GM layoffs could mean 16,000 fewer jobs overall in Michigan

By: - January 11, 2019 9:34 pm

Lawmakers and state officials were presented with a somewhat encouraging picture of the national and Michigan economies at a semi-annual budget conference Friday morning. However, General Motors layoffs put a damper on the outlook.

Gabriel Ehrlich, director of the University of Michigan’s Department of Economics, reported that “Michigan’s economy has rarely been better than is.” But the picture may not stay rosy.

Christopher Harkins, director of SFA; Mary Ann Cleary, director of HFA; Rachael Eubanks, state treasurer; and Chris Kolb, budget director listen to U-M economists’ presentation, Jan. 11, 2019 | Ken Coleman

“Looking into the future, there are more clouds on the horizon then there have been in awhile,” Ehrlich said. “We are forecasting continued, if not slower job growth over the next three years, along with lower unemployment, sustained inflation and meaningful income growth. In our view, this economic expansion is probably not more realistic than that.”   

At a briefing in West Michigan in December, economists concluded that the state’s and region’s economies would be strong this year. They did acknowledge challenges in the leadership change in Lansing, a lack of workers and the ongoing tariffs and trade war.

A key highlight is that Michigan job growth increased by 540,900 last year. More modest gains are projected for the next three years capping at about 34,000 jobs in 2019, 2020 and 2021.  

As for GM, almost 1,900 production Michigan jobs will be cut at the Detroit-Hamtramck Assembly and Warren Transmission plants. That includes about 8,000 white-collar positions. The predicted total effect is 16,000 fewer jobs in Michigan over the next two years.

Michigan’s unemployment rate has been low, averaging 4.3 percent in 2018, which is a bit above the national average. The rate is forecast to be 3.9 percent in 2019, 3.8 percent in 2020 and 3.7 percent in 2021. That would match lows from before the last recession.

The state’s wage and salary employment growth was 1.3 percent in 2018. That’s estimated to dip to .6 percent in 2019 and then be at .8 percent in 2020 and .7 percent in 2021.

Key findings for Michigan reported by the economists include:

  • Unemployment claims are at an all-time low
  • Unemployment rate has fallen faster the U.S. rate
  • Quarterly payroll employment growth has been “solid”
  • Light vehicles sales reach an all-time record in 2016 but have tailed off
  • 25,700 job gains predicted in 2019

Experts broke down the economy by sector:

  • Manufacturing: Characterized by Ehrlich as at a “standstill,” in part, given by an “uncertain” federal trade tension with China.
  • Professional and business services: Experienced a growth of 6,000 jobs this year but slower growth is expected in 2020 and 2021.
  • Construction: Slowing down 11,700 jobs were added in 2018, but only no more than 3,400 jobs per year are expected in 2020 and 2021.
  • Retail trade: About 1,700 job gains in 2019, but an average of about 5,400 jobs will be realized in 2020 and 2021.  It’s the “single most optimistic part of our forecast,” Ehrlich said.
  • Leisure and Hospitality: Job growth expected and is a “bright spot in our recovery,” Ehrlich said. He predicts a 6,700 jobs per year growth rate over the forecast period.  

On the national front, Daniil Manaenkov of U of M’s Department of Economics, reported that there is no hint of runaway inflation and no federal interest rate hike is expected.

However, the partial federal government shutdown could impact January jobs numbers, he said.

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Ken Coleman
Ken Coleman

Ken Coleman covers Southeast Michigan, economic justice and civil rights. He is a former Michigan Chronicle senior editor and served as the American Black Journal segment host on Detroit Public Television. He has written and published four books on black life in Detroit, including Soul on Air: Blacks Who Helped to Define Radio in Detroit and Forever Young: A Coleman Reader. His work has been cited by the Detroit News, Detroit Free Press, History Channel and CNN. Additionally, he was an essayist for the award-winning book, Detroit 1967: Origins, Impacts, Legacies. Ken has served as a spokesperson for the Michigan Democratic Party, Detroit Public Schools, U.S. Sen. Gary Peters and U.S. Rep. Brenda Lawrence. Previously to joining the Advance, he worked for the Detroit Federation of Teachers as a communications specialist. He is a Historical Society of Michigan trustee and a Big Brothers Big Sisters of Metropolitan Detroit advisory board member.