Employment in Michigan and Minnesota II
In my last post we explored the differences in the employment to population ratio in Michigan compared to Minnesota by gender, race and age. We found that across the board, with the exceptions of Asians, Minnesotans work more than Michiganders. So much so that if the proportion of Michiganders who worked was the same as Minnesotans there would be 847,000 more Michiganders working today.
Another troubling component of the data is the differences in the number of people in each age cohort. There are 665,000 Minnesotans age 16-24. These are the new entrants into the labor market. There are 675,000 Minnesotans age 55-64. These are those soon to be exiting the labor market. Roughly in balance. Not so in Michigan. There are 1,194,000 Michiganders age 16-24. There are 1,363,000 Michiganders age 55-64. A difference of 169,000. Add to that that more 16-24 year old Minnesotans work than Michiganders of the same age: 60.9 percent compared to 51.5 percent and you have the recipe for structural labor shortages in Michigan. Too few labor force participants to supply the workers needed by Michigan employers over the long term.
In a terrific Bridge column Kurt Metzger summarizes Michigan’s age challenge this way: “In 2000, Michigan was the 22nd youngest state in the country based on the median age of its population – 35.5 years. Florida’s median age was 3.2 years higher. In 2013, Michigan was the 42nd youngest population with a median age of 39.6 years. Florida is now only 1.9 years higher.”
This demographic reality is one of the biggest challenges facing Michigan economy going forward. And like some many other structural challenges, we are not dealing with it. Michigan employers in every industry and occupation are likely to face labor shortages in the not to distant future. Not just in the skilled trades, but across the board. It will be most severe in those occupations which require higher skills because Michigan remains under educated compared to the country.
Add to that, as William Frey details in his terrific new book Diversity Explosion, labor force growth in America is going to come primarily from Latinos and Asians––two groups that are very under concentrated in Michigan––you get a challenge where the solutions are not obvious.
For years we have ended our presentations with “Either Michigan gets younger and better educated or we will get poorer.” These are two of the most serious economic challenges Michigan needs to deal with. The solutions are, almost certainly, not the low tax/small government/less regulation so-called business friendly policies that has been the almost exclusive economic agenda pursued by Michigan policy makers for way too long. Its time for a new agenda.