Michigan’s permanent layoffs suggest thousands of jobs may be gone for good

vitro

Vitro, an automotive glass supplier to the auto industry, is consolidating factories. Its operation in Evart, where it was the second-largest employer, will fully close by Labor Day, eliminating 125 total jobs. (Bridge photo by Dale Young)

Massive job losses during the coronavirus pandemic started out as temporary, but now economists are watching a growing concern: Reports are starting to show increasing numbers of layoffs that are permanent, a trend that could slow recovery.

Waves of temporary job cuts started in March, while state unemployment skyrocketed over months. By June, the unemployment rate hit 14.8 percent, but in July that fell to 8.7 percent, according to the state, following more businesses opening as cases of COVID-19 eased. 

Now hints are emerging that many lost jobs won’t be coming back, economists told Bridge Michigan.

“When the dust settles, and firms reopen … a lot of people are going to be going back to their automotive manufacturing job, or their construction job or their restaurant job,” said Michael Horrigan, economist at the Upjohn Institute in Kalamazoo. “But many people won’t.

“It’s becoming pretty clear that permanent job loss is beginning to increase.”

Michigan has recovered about half of the jobs lost to the pandemic, or about 540,000 positions. The state saw 266,000 jobs return in June; job gains fell to 103,000 in July.

Across the United States, permanent job losses doubled from 1.4 million to 2.8 million over the last four months, said Michael Hicks, director of Ball State University’s Center for Business and Economic Research. The job loss tops all previous recessions except the Great Recession just over a decade ago, “which was a huge job-killer,” he said.

“The presence of permanent job loss extends the recovery period by years, not by weeks or months,” Hicks said. 

 

Horrigan said many economists are starting to look at these numbers amid concerns that reopenings — including schools and college campuses — are resulting in setbacks and not the gradual and sustained return to a normal economy that they say could have happened during a so-called “V-shaped recovery” if earlier shutdowns and stay-at-home orders had better curtailed the virus’ spread.

A recent national survey of CEOs also suggests more permanent layoffs are coming. A third-quarter survey showed 38 percent of corporate leadership polled expect to reduce their workforce, according to the Measure of CEO Confidence from The Conference Board, a nonprofit business research group.

Nationally, about 5 million workers have left the labor force in just the past few months. Were they included in the jobs report, which includes only people actively looking for work, the unemployment rate would be 2.5 percentage points higher than the 10.2 percent rate for July, Hicks said.

Layoff notices provided to Michigan officials under the federal Worker Adjustment and Retraining Notification (WARN) Act from mid-March through July 31 show an estimated 6,000 permanent jobs lost in wide-scale layoffs, compared to about 18,000 temporary layoffs at companies with mass layoffs.

But many of those temporary layoffs have since become permanent, or employers warn that they may not yield call-backs.

The jobs are varied, according to Bridge’s look at Michigan’s WARN filings:

Vitro, an automotive glass supplier to the auto industry, is consolidating factories. Its operation in Evart, where it was the second-largest employer, will fully close by Labor Day. The total jobs lost, it told the state, comes to 125.

Martiz of Southfield, an events organizer for automotive clients, said in a statement from the company that this month it would make five “permanent terminations of employees who had previously been placed on what Maritz reasonably believed at the time would be a temporary layoff.”

Greektown Hotel and Casino in Detroit told 621 workers they would lose their jobs in September, saying “significant drags on our business will likely continue for the foreseeable future.”

MAPAL, a precision tool company in Port Huron, in July said it planned permanent layoffs of up to 50 people after it continued “to experience a significant, reduced demand for our products and, equally important, an unknown future demand due to the worldwide COVID-19 pandemic.” 

Among the employers starting to shift from temporary to permanent layoffs is HMS Host, a food-service operator in the travel industry. It told the state on Monday that 84 workers at the Gerald R. Ford Airport in Grand Rapids will have their jobs eliminated if they’re not called back by Oct. 15.

Gabe Ehrlich, a University of Michigan economist, said Yelp gives more hints about long-term job losses. 

“The fraction of closures that they estimate are permanent has risen over time,” Ehrlich said, with 55 percent of closed businesses listed on the consumer review site saying they will never reopen. 

“That’s where you start thinking about the permanent scarring,” Ehrlich said. 

Workers affected by permanent job losses are finding challenges that they never expected. Restaurant workers, for example, had been in high demand before the pandemic. Universities are announcing layoffs. So are medical centers. 

Will Emerson, 48, of Eaton Rapids holds a doctoral degree and most recently worked as director of student success for the Michigan Association of State Universities. He learned in June that his job had been eliminated as grant funding evaporated.

“I thought I was fairly insulated” from layoffs,” Emerson said. Now, he’s looking at employment listings daily as his paid insurance is set to expire by the end of the month. He said he’s seeing a lot of hiring freezes.

“I have no doubt there will be a lot of folks like me in the job market,” Emerson said. “We’ll be looking while there’s a decrease in jobs and an increasing pool of job-seekers. That will make it challenging.”

That raises questions about recovery, said Ehrlich, the U-M economist.

“It’s very difficult to get a sense of where we’re going to be,” he said. “Once the public health situation returns to normal, it’s clear that the economy is not going to return to normal immediately.”

Horrigan of the Upjohn Institute said the long-term unemployed worry him most in the jobs data. Like Hicks of Ball State, Horrigan said it’s important to watch the number of unemployed people and the number of people who are out of the job market and not counted among the unemployed. 

When unemployment runs out, the people who have left the job market then become “reentrants” are most likely to find it difficult to find a job.

“They’re losing their skills and the long-term unemployed become less and less attractive to employers,” Horrigan said. At the peak of the Great Recession, he said, about 45 percent lost jobs for 27 weeks or longer. 

“That [percentage] came down, but very slowly,” he said.

The degree of permanent job losses that we see through the end of the year and into 2021 will ripple through states and communities. It also will influence policy, Hicks said, as officials confront unemployment benefits while states and municipalities forego tax payments and revenue sharing.

Unclear so far is which types of jobs will be lost in Michigan, with analysis just beginning. Most likely, Horrigan said, is that many people will have to work on learning new skills to fit available positions. 

That hasn’t always been the case. Americans older than 50 grew up with recessions that were “short and deep” with robust recoveries, Hicks said. “You became accustomed to people being laid off for two, three or four months, and then going back to work.”

But recessions in the early 1990s, 2001 and 2007-09 saw sluggish labor market recoveries, he said. 

Policies that could speed recovery would focus on start-ups, new business financing and job retraining, Hicks said. 

If preliminary data are right, Hicks added, higher income and educated workers will be less affected by permanent job loss.  

“The real economic damage will be at the lower level, particularly the young people who are unemployed at much higher rates than other workers. “

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Comments

Just Facts
Fri, 08/21/2020 - 7:43am

Thanks, Gretchen!
Meanwhile, EU countries who decided NOT to shut down and NOT to force mask usage have infection rates similar to everyone else.

Thank the Governor
Fri, 08/21/2020 - 10:26am

Make sure you thank Governor Whitmer for losing your job. She gave the order to shut down the economy.

Nutty
Fri, 08/21/2020 - 10:27am

What do people expect? Good news! We never done anything like this before in recent history with sicknesses or diseases that are far worse in there implications that are occurring right now and before the impact of covid 19.
If this was something the world presented and like lemmings we followed along or have even done worse to hurt each other with the implementation of weapons used to save ourselves. Or if someone thought they could use this for political advantage or to over throw our way life- I do not see where this is good for anyone.
It reminds of the bible story where the door closed to the ark and then imagining the waters begin to rise. I hate to think what humanity is going to do to each other when they figure out it is over and begin to step on one another to get to the top of the hill to save themselves only find that they will be wiped out there too. Hooray, hooray what I way to throw our lives away. When people wake up, unfortunately it will be to late.,,

Anonymous
Thu, 08/27/2020 - 8:38pm

A virus with a rate of recovery greater than 95%. I'm pretty sure we have seen those lots of times throughout history. What we've never seen is such an extreme set of knee-jerk reactions by people in power. Stripping constitutional rights over something this mild is unbelievably mocking to those who have experienced true hardship.

jan d
Fri, 08/21/2020 - 10:28am

Exactly what Whitmer has been striving for. Anything to impede Trump's presidency.

Larry Good
Fri, 08/21/2020 - 11:16am

Important story. Building on comments within it, after the Great Recession, long-term unemployment came down slowly as noted, but it never really went away. So even when official unemployment rates were really low, Michigan and the country had a significant group of people who had lost their job a decade ago and never found another one. The current situation risks the same problem at even larger scale because of combination of slow job creation and challenges faced by the long-term unemployed.

Arjay
Fri, 08/21/2020 - 12:01pm

Perhaps the pandemic is just a push for the normal modernization that comes over time. Just about every job known today can be replaced with a machine or a different process. a doctors review of an x-ray is an example where a computer device is better than the doctor. Low paying repetitive jobs will be the first to go. Engineering tasks are replaced by advanced computer methods such as drafting being replaced by CAD and analysis being replaced by 3D analysis. Modern communication means that companies can obtain lower cost engineers overseas with no drop in productivity. As workers, it behooves us to always think to the future and be prepared that the job we are doing today will not be there tomorrow.

Ouchez
Fri, 08/21/2020 - 12:08pm

Will Emerson, the job he lost sounds like a non-essential, and easily not missed position,,and for some reason he believed he was insulated?? Really? Will,, go back and learn a trade, electrical, HVAC, plumbing, refrigeration, carpentry,,apply today! :)

duane
Sun, 08/23/2020 - 3:30pm

This article follows a theme of Bridge articles, of Lansing's view of Michigan future and culture. They seem to see the future about disappointment, about envy for the past, and about what people are owed. There is nothing about success, about creativity, nothing about what the individual can do for their future, their community's future, Michigan's future, and nothing about change.
When has a Bridge reporter/editor or someone from Lansing asked what the people of Michigan expect the future to be or what we hope it will be, and nothing about what do we, as individuals, need to do to make that happen? Why isn’t Bridge, or Lansing, looking around at the successes in Michigan, those centennial employers, those communities growing or improving their activities, those new employers, and asking them about how and they are succeeding, how they are preparing for the future and why?
It seems Bridge is adding staff, I wonder why, what do they see for their future and report about it or is it about who is failing and they will replace them or is it growing on hope without a plan.
We have a long history of good times and difficult ones, and yet our state, our nation has grown more abundant, the quality of live has never been better for the weak, the undereducated, for the infirmed, for those who are willing to work for an education, for those who are creative. Why can’t we hear about successes, about how others see the future and how they are preparing for it?
How can we get ready for the future when the pandemic loses control of Michigan if we’re not hearing and talking about the future?
Rather than ‘fix the damn roads’, maybe it time to be creating ‘highways’ of the future. Could this be a time when a town like Evart could be adding coding classes to the school's curriculum and creating a pool of in demand skills that doesn't have to leave town to become employed and one where people can change employers and not have to change their homes? Manufacturing is declining worldwide; it is knowledge and judgment economy, so when do we begin to reading about such changes and how we prepare for the future service economy? Where better to start than responding to a Bridge article?