Michigan's incredible shrinking workforce

teens playing video games

Jobless rate at lowest since 2000. But teenagers aren’t working as much as their parents did, and many high-school dropouts have left the labor pool.

It’s generally seen as good news when the state’s unemployment rate goes down.

Michigan’s unemployment rate fell again in July to 3.7 percent and has been at its lowest point since 2000, according to the state department that tracks it.

That means companies are hiring more people. Right?

Not exactly.

An underlying problem is that people are giving up looking for work, harkening back to the deepest depths of the Great Recession.

In Michigan, people out of the workforce are disproportionately teenagers between the ages of 16 and 19, and adults who don’t have a bachelor’s degree, according to American Community Survey estimates.

The trend is not good news. Its causes are diverse and include a lingering hangover from the Great Recession, shifting cultural attitudes toward teenagers working, but it also indicates a gap between the skills that would-be workers have and the jobs that employers say are going begging.

From June to July, 7,000 fewer Michiganders were unemployed. The number of unemployed residents has decreased for five straight months, according to the Michigan Department of Technology, Management and Budget.

Yet they didn’t all find jobs. Total employment fell by 18,000 between June and July, and another 24,000 people left the labor force altogether.

“Michigan’s unemployment rate decreased slightly in July,” said Jason Palmer, director of the state’s Bureau of Labor Market Information and Strategic Initiatives, in a news release this month about the July data. “However, for the third consecutive month, the drop in the rate reflected fewer people in the state’s labor market actively seeking employment.”

More people are dropping out of the workforce during an economic expansion that has now stretched into its eighth year and is nearing record lengths.

Charles Ballard

Michigan State University economist Charles Ballard says the opiate epidemic may prompt people to stop looking for jobs.

“It is kind of paradoxical right now, isn’t it?” said Charles Ballard, a Michigan State University economist.

Ballard said he’s curious to see whether a few months’ worth of data is a temporary blip or a sign of a longer-term trend.

RELATED: Down and out in Purest Michigan

The federal government defines the unemployment rate as the total number of unemployed as a percentage of the civilian labor force. People are considered to be unemployed if they aren’t working, could work and have searched for a job within the past four weeks.

People who aren’t working but haven’t looked for a job within the past month are considered to be out of the labor force. They’re not counted at all when it comes to official jobless statistics.

That can have the unintended consequence of making a state’s unemployment picture look rosier than it really is.

Even as Michigan’s official monthly jobless rate is at its lowest point in 17 years, the state’s total employment and labor force levels both are down by more than 300,000 since July 2000, according to the state’s Bureau of Labor Market Information.

And, it said, the labor force grew slower than the nation’s as a whole in July compared to the same month a year ago — 18,000 people, or 0.4 percent.

RELATED: Hidden poverty stalks a Pure Michigan setting

Michigan’s traditional unemployment rate of 4.7 percent, calculated between the third quarter of 2016 and the second quarter of 2017, would spike to 9.5 percent if it included discouraged, marginally attached and part-time workers, according to data from the U.S. Bureau of Labor Statistics.

The bureau publishes a set of alternative unemployment data that factor in discouraged workers (people who aren’t in the labor force, want to and could work but didn’t search for a job within the past month because they didn’t think they’d find one), marginally attached workers who didn’t search for a job in the past month for any reason, and part-time workers who worked fewer than 35 hours per week, wanted to work full time but couldn’t find a job with full-time hours.

When factored this way, Michigan would be among the 20 states with the highest expanded jobless rates, a list that includes Great Lakes neighbors Illinois (9.9 percent) and Ohio (9.5 percent).

So who’s not looking for work?

We can draw inferences from looking at who is. Roughly 61 percent of Michigan residents 16 and older are in the labor force, according to American Community Survey estimates from 2015, the most recent available. That’s down more than 4 percentage points, from 65.2 percent, a decade earlier.

The phenomenon is most pronounced among teens and people without a bachelor’s degree.

People without a high school diploma fare the worst: Just 51.7 percent of Michigan residents of prime working age — between the ages of 25 and 64 — who didn’t graduate from high school were in the labor force in 2015, according to ACS data. That’s down more than 7 points from 59.2 percent participation in 2005.

Workforce participation among Michiganders with a diploma but no college slid from 73.1 percent in 2005 to 67.4 percent in 2015.

Contrast that with Michigan residents with a bachelor’s degree, the only group to increase labor force participation from 2005 to 2015. Economists and business leaders have long said that Michigan needs to increase the number of residents who have four-year degrees if the state’s economy will succeed at transitioning away from a reliance on manufacturing to more advanced-skill fields.

Ballard believes Michigan and the nation may be experiencing lingering effects from the Great Recession, which officially ended in June 2009. Among them is sluggish wage growth, which he said has puzzled economists because lower unemployment should put upward pressure on wages. Higher wages could be one way to lure more people back to the labor force.

It’s also possible, though difficult to quantify, that the nation’s opioid epidemic has removed some people from the workforce, he said.

And Ballard said it could be that a cultural shift is underway in which teenagers are shunning work, a shift that may have started during the recession when unemployed adults took entry-level jobs that traditionally went to teens. Teenagers also have low levels of educational attainment, he said, which could be a partial explanation for the big drops in participation among people without a high school diploma.

“Social norms are the hardest thing in the world to quantify,” Ballard said.

gov rick snyder

Gov. Rick Snyder was tempered in his enthusiasm for Michigan’s low unemployment rate, saying “there is always more we can do.”

Gov. Rick Snyder, in a statement when the numbers were released, touted the state’s “tremendous comeback” as reflected in double-digit unemployment rate declines since shortly before he took office in January 2011.

Snyder often refers to the hundreds of thousands of private-sector jobs that have been added during his two-term tenure — understandably so, because politicians get credit for a good economy and blame for a bad one, regardless of whether they had anything to do with it.

There are good signs in the state’s numbers. Even as employment lags 2000 levels, year-to-date average employment through July — close to 4.7 million people — is the highest since 2007, the start of the Great Recession. And total employment has grown every year since 2010. From June to July, it fell.

The number of unemployed people from July 2016 to July 2017 is down 55,000, according to the state’s data.

Still, Snyder’s statement struck a more tempered tone, given the news about Michigan’s labor force participation: “There is always more we can do.”

He cited a disconnect between job providers and the skills that job seekers have, and said Michigan needs to emphasize skills training in order to close the talent gap.

Snyder has made increasing skilled trades training and participation a focus of his administration.

Still, what does declining participation in the labor force say about the strength of Michigan’s economic comeback? Does it suggest some kind of underlying weakness in the economy?

“This is why the renewed focus on making sure people have the skills and training they need to succeed at getting jobs is so vital,” Snyder spokesman Ari Adler said via email. “We are hearing from employers who cannot find enough employees — so we must address that disconnect.”

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Dave
Mon, 08/28/2017 - 8:53am

I don't know if it is just opioid's, but when we go to hire entry level help, one of our biggest problems is that so many fail the drug test. The test includes pot. The question is who continues to support them, and where does the money come from to buy the drugs? There are lots of jobs out there, even entry level, just not enough people who are properly prepared, or motivated, to take them.

Rich
Mon, 08/28/2017 - 10:59am

I don't know the answer. I'm of the generation that is long retired. Your real world comment that most entry level applicants fail the drug test, and it is not apparent that these applicants have any trouble finding money to buy drugs, make me believe that our welfare state is too generous. I started work in fifth grade with a paper route selling papers at a nickel each after buying them for 3 1/2 cents. I was elated to get a five cent tip for a weeks deliveries, and a 10 cent tip was a gold mine. I earned 35 cents on my first snow shoveling job, and had continuous part time employment until I graduated from college. You always did whatever it took to keep the income flowing. I just don't see that in a lot of today's American kids, and their education leads me to believe that they don't really care to work. Thank you for the legal immigrants. Their kids seem to be the valedictorians, the science fair and robotics winners, and the kids that will have successful careers. Maybe it is the parents that push and push their kids to study, and do not make sports a big part of their high school education. Whatever it is, I can see America failing in 50 or 100 years.

Joe Filip
Mon, 08/28/2017 - 4:55pm

Dave, agree about the "pot" comment. What we see in District Court is overwhelmingly alcohol and "pot" violations. There certainly are cocaine/heroin possession/delivery violations but they are far outnumbered by the alcohol/pot violation, which lead to opioid violations, once the brain is softened.

Mary Fox
Mon, 08/28/2017 - 9:07am

The lack of educational opportunities in our failing schools is sad. We shifted to testing mills that produced billions for Snyder's buddies, to privatization messes, and to practices that drive teachers from the classroom. Teaching and schools aren't businesses. Trying to run them like they are is pure stupidity. Making college and training cost more isn't helping the poor and working class. At some point, we have to go to t he teachers and ask THEM WHAT THEY NEED TO SUCCEED. Apparently that never occurs to Republicans. At some point we need to ask college students and community colleges workers what they need to succeed. Apparently that never occurs to them either.

Steve Williams
Mon, 08/28/2017 - 10:39am

I mentor in inner city schools and can tell you that educational opportunities abound. Privatization is a bogeyman that is a distraction from the main problem. The Ivy League schools, Catholic schools, Christian schools are all private and succeed. Charters are generally on a par with public schools. From first hand experience, I can tell you that the destruction of the family and responsibility by the welfare state is the main issue - see Dave's comment above.

Larry Stephens
Mon, 08/28/2017 - 10:55am

When you have a growing number of people that just don't want to work, they also are not keen on learning or finishing school. There are plenty of education choices and apparently unfilled jobs for the taking for those that are motivated to finish their education first, and then search for a job. My granddaughter aggressively searched for a summer job after her first year of college, and ended up working 3 jobs for the summer.

There are apparently lots of jobs available for those that want to work. This is a personal accountability thing, not a structural problem. The best thing that the decision-makers can do is create the economic climate where jobs are available. It is our responsibility to prepare ourselves to qualify for the job of our choosing. Many do - some don't. It is on us if we don't have the motivation to do so.

Joe Filip
Mon, 08/28/2017 - 4:57pm

A recent manufacturer told that a person who does not find a job is 1) not looking, and 2) cannot pass the drug test. Should be really cool when MJ is legal in Michigan.

duane
Mon, 08/28/2017 - 7:43pm

Steve,
In your experience how much of academic success do you feel is due to the students interest in learning, and how much is due to the school protocols/procedures, the education system, the government money?

Steve Williams
Mon, 08/28/2017 - 11:07pm

Duane,
They are all intertwined; but first is the perverse incentives of welfare state that destroy the family, personal responsibility, and good behavior, and second is the public school system's protocols/procedures. There is nothing different about kids today or adults for that matter. They just react to environmental stimulus.

duane
Tue, 08/29/2017 - 3:17pm

Steve,

The questions is do people truly want to change results, and if they say they are they willing to change how they do things.

If people are the same then the way that how groups were assimilated, and how individuals learn should be better understood so we can use those lessons to change the results we are getting today.

sam
Mon, 09/04/2017 - 4:55pm

Do not blame the families..the Goverment makes the changes and rules.
it is the contend changes that has citizen pay for more(Reagan1985 ..11 tax increase) AND THE COSTENT TAXCHANGES. WE DONOT HAVE ANY MORE SAVING ACCOUNT IN THE LOCAL BANKS.(IN 1985 INTEREST RATE WAS 18% A MONTH now zero ...How many people got Jobs by Michigan Works training and offers? Stop the Pill commercial on TV you are Brainwashing the next generation>IF..we have ONE!

sam
Mon, 09/04/2017 - 4:58pm

after graduation from college with a master in business it took 2 years for payed employment,the first job ..was internship for a big government company ..that overpaid the new hire by 100%...from outside of Michigan..

Matt
Mon, 08/28/2017 - 3:36pm

Mary, What world do you come from?? It is sad that in your world people are so helpless and unable to function without having a particular politician in charge of their lives and well being! Or going to a particular school run in a particular way (by a particular politician?) without which they (or we) are condemned to a life of failure! Very sad.

John Q. Public
Mon, 08/28/2017 - 11:30am

People, even ones without a lot of formal education, aren't as stupid as they're charged with being. They see the concentration of wealth in the hands of fewer people. They see how capital is rewarded, but labor is not. They see the wealth created by productivity gains accruing to the already wealthy.

When the fruits of labor--or anything else--flow disproportionately to someone other than the provider, few will invest in providing it. Providers of capital have always known this, and acted accordingly. Now, they're discovering they're not the only ones who do.

Matt
Mon, 08/28/2017 - 3:42pm

Should people be compensated the same regardless of what they do?
"From each according to his abilities, to each according to his needs", is this your idea of how to structure an economy? Welcome to Venezuela!

Larry Stephens
Mon, 08/28/2017 - 5:06pm

Did you ever notice, John Q., that it is those that have been successful working their way up the ladder that hire (as in create jobs for) those that are just getting started at the bottom of the ladder? It is the workers' responsibility to do their part to make businesses successful. That is what they are paid for doing. Businesses manufacturer/provide goods and services that are needed/wanted in the market place. And, businesses must compete in the market places with others providing the same products. A business owner is a middle man, always trying to balance the cost of producing a product/service with the price that product/service can bring in.

The motivated employee will work and learn a trade so that he/she can move up the ladder to one day be in management, or be a business owner themselves, earning the big bucks. America gives a person those choices. Unfortunately, all to many decide they do not want to make the sacrifices necessary to work that hard. That is a choice you have a right to make; but that does not give you a right to be jealous and criticize those that do put in the time and effort to do better.

duane
Mon, 08/28/2017 - 7:38pm

John,
I am disappointed that you use the term 'stupid' to describe anyone, let alone those who are working. The new economy is driven by knowledge and skills and understanding of how to apply them effectively.

Are you sure the gap isn't between those who know how and are willing to invest [take risks with their money and time] and those who listen to you and think the results should be provided by other people [government spending]?

I am afraid you fail to realize that the productivity improvements create opportunities for better paying jobs for those willing to learn the knowledge and skills to build, maintain, and develop the means and methods that are improving productivity.

Many fear that artificial intelligence in computers will displace people. The reality is that AI doesn't conceptualize, it only modifies what it has been programmed to focus on. The people that can and do think, apply judgement, and make decisions will always be in demand, but they must first learn how to learn, how to think critically, and how to make decisions/take actions, and how to conceptualize outside of what they have seen in the past.
Your concern with whose investing is falsely focus, we all can invest, but it is those who actually do, taking the risk of loss, that grow their wealth.

As the financial 'gurus' often say 'pay yourself first,' meaning before you spend any money put 10% of everything you receive into savings/investing. There are many lessons that simply habit will force one to learn and the results, though not immediate, will prove investing is good for the investor/risk taker, and those where the investments are made.

John Q. Public
Tue, 08/29/2017 - 1:23pm

duane:

If you want to rebut my posts, that's great. What you should refrain from doing in the process is attributing things to me that I didn't say. I posit that people aren't stupid, and you infer the exact opposite. I missed the part where I said government spending was the solution, too. That's mostly the "job providers" demanding that, because they don't want to pay themselves to train the workers they need.

I'm afraid you don't realize that while productivity improvements create opportunities for higher-paying jobs for wage-earning employees, that outcome hasn't played out in reality in any equitable sense over the last two generations. Ask Prof. Ballard about the productivity/wage gap; he's an economist. Or read this: http://www.epi.org/productivity-pay-gap/ Of course, you can always find research disputing the EPI findings, and choose to believe that instead, too.

All I'm saying is that capital doesn't invest where it doesn't perceive an adequate return. Why should it be surprised when labor does the same thing?

duane
Tue, 08/29/2017 - 5:41pm

John,
You are right, I made an egregious error, and for that I humbly apologize and commit to striving to do better and not only reread what I write but to rereading what I am commenting on.

I still believe in my view about opportunities that improving productivity creates.

The weakness I see in the article and Mr. Ballard's remarks is their under appreciation of the individual's role and responsibilities in taking advantage of the opportunities that productivity creates and they lack an appreciation of how the lack of people preparing themselves for such opportunities has encouraged the development of manufacturing in regions where productivity is still achieved by leveraging strength and hard work. [Even China is losing the low knowledge and skill work to improved productivity and other nations that are strength and hard work driven, such as Vietnam.] The 'economists' fail to talk about/see how high tech or science driven manufacturing has been making the shift to higher knowledge and skilled based workers for generations, driven by productivity. Where the article identifies 1973 as the start of divergence between wage and productivity they fail to recognize that that was when the computer was starting to enter the workplace at the production level and that people were being given the opportunity to learn the knowledge and skills to operate, maintain, and expand the tools of improving productivity.
Rather than focusing on the aggregate of the wages and had the 'economists' looked at the individual businesses they would have seen how productivity was more reflective of increased output per person and how the number of people stayed constant while wages for those [with added knowledge and skills] increased. The 60s were a burst in the globalizing economy, local manufactures were beginning to be introduced to the world as their market place and thus manufacturing place. They would have seen how high strength and hard work leveraged businesses were being drawn overseas while high tech/science driven businesses were transition to new and different products based on more exotic manufacturing capabilities providing improved productivity and requiring greater knowledge and skills in their workforce, which compensation was growing for. This was when people that saw the changing workplace grabbed for those opportunities by learning the new productivity driven technologies on the job.

You are correct that investing, whether it be money or time, goes where it is likely to gain a minimum expected return with the potential for out sized returns. And as long as the ‘economists’ and others don't seen learning as an investment they will discourage such investment by not acknowledging how learning has help those who do the learning have their wages grow with productivity. As best I can tell from Mr. Ballard’s comments and the article you linked to, they proclaim the aggregate wages are staying flat while ignoring the knowledge and skills wages growing with productivity. In essence they are telling those who are considering investing their time in learning not to make the effort the return isn’t there, so simply enjoy today and let someone else provide them with the results they get.

If you doubt this perspective consider a welder, back in the 70s the predominate welding was stick welding steel which limited what could be welded and how much could be welded in a day, and even the extreme condition the welds would have to survive. Today there is any number of different materials being welded, the welding is now continuous feed, and other productivity improvements. The welder that can only do stick welding is limited in the work and compensation available, but that welder that can do the specialized welding in extreme conditions is the one whose wages is growing with the productivity.

Wages more than ever are being determined by the knowledge and skills the individual develops, especially when it is supporting the means and methods of improving productivity.
What I am concerned with is that you, Mr. Ballard, Ms. VanHulle, and the authors of the article don’t want to accept that the individual has responsibility to invest their time in gaining the necessary knowledge and skills necessary to earn the higher wages, to take advantage of the opportunities the means and methods of improving productivity provide. All of you seem to want to turn to a high power control the improving productivity and use other people’s money to provide the results that individuals have within their reach if the will invest their time and money.
A student that doesn’t make the effort to learn how to learn in school is creating barriers for themselves for financial success in the future. Please don’t think that simply setting in a retraining classroom provide by government money has any relationship with learning what is need for the higher wage jobs.

sam
Mon, 09/04/2017 - 5:04pm

raise the minimum Wages to $ 15 and Free Healthcare plus payed vacation and people will come and stay and work..See germany they needed worker and still need more worker they offer free college and get more taxman from the new workers and right now they HAVE a surplus in there Budget........

Matt
Mon, 08/28/2017 - 3:28pm

There is absolutely no shortage of jobs for unskilled or young workers out there! Landscaping, retail, construction, services on and on, are begging. The problem of joblessness is else where! The problem of non-working teenagers is in some ways more concerning and a symptom of over indulgent helicopter parents and a culture of entitlement, which will plague us for decades to come. Late Roman Empire here we come!

Anonymous
Mon, 08/28/2017 - 8:48pm

No Michigan "comeback" according to Chicago Fed. Loss of manufacturing jobs and out-migration stymies recovery. Brookings Institution thinks the concentration of robots and automation in Michigan may account for lower wages and worker dissatisfaction.
"Is Michigan’s Low Unemployment Rate Misleading?"
"Whereas Michigan’s unemployment rate is now recorded at its lowest since the summer of 2000, other labor market measures compiled through the household survey indicate Michigan’s labor market has not recovered to its 2000 condition. In August 2000, when Michigan’s unemployment rate last reached 3.8%, the state’s labor force participation rate reached 68.5% compared with 61.4% today. Why has the state’s labor force participation rate fallen so far? Some of it is demographics—an aging population. The national LFPR has also fallen for this reason, from 67.3% in January 2000 to 62.9% today.(3) However, Michigan’s falling LFPR also reflects more troubling developments, such as the loss of manufacturing jobs and the movement of working age population to other states. Michigan has 286,300 fewer manufacturing jobs now versus July 2000, helping to prompt the migration of almost 800,000 Michigan residents to other states since 2000. Accordingly, despite its low unemployment rate, it will most likely be some time before Michigan’s labor market will reclaim the level of health it recorded during the summer of 2000."
http://michiganeconomy.chicagofedblogs.org/?p=1068
https://www.brookings.edu/blog/the-avenue/2017/08/14/where-the-robots-are/

sam
Mon, 09/04/2017 - 5:07pm

Robots do not pay Taxes, they do not buy products,thaydonot have children.they do not eat.they don't drive, they do not need homes.they do not smoke, they don't take pills, they don't get" sick" so...they do not......

arnold weinfeld
Wed, 08/30/2017 - 9:12am

As is noted in the article one can't simply look at numbers when discussing employment/unemployment. There are many underlying factors at work. And even if one wanted to tout the fact that our unemployment rate is at the lowest its been in 17 years, during that same time period, Michigan's per capita income has dropped from the national average to 89% of the national average. Which means those that are working are making less. This is most worrisome as well.

sam
Mon, 09/04/2017 - 5:08pm

california raised taxes on there milloinares and have raise the minimum wages ..and more and now are NUMBER 6 in world Economy....