Rick Haglund: Michigan is running out of workers. That’s bad news for the economy.

April 27, 2019 8:27 am

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Michigan has largely focused on boosting educational attainment and vocational skills to meet employers’ current and future workforce needs.

But there’s a bigger issue threatening the state’s economic vitality: we’re running out of people to train, educate and fill new jobs.

Michigan’s working-age population is forecast to grow by just 87,700 people between 2015 and 2045, according to University of Michigan economists George Fulton and Don Grimes in a 2017 forecast for the Michigan Department of Transportation’s Bureau of Transportation Planning.

But none of that growth will occur until 2031. The number of people in the state between the ages of 25 and 64 is expected to decline by 110,000 between 2017 and 2030, “making it increasingly difficult for employers to find workers,” the forecast said.

Currently, there are only 198,000 Michigan residents who are unemployed and actively looking for work in a labor force of 4.9 million people.

Unless Michigan can find more workers, the state’s economy is likely to stagnate over the next 30 years, the economists warned.

2017 MDOT report

“The looming problem down the road will be labor shortages, particularly of workers with skills that mesh with the evolving knowledge- and information-based economy,” Fulton and Grimes wrote.

Michigan could have a difficult time growing an adequate number of workers for generations to come. The number of babies born in the state in 2017 was the fewest since 1944, prior to the start of the baby boom in 1946.

Births have been declining for years in Michigan and will likely result in a steep decline of residents under the age of 25 by 2045.

The only significant growth in the state population will be among those 65 years and older, as shown in the chart below from the U of M forecast.

Michigan is far from alone in dealing with a squeeze in its working-age population. Many other states, mostly those in the aging, slow-growing Midwest and Northeast, also are struggling with the issue.

Some states and cities, including Vermont and Tulsa, are paying remote workers as much as $10,000 to move there.

Such efforts will accelerate the competition for talent. That’s a race that Michigan can’t afford to lose, particularly as it vies to become a global center of electric and self-driving vehicles.

There are a number of things that can be done to grow Michigan’s workforce and make the state more attractive to newcomers.

While most state residents looking for jobs are able to find them, almost 40 percent of the state’s adult population is not connected to the job market. Michigan’s labor force participation rate — the percentage of working-age adults employed or seeking employment — was 61.7 percent in March, according to the U.S. Bureau of Labor Statistics. Michigan ranked 36th among the states.

Brighton potholes | Susan J. Demas

Boosting wages and easing barriers to employment, such as a lack of child care or transportation, could bring thousands of new workers into the job market.

Fixing the roads, investing in communities and education and becoming more welcoming — all priorities of new Gov. Gretchen Whitmer’s administration — could attract more people of working age to the state.

Michigan has had some success over the past decade in retaining and attracting college graduates, according to U of M’s most recent state economic forecast.

The state added 95,000 young adults between the ages of 25 and 34 with at least a bachelor’s degree between 2010 and 2017 — a 29 percent jump as the economy bounced back from the Great Recession. Michigan ranked 15th among the states in the growth of young college-educated adults during that period.

But Michigan and Detroit, the state’s largest city, still lag the country and other large cities in the percentage of young adults with at least a bachelor’s degree.

In 2017, 33.5 percent of Michigan’s young adults had college degrees, below the national average of 35.6 percent. Just 16.9 percent of young adults in Detroit had at least a bachelor’s degree.

Michigan also has struggled to attract people of all ages to the state.  For years, more people have been leaving Michigan for other states than those arriving here.

But the state has had much more success in attracting international immigrants, which experts say may provide the best chance of boosting Michigan’s working-age population.

In their latest state economic forecast, U of M economists say Michigan’s working-age population is expected to fall by 37,000 people between 2018 and 2025. But that decline would be about 200,000 people without the projected increase of about 163,000 international migrants in that time period.

“International migration will play a central role in shaping Michigan’s demographic and workforce future,” the U of M forecast said.

But the President Trump administration’s hard line on immigration could severely limit the number of international immigrants, refugees and asylum seekers admitted to the United States in coming years.

And Michigan would pay the price by being deprived of the future workers it will so desperately need.

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Rick Haglund
Rick Haglund

Rick Haglund writes the "Micheconomy" column for the Michigan Advance. He's a former reporter and business columnist for Booth Newspapers, now the MLive Media Group, with extensive experience covering Michigan’s economy and the auto industry. He now works as a freelance writer based in Southeast Michigan.