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Economy & Business Environment Blog

May
12
2017

Growth in American manufacturing jobs? It’s happening in Michigan

by Gad Levanon and Diane Lim

Today’s jobs report reinforces the slow yet steady recovery of the auto industry. Since 2009 when auto manufacturing jobs bottomed out at just over 600,000 jobs, the sector has seen steady improvement: back above 900,000 jobs for the past two years and at 946,300 in April, according to today’s report.

Still, U.S. manufacturing and auto manufacturing jobs have yet to reach their pre-recession levels. And as we’ve said in our Hill column before, the recession by no means can serve as the scapegoat for the challenges facing the manufacturing industry.

But for a happy story about manufacturing, look no further than Michigan.

The year 2009 was a very tough year for Michigan. Unemployment rose to near 14 percent in the state, as it succumbed to the one-two punch of an already-struggling auto manufacturing industry and then the Great Recession.

Yet despite its heavy reliance on the tumultuous auto industry, employment in Michigan has recovered better than in the country as a whole. From 2009 to 2016, total jobs there grew by 12 percent compared to 10 percent nationally. They achieved those gains despite their total population growing much more slowly than the country as a whole. And in the overall manufacturing sector, job growth has skyrocketed in Michigan, rising by nearly 32 percent compared with just over 4 percent nationally.

In fact, from 2009 to 2016, manufacturing boasted almost one of every three new Michigan jobs. Some of that (nearly one out of every eight new Michigan jobs) occurred within the auto industry — it turns out mostly in auto parts manufacturing than in the assembly of the cars. Not a surprise given the high technological sophistication of automotive instrumentation these days.

But even more of a surprise, most of the recovery in Michigan manufacturing took place in manufacturing outside of transportation. Michigan’s share of non-transportation manufacturing is now much higher than it was at anytime in the past 26 years.

While all manufacturing jobs accounted for about 32 percent of the total jobs growth in Michigan from 2009 to 2016, non-transportation manufacturing jobs alone added 18.5 percent. Nationally, all manufacturing jobs have accounted for less than 4 percent of total new jobs over the same period.

As a result of the employment recovery in Michigan, the unemployment rate dropped to 5 percent in 2016 — the lowest rate since 2000, and one of the lowest ever.

So what accounts for the Michigan miracle?

One potential explanation: in the years following the Great Recession, Michigan had an unusually large number of available workers with particularly high skills and experience in manufacturing. That uniquely talented workforce, well versed in adapting to the latest technological advances, may have encouraged some businesses to employ a larger share of their workers in Michigan. And many of the skills and experiences that people acquire working in the auto industry can transfer to other forms of manufacturing.

The high-skilled nature of manufacturing jobs in Michigan also makes them less likely candidates for automation or offshoring. Neither a machine nor cheaper foreign labor can adequately substitute for the talent of a Michigan worker.

But at the currently low unemployment rate and tightening labor market, and with trends for the working-age population in Michigan looking rather bleak, Michigan’s supply of human talent may be bumping up against a natural limit — suggesting that Michigan’s attractiveness to manufacturing employers may soon diminish.

To sustain the manufacturing recovery in Michigan, public and private sector leaders alike will need to better encourage younger Michiganders to stay and work in Michigan manufacturing (like their parents did), and attract people from other states and countries to reside there.



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