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What’s behind Michigan’s rising jobless rate: Job cuts at big companies, slowing growth

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What’s behind Michigan’s rising jobless rate: Job cuts at big companies, slowing growth

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Michigan’s jobless rate hit 4.7% in October, up for a seventh consecutive month, and up from 4.2% the same month last year, according to data released Thursday by the Michigan Department of Technology, Management and Budget.

The unemployment rate nationally in October was 4.1%.

The numbers come as Michigan’s economy faces challenges this year, from persisting inflation, the climbing unemployment rate and declining real disposable income for workers.

The jobless news also follows what economists called a “vigorous” economic recovery from the COVID-19 pandemic in which Michigan’s companies saw jobless rates return to pre-pandemic levels and more people were working in the state compared with before the pandemic.

More people working is good news, though some employers now say that they’re having trouble finding qualified candidates to fill positions. And employees at some large Michigan companies say they need raises to keep up with inflation, motivating some to go on strike or threaten to do so.

Overall, Michigan’s economy is expected to stay about the same through the end of the year, and more than half of Michigan executives surveyed expect their revenues to increase in that time, according to Business Leaders for Michigan’s CEO Economic Outlook Survey released in August.

“We’ve seen improvements to our short-term economic outlook, but persistent barriers to sustained long-term growth,” Jeff Donofrio, president and CEO of Business Leaders for Michigan, said in a news release announcing the survey results. “Consumers and businesses are worried about increased costs, many of which can be impacted by state policies and talent shortages.”

Jobs go unfilled

Many of the state’s top executives say they continue to struggle to find qualified people for job openings, with 38% saying they are having trouble filling positions, the Business Leaders for Michigan survey found.

Business Leaders for Michigan sent out another survey to executives in September, and for the first time, asked about the roadblocks companies faced when recruiting talent for jobs in the state. The top responses to the survey were location; awareness of the density of opportunities in the region, and the quality of K-12 education, Randi Berris, vice president of marketing and communications at the Business Leaders for Michigan, said in an email.

“We have to sell ourselves better and make those connections between job seekers and employers,” Berris said.

She said Michigan offers a high quality of life and a relatively low cost of living, and pointed to projects such as the University of Michigan Center for Innovation; Michigan Central Station and Newlab; and the Henry Ford Health, Detroit Pistons and Michigan State University development in Detroit, along with the Medical Mile in Grand Rapids, as developments that will inspire more companies to move to Michigan and where young professionals can grow their careers.

Yet, there were more individuals available to work than job openings in August in Michigan, according to the most recent state Job Openings and Labor Turnover Survey, suggesting a mismatch between the skills employers are looking for and job seekers’ skills and experiences.

A majority of these job postings have minimum education requirements. Of the roughly 178,000 online job advertisements available in August throughout Michigan, about 60% of them listed a minimum education requirement, according to Help Wanted Online data analyzed by the state.

To retain current state residents and attract new ones to meet the workforce needs of local businesses, the state of Michigan’s Growth Office said last month it’s awarding nearly $700,000 to five consortiums across the state that have programs focused on this mission.

For example, Discover Southwest Michigan will use marketing strategies and offer relocation support services and a down payment assistance program to lure skilled young professionals, particularly those in high-demand fields such as STEM-H (science, technology, engineering, mathematics and health), manufacturing, IT and skilled trades.

Jobs going away

Meanwhile, some major Michigan employers have cut jobs this year.

General Motors Co. cut about 1,000 salaried and hourly employees Friday, with more than half of the cuts coming from salaried workers assigned to GM’s Global Technical Center in Warren. This is the second round of job cuts at the automaker within a few months.

Meanwhile, Stellantis said last week that 400 workers at a Detroit logistics facility would indefinitely lose their jobs, adding to its rising tally of layoffs. The automaker cut as many as 2,450 unionized jobs at its Warren Truck facility in August.

In response to those layoffs and accusations that Stellantis is not keeping its investment commitments in the contract negotiated last year, several local unions have passed strike authorization votes as the UAW has threatened a potential strike.

There are industries that are hiring

Industries like construction, though, have expanded, adding 15,000 jobs, a nearly 8% increase, this year through October. Government jobs increased by 3% (19,000 jobs) in that period.

Looking forward, the University of Michigan Research Seminar in Quantitative Economics predicts Michigan will have added jobs in every year but one in the 16 years from 2011 to 2026 (the exception being 2020).

Executives that responded to the Business Leaders for Michigan survey cited the state’s slow population and economic growth, increasing costs, state policy and talent shortages as hurdles to overcome. In particular, Berris pointed to the Earned Sick Time Act, which goes into effect in February and will expand paid sick time. Business advocacy groups in Michigan say the new laws represent a drastic change for employers and reduce flexibility for workers when it comes to earning paid time off. 

The University of Michigan researchers see two possible outcomes for Michigan’s economy.

“The first paints a challenging picture, with slowing job growth, rising unemployment and hardly any growth in real disposable incomes,” U-M economists Jacob Burton, Gabriel Ehrlich and Michael McWilliams wrote in the September report. “The second offers a more optimistic outlook, with statewide growth persisting through a period of high inflation and interest rates, and a subsequent slowdown in national economic growth.”

They say that inflation has eased enough for the Federal Reserve to deliver relief on interest rates (the Fed cut interest rates last week for the second time since September).

U-M’s economic forecast for Michigan: U-M forecast says Michigan’s economy at a crossroads: What the next two years may bring

More on the Fed’s interest rate cut: Fed cuts interest rates a second time but economists say 2025 outlook uncertain

The researchers predict Michigan’s unemployment rate will remain at 4.7% next year before dropping back down to 4.6% in 2026, and say they expect statewide real disposable income per capita will also dip next year before returning to growth in 2026.

Contact Adrienne Roberts: amroberts@freepress.com

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