A political godsend for Republicans came last Wednesday in time for Gov. Rick Snyder’s State of the State speech: new numbers from the Bureau of Labor Statistics showing Michigan’s unemployment rate had dropped to 9.3 percent — the lowest since September 2008.
“We’re getting it right, and we’re getting it done,” Snyder said in his speech that evening, declaring the beginning of “Michigan 3.0,” a new chapter in Michigan’s economic history based on innovation.
But a closer examination of the latest numbers doesn’t paint an entirely optimistic picture, economists said, although Michigan undoubtedly is on a slow climb out of its economic pit.
While the unemployment rate, which is calculated using the number of people who don’t have a job but are actively looking, has declined, it has been paired with a drop in the overall labor force. This suggests the lowered rate is not just driven by people finding work, but largely by people going back to school, leaving the state or just giving up entirely, MSU economics professor Charles Ballard said.
While the number of unemployed people has fallen steadily since the unemployment rate hit its 14.1 percent peak in August 2009, the labor force also has shrunk by about the same amount.
From December 2010 to December 2011, Michigan’s work force dropped by 100,000 people, 12,000 of which were between November 2011 and December 2011.
“If you believe these numbers, people leaving the labor force is the bigger story than actual job growth,” said Doug Roberts, director of MSU’s Institute for Public Policy and Social Research.
But the declining work force isn’t the whole story; there have been some signs showing Michigan slowly is moving in the right direction. From November 2011 to December 2011, employment rose by 13,000 people, although it still is about 3,000 people lower than December 2010.
As long as the numbers are somewhat driven by job growth, “that means the economy is making some strides forward,” Ballard said. “It’s almost exactly half job growth and people leaving the labor force.”
The trend actually started reversing in 2009, when unemployment began falling from its historic highs.
“The trend started very much in the last year of (former) Governor Granholm’s administration,” Roberts said. “The upward momentum was already in place when (Snyder) took office.”
While the current governor’s changes to the tax structure have undoubtedly made the state government more stable, many of his policies have taken effect recently and have yet to show their impact on rates such as unemployment, Roberts said.
General management freshman Kelli Zorn, who is from California, said she plans to apply for jobs in her home state after graduating, although finding employment as a young person is equally difficult in both states.
“I’m optimistic, so I want to say it will be better,” Zorn said.
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