percent, making it unrealistic to expect the pace to continue, but Michigan needs 20 to 25 thousand of these new jobs to keep pace for continued growth around 2 percent a year.
Goods production also reached a high in 2000 with 1.12 million jobs, but declined to a low of 597.6 thousand in 2009. Jobs started to recover before Governor Snyder took office, but 93 of the 98 thousand new goods production jobs came after he was in office.
Natural resources and mining was up a thousand jobs and construction was up 4 thousand jobs over the three years. While up is better than down both sectors have small shares of Michigan jobs. In the national economy natural resources employment is .64 percent, but in the Michigan economy it is only .2 percent. Natural resources has not added more than a thousand jobs a year in natural resources going back to 1990.
Construction jobs increased by 11 thousand to 132 thousand in the three years since 2010. Michigan has construction employment equal to 3.2 percent of statewide employment compared to the national economy where it is 4.3 percent. Construction needs just 3 thousand new jobs a year to keep pace with the current statewide growth rate. A good economy should be able to increase it to 5 or 6 thousand a year.
That leaves manufacturing, the most uncertain variable in Michigan jobs. The Michigan increase in manufacturing jobs came primarily in motor vehicle and motor vehicle parts manufacturing with 36 thousand of the 81 thousand manufacturing increase. Another 29 thousand of the manufacturing jobs were in auto related primary metals, fabricated metals, and machinery manufacturing. Combined these auto related industries make up 80 percent of the Michigan manufacturing increase.
In spite of the national decline in manufacturing after 2000 and the national decline of more than a 100 thousand jobs in automobile manufacturing in the same period, Michigan still has more motor vehicle manufacturing jobs than any other state. In 2012, it had 39.1 thousand jobs making complete vehicles or the chassis and frame, which was 23.4 percent of national employment in this industry; in 2013 it was up to 42.4 thousand jobs, which was up to 23.8 percent of complete vehicle, chassis and frame manufacturing. Second place Ohio had barely 20 thousand of these jobs.
Michigan ranks sixth in motor vehicle body and trailer manufacturing with 6 thousand jobs, but this is the smallest segment of the industry.
Michgian is first in the biggest segment of the industry: motor vehicle parts manufacturing. Employment here was 109.7 thousand jobs in 2013, which was 21.6 percent of the national employment. Ohio was second again with 63.6 thousand jobs.
From 2012 to 2013 jobs in the three component motor vehicle industries added 42.8 thousand jobs in nationwide employment. Michigan had 10.9 thousand of the new jobs, or just over 25 percent of them. It was more than any other state. Since five states had a decrease in motor vehicle manufacturing employment, and 13 states had a decrease in auto parts manufacturing employment, Michigan is clearly making gains in competition with other states in motor vehicle manufacturing.
The benefits of job gains depend partly on wages. The Bureau of Labor Statistics now publishes wage distributions by state, by industry and by occupation. Production occupations make up 60 to 66 percent of jobs in motor vehicle manufacturing including assembly and parts manufacturing. The Michigan median wage for production workers in motor vehicle manufacturing was $22.92 in 2012 and was up to $23.69 in 2013. Wages were up as employment was up from 21,540 in 2012 to 31,450 in 2013.
For Michigan production workers in motor vehicle body and trailer manufacturing in 2012 the median wage was $17.64 but was down to $15.27 in 2013. Employment here is low with only 2,640 jobs in 2012 and 2,680 in 2013.
For Michigan production workers in motor vehicle parts manufacturing in 2012 the median wage was $19.67 but was down to $17.09 in 2013. Wages were down as employment was up from 56,910 in 2012 to 61,290 in 2013. However, the wage bill (wage x employment) dropped for production workers who had less wage income to put into the Michigan economy.
Bureau of Labor Statistics data allows comparison between Michigan and other states. Production occupations for motor vehicle manufacturing in 2013 exceed 1,000 jobs in 10 states, but seven of those states report median wages higher than Michigan and two states with median wages below Michigan.
Production occupations for motor vehicle body and trailer manufacturing exceed 1,000 jobs in 26 states, but nine states report median wages higher than Michigan and sixteen states have median wages below Michigan.
Production occupations for motor vehicle parts manufacturing exceed 1,000 jobs in 28 states, but three states report median wages higher than Michigan and 24 states have median wages below Michigan.
A Cautious Future
Michigan needs at least 80 thousand new jobs a year to meet statewide employment needs. The job shifts over the last three to four years make Michigan more dependent on selling exports to other states or countries and therefore more vulnerable to job losses in an economic downturn. Through the first 9 months of 2014 manufacturing is up 8.9 thousand jobs out of a statewide increase of 12.9 thousand. Motor vehicle and motor vehicle related manufacturing in fabricated metals and machinery manufacturing were up 9.1 thousand in the same period, which means other manufacturing industries have a net decline in jobs.
The narrow advance of jobs in the three industries motor vehicle manufacturing, professional services expect legal services, and employment services makes a future forecast hard to make. In the first 9 months of 2014 retail trade, financial services, education, health care, accommodations, repair and maintenance services, personal services, non-profit associations, and federal, state and local government all had small job losses. Michigan has a better outlook on jobs than it did in 2009 and 2010, but it needs a broader advance across more industries to be optimistic it will continue.