Incomes climb in Michigan, but state still struggles with loss of manufacturing

The loss of 300,000 well-paying manufacturing jobs means that, even though, Michigan wages have climbed over the past few years, they’re still less than the nationwide average. (Shutterstock image)

By Joel Kurth, Mike Wilkinson (Bridge Special Report)

Make no mistake: Michigan’s economy is doing well, but the days of leading the nation in weekly paychecks are long over.

The state’s workers once made substantially more than the average American household (6 percent more in 2000). Now, the median household income is 4 percent less than that of the nation, $60,449 in Michigan in 2018 compared to $63,179 nationwide.

The cause: the loss of nearly 300,000 manufacturing jobs, many well-paying. And the jobs that have been created have largely been in the service sector and pay just over two-thirds, on average, what a factory job pays.

Michigan is still a strong union state, with 658,000 people belonging to a local. But it’s becoming less so: The percentage of union members has fallen from nearly 20 percent of the workforce in 2008 to 14.5 percent in 2018 (compared to 10.5 percent nationwide), according to the Bureau of Labor Statistics.

The wage gap among genders in Michigan is just as profound as the nation: Women’s median weekly pay was $725 in 2017, compared to $928 for men.

Still, Michigan incomes are growing. Total statewide personal income grew to $505 billion in 2019, up from $424 billion in 2015, while per capita income jumped to $46,055 in 2017 from $42,812.

Uneven wages, poverty

The economy isn’t lifting all people evenly.

Median annual earnings among minorities still lag, at $25,765 in 2018 for African Americans and $27,212 for Hispanics compared to $32,206 for all residents statewide. Since 2012, poverty rates have declined to 27.6 percent from 36 percent for African Americans and 19.7 percent from 29.4 percent for Hispanics. (The state average is 14.1 percent)

In Detroit and Flint, more than half of children under 18  and more than a third of all residents live in poverty. Median household income in Flint was $26,330 and $$27,838 for Detroit in 2018, according to the U.S. Census.

In other parts of the state, median household incomes are far higher, like in Ann Arbor ($61,247), Grand Rapids ($44,369), Okemos ($74,568), Midland ($61,076) and in Metro Detroit suburbs like Northville ($107,500) and Warren ($45,611.)

Again, education is a factor: In Okemos and Ann Arbor, more than 70 percent of adults have a college degrees. But in Detroit just 14.2 percent of adults have a college degree, while 12 percent do in Flint.

Jobs up, poverty declines as Michigan emerges from Great Recession hangover

Michigan’s economy has long centered on manufacturing — especially automobiles. But reliance on a single industry produces boom and bust cycles. Nowadays, Michigan is enjoying a boom and has mostly recovered from the Great Recession.

Total employment grew by nearly 10 percent from 2014 to 2019, while total personal income grew by 12 percent over the same period.

Here’s a look at some numbers that shape the economy.

• Michigan jobs grew 5 percent from 2015 to 4.8 million now. Unemployment has fallen from 10 percent in 2011 to just 4.1 percent in 2019 (3.6 nationally).
• Total statewide personal income ($484 billion) and per capita income ($48,423) in 2018 have both grown about 12 percent since 2014.
• Michigan’s total gross domestic product grew 11 percent from 2014 to 2018 to $527.1 billion, 14th in the nation.
• As of December 2019, Michigan ranks 37th for labor force participation (61.7 percent; 63.2 percent nationally) among residents 16 and older. Michigan has an estimated 6,700 job openings in the skilled trades annually through 2022.
• Property values are climbing, up 12.7 percent between 2015 and 2019 with the value of all real property estimated at $429.7 billion after losing billions of dollars from 2008 to 2016.
• Recovery is uneven across the state. Cities like Grand Rapids, Ann Arbor and Detroit have added tens of thousands of jobs since 2012, while older cities like Flint and Saginaw and rural communities suffer.

A closer look at jobs

Statewide, economists project strong job growth in professional and business services (37,000 more jobs) and construction (11,000 more jobs).

In addition, the education and health services sector has added 60,000 jobs since 2008. But, in some cases (such as lower-level health-care service jobs for an aging population) growing job sectors have considerably lower wages than Michigan’s past manufacturing glory.

One challenge is the state’s aging workforce. One in 5 workers is over 55. That also creates opportunity: In a well-paying field like tool-and-die work, the loss of so many older specialists is creating demand. Nearly three-quarters of tool-and-die workers are over 45.

Poverty down

The robust economy in Michigan has reduced poverty. During the height of the recession, it was 17 percent but had declined to 14.1 percent by 2018.

By some measures, though, the number of working poor is increasing. According to the United Way of Michigan, the percentage of working families who struggled to meet the basic costs of living grew substantially. More than 950,000 Michigan households have wage earners, but are considered working poor with few assets and constrained incomes.

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by Marsha Chartrand

Marsha Johnson Chartrand, a founder, writer, and copy editor with the Manchester Mirror, is a 50-year resident of Manchester. She has a long history of volunteer and community involvement.