Report: Michigan’s unemployment rate masks staggering loss of workers, aging workforce

For Immediate Release
September 4, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

Since 2000, Michigan has lost 326,000 workers, seen labor participation rate go up for older workers, down for younger workers

LANSING—Since 2000, Michigan’s labor force has lost 326,000 workers, driven largely by a drop in workers 16-24 years old, according to the 2017 Labor Day report released today by the Michigan League for Public Policy. The report shows that while Michigan’s monthly unemployment rate dropped to 3.7 percent for July—the lowest jobless rate since 2000—this decline can be attributed as much to worker attrition as economic improvement.

Workers drop out of a state’s labor force in several ways: physically leaving the state, death, institutionalization (i.e., incarceration), or stopping both work and the search for work (i.e., retirement, disability, staying home with children, etc.). Michigan’s labor force reached its numerical peak of 5.16 million in 2000 and was down to under 4.84 million for 2016, showing a net loss of 326,000 workers.

“How Michigan’s economy is doing depends on which worker or policymaker you talk to and what data you look at,” said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “Michigan’s declining unemployment rate is certainly good news, but it doesn’t tell the whole story. Since the unemployment rate was last this low in 2000, Michigan has been steadily losing workers, and our workforce is getting older, neither of which bodes well for our economic future.”

Michigan’s labor force participation rate, which measures the percent of the civilian population 16 years old and over that is working or looking for work, has been at a historic low for several years. Its high-water mark was 69 percent in 2000, but fell to a low of 60 percent in 2011 and 2012, where it has hovered since, despite the improving unemployment rate. In the same way, while Michigan’s employment-population ratio shows clear improvement since 2011 concurrent with falling unemployment, it is below where it was during the economically difficult years of the early and mid-2000s and the 20 years prior.

Michigan’s labor force has also begun to shift toward older workers. From 1979 (the earliest year data on worker ages is available) to 2000, the share of Michigan’s labor force that was 55 years of age or older was between 10-13 percent annually. Following 2000, however, this age group began comprising a steadily larger share of the workforce, and in 2016 their share (22.2 percent) nearly doubled that in 2000, while the portion in prime working age decreased from 70.4 percent to 62.3 percent over that span.

Younger workers, those from age 16-24, comprised a moderately smaller share of the workforce in 2016 (15.4 percent) than in 2000 (17.9 percent) but considerably smaller than in 1979, when they accounted for more than a quarter of the workforce. In keeping with the pattern of the previous 20 years, 72 percent of residents aged 16-24 were either working or looking for work in 2000. That percentage took a sharp and steady plunge over the following decade, bottoming out near 50 percent in 2011 sitting at 63 percent for 2016.

“We’ve all seen this data in action. Think about your daily life and the variety of workers you encounter in jobs that young people used to hold—a fast food worker, a grocery bagger, a restaurant server,” Jacobs said. “Lawmakers need to look at these changing demographics and embrace policies that help younger and older workers alike get the education, skills and training they need to get the jobs that they want.”

Although a higher portion of older individuals are remaining in the workforce, as they retire there are fewer younger workers to replace them. The League’s Labor Day Report offers the following policy recommendations for legislators to strengthen Michigan’s workforce at both ends of the age scale:

  • Make college education less expensive by lowering tuition and increasing financial aid, which will help cut down on student debt;
  • Encourage universities to offer more academically relevant work-study for students with low incomes so that they may gain meaningful work experience;
  • Make postsecondary training for “middle skills credentials” (a short-term or two-year credential such as a license, certificate or associate degree) more accessible to young people, especially those who live in areas with high unemployment and poverty and few available jobs;
  • Provide support services to young single mothers that encourage them to participate in postsecondary education or training and facilitate their completion and success; and
  • Retain Medicaid expansion in order to help provide healthcare for older workers earning lower wages.

To read the full Labor Day report and see labor force and jobless rate data for all 83 counties, go to www.mlpp.org/wp-content/uploads/2017/08/Labor-Day-Sept-2017.pdf.

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.