Michigan Employment Ramifications from COVID-19

Today, Gov. Gretchen Whitmer placed a three week stay-at-home order on the residents of Michigan to slow the spread of the coronavirus disease (COVID-19). This order, along with other executed orders issued in the last week means restaurants are limited to takeout, casinos are shuttered and the Big 3 (Ford, GM and Chrysler-Fiat) all temporarily closed their manufacturing plants, along with hundreds of other businesses deemed non-essential. As the number of confirmed cases in Michigan continue to rise so do the concerns about economic stability. Staying home and social distancing are necessities at a time like this but businesses, and their employees, are grappling with how to stay afloat. Some have the ability to have their employees work from home, others can pay their workers for some period of time despite being closed, and many employees are left without knowing where their next paycheck will come from.

According to Bridge Magazine, the Michigan Department of Labor and Economic Opportunity reported about 108,000 unemployment claims as between March 16-20, 2020. The same agency reported that the average weekly unemployment claims during the height of the Great Recession peaked at about 90,000.

To provide a better glimpse as to how many people in Michigan may be economically impacted due to this global pandemic we have provided the most recent annual employment numbers from the State for occupations and industries that have been or are most likely to be impacted.

All the employment data in this post is from the Michigan Department of Management, Technology and Budget and focuses on Metropolitan Statistical Areas (MSA) in Michigan, which are areas with a dense population at its core and close economic ties to the surrounding areas in the region. Not all MSAs in this post had data to reflect the industries or occupations examined in this post. Additionally, some State totals may vary from the totals in the pie charts due to the fact not all MSAs had data and some areas, such in the Upper Peninsula, do not have an MSA but do still have employees in the various industries and occupations examined.

The chart below shows the number of employees in 2019 of the various industries and occupations that are arguably amongst the hardest hit due to COVID-19, whether it be from being forced to or from being overworked due to community needs (health care workers and grocery stores, who have been deemed essential employees by the governor).

In 2019, there were 672,000 people who declared manufacturing as their occupation; this was the highest number in the State of Michigan of those examined in this post; those declaring health care and social assistance as their occupation came in second at 606,900. The food preparations and serving industry came in third with 392,900 people employed in the State of Michigan.

In breaking the data down further, we look at the same industries and occupations (if data was available) for the Detroit-Warren-Dearborn MSA. For just this area, the health care and social assistance occupation had the most number of employees at 288,300 in 2019, followed by manufacturing at 257,900. In the Detroit-Warren-Dearborn MSA there were 169,500 people in the food preparation and serving industry.

The two pie charts below highlight what areas (MSAs) are likely to be impacted the most in terms of unemployment as a result of COVID-19 related closures. Food preparation and serving and manufacturing were the only two occupations with comprehensive data sets for 2019, and as both charts show, the Detroit-Warren-Dearborn MSA had the highest number of employees (this is also the most densely populated area in the State). For food preparation and serving there were 169,950 employees in the Detroit-Warren-Dearborn MSA followed by the Grand Rapids-Wyoming MSA with 45,140 employees. For manufacturing there were 257,900 employees in the Detroit-Warren-Dearborn MSA in 2019 and 119,000 in the Grand Rapids-Wyoming MSA.

As the snapshots above show, thousands of people are at risk of being unemployed for an unknown amount of time. And, as noted earlier, the number of unemployment claims continue to rise as a result of COVID-19 and the precautions being taken to “flatten the curve.” In 2019 the unemployment rate for the State of Michigan was 4.1 percent, the lowest it has been since the start of the Great Recession in 2008. We certainly have a long way to go before unemployment rates reach what they were during the peak of the recession (14%) but with such a swift shift in employment for hundreds of thousands of people the possibility is certainly on the minds of many.

While the economic future of Michigan and the country is not exactly certain at this time, actions are being taken by federal and state officials to aid citizens. At the federal level officials are working to secure a coronavirus stimulus check for qualifying citizens and in Michigan Gov. Whitmer extended unemployment benefits, among other forms of support. For now, what we can do is adhere to the guidelines created by the Centers for Disease Control to “flatten the curve,” which include: remaining at home-especially when sick, keeping at least six feet away from others, washing your hands frequently for at least 20 seconds, covering coughs and sneezes and regularly cleaning frequently touched surfaces. Additionally, local businesses can be supported by: purchasing gift cards, donating to funds they may have created or are being supported through, ordering their products online or purchasing carry-out and writing your elected officials to find means to further support them through public policy decisions.

Unemployment numbers decreased with the holiday season

  • From October 2014 to December 2014, the unemployment rate across the state and in the City of Detroit’s decreased (monthly);
  • The Purchasing Manager’s Index for Southeast Michigan increased from November 2014 to December 2014 (monthly);
  • Commodity Price Index decreased from November 2014 to December 2014 for Southeast Michigan (monthly);
  • Wayne, Macomb and Oakland counties experienced decreases in the number of monthly building permits pulled.

Slide02According to the most recent data provided by the Michigan Department of Technology, Management, and Budget, the unemployment rate for the state of Michigan decreased from 7.1 percent in October to 6.3 percent in December. During this same period, unemployment in the city of Detroit also decreased from 15.1 in October percent to 12.2 percent.

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From November to December of 2014, the number of people employed in the city of Detroit increased by 1,775, leading to a total of 287,228 people employed in December.

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The above chart shows the number of people employed in the auto manufacturing industry in the Detroit Metropolitan Statistical Area (MSA) (Detroit-Warren-Livonia) from December 2013 to December 2014. From July 2014 to November 2014 employment in this industry has increased by 9,000 from 91,600 to 100,600. However, from November to December, that number stagnated, remaining at 100,600. This was still the highest it had been over the last year.

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The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 means the economy is expanding.

According to the most recent data released on Southeast Michigan’s Purchasing Manager’s Index, the PMI for December 2014 was 64.2, an increase of 7.4 points from the prior month. As compared to December 2013, there has been an increase of 13.6 points.

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The Commodity Price Index, which is a weighted average of selected commodity prices, was recorded at 54.2 points in December 2014, which was 7.6 points lower than the previous month and 1.9 points higher than December 2013.

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The above charts show the number of residential building permits obtained each month in Oakland, Macomb, and Wayne counties from January 2013 until December 2014. These numbers are reported by local municipalities to the Southeastern Michigan Council of Governments and include single-family units, two-family units, attached condos, and multi-family units.

 

Oakland, Wayne, and Macomb counties all experienced a decrease in the number of building permits pulled from November 2014 to December 2014. These declines are largely seasonal, due to weather. Only Wayne County issued more permits in December 2014 than it did in December 2013. Oakland County issued 131 permits in December of 2014, a decrease of 10 compared to November 2014 and a decrease of 18 compared to December 2013. Macomb County issued 31 permits in December 2014, 47 fewer than in November 2014 and 52 fewer than in December 2013.

Wayne County issued nine fewer building permits in December than November of this year; in total 52 permits were pulled. This is seven more than the number pulled for the county in December 2013.