Lower income and fewer jobs with the same unemployment rate

Michigan’s February unemployment rate of 5.9 percent is the lowest it has been in more than a dozen years. Since it was also 5.9 percent in October, 2001. Good news indeed!

Unfortunately there the similarity in good economic news ends. Even with the same unemployment rate, Michiganders in 2015 are far behind where they were in 2001.

In 2001, just as Michigan’s decade of job losses was starting, Michigan was 21st in per capita and 26th in per capita income without government transfer payments. In 2013––last available data––the state has fallen to 37th in per capita income and 41st in per capita income without government transfer payments.

If Michigan were 21st in per capita income in 2013 every Michigander would have $6,400 more in annual income.

Even though the unemployment rate is the same, the number of Michiganders working is far smaller today than in 2001. In 2001 4.564 million MIchiganders had a job. Average employment for the first two months of 2015 in Michigan is 4.154 million. So more than 400,000 fewer Michiganders are working today than the last time the unemployment rate was below six percent.

In 2001 64.3 percent of Michiganders 16 and older had a job. In 2014 it was 56.1 percent. If the same proportion of working age Michiganders had a job today as in 2001 there would be 643,000 more Michiganders with a job today.

Michigan has recovered a bit from the depths of the Great Recession. In 2010 the proportion of those 16 and older with a job fell to 53.6 percent. Per capita income bottomed in 2009 with Michigan ranked 38th and 42nd in per capita income without government transfer payments.

But Michigan today––five years into a national recovery and even stronger auto industry recovery––is still structurally a state with low personal income and low working age population employment rates.

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has 2 Comments

  1. Are there any studies showing what portion of the decline in adult employment rate is due to people who want a job but cannot find an acceptable one, and what portion of the decline is due to people reaching their targeted retirement date and not wanting to work any more. I have noted in some of your statistical studies that our population of people 65 and older has increased more than other states and Michigan’s percentage of people over 65 is increasing. I think at that age a lot of people with a decent pension and social security start wanting to retire whether the economy is good or not. I know there are many people who want to work and are not reflected in the official unemployment rate because the have given up. But there are also retired people enjoying life with a nice pension and not wanting to work. Also a related question. Do you think a higher than average number of retired people can actually help Michigan’s economy by spending their pensions and social security while not competing with younger workers for jobs?

    1. Good questions. The employment rate for those 25-64 year old (considered the prime working ages) for Michigan is also in the bottom 10 state. So yes some of the decline in the proportion of those working is Michigan is aging. And yes retirees by spending money in the local economy add to economic activity. But the aging population is not the prime cause of fewer jobs and lower income from 2001-2015.

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