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Original article URL: http://bridgemi.com/2017/01/michigans-economic-axis-tilts-away-from-detroit/

Economy & competitive position

Michigan’s economic axis tilts away from Detroit

  • No. 1

    Grand Rapids

    Kent, Ottawa, Barry and Montcalm counties

    Far and away the best region in the state, economically, Grand Rapids has been powered by growing manufacturing sector. It’s 1-year GDP growth of 5.3 percent ranks it 32nd out of 381 metro regions in the country.

    Economic Activity Change Rank (out of 14 regions)
    GDP 1-yr change 2.3% 2
    GDP 3-yr change 9.8% 1
    Employment Change Rank (out of 14 regions)
    Jobs, 3-yr change 21.3% 1
    Unemployment, 2015 3.7% 2
    Income, wages Amount/change Rank (out of 14 regions)
    Avg. annual wages $45,435 9
    Wages, 3-yr change 3.6% 2
  • No. 2

    Ann Arbor

    Washtenaw County

    Thirty percent of the region’s economy rests with government, no surprise given the dominance of the University of Michigan and other educational institutions in the county. It’s enjoyed the lowest unemployment rate in the state and wages remain high.

    Economic Activity Change Rank (out of 14 regions)
    GDP 1-yr change 1.8% 4
    GDP 3-yr change 3.6% 8
    Employment Change Rank (out of 14 regions)
    Jobs, 3-yr change 4.6% 4
    Unemployment, 2015 3.5% 1
    Income, wages Amount/change Rank (out of 14 regions)
    Avg. annual wages $54,985 3
    Wages, 3-yr change 1.4% 7

Whether Michigan’s economy is humming or wheezing depends on your zip code.

Plentiful jobs and rising wages have been the byproduct of a dynamic, growing economy in the Grand Rapids region, making it the strongest economy in Michigan and one of the faster growing metropolitan areas in the country, economic data analyzed by Bridge Magazine shows.

But just two hours east, the economic story is more angst than awe. In Saginaw and Bay City regions, the economies are shrinking while wages are either down (Bay County) or stagnant (Saginaw County).

The vast differences are proof that while Michigan’s economy is on the mend, recovery remains frustratingly uneven, with only three of the 14 metropolitan regions having yet to climb above pre-recession figures for economic output. All are on the west side of the state: Grand Rapids, Kalamazoo and Muskegon.

“The east side of the state has not recovered as fast as the west side of the state,” said Brian Long, currently director of Grand Valley State University’s supply management research  within the business school. He has surveyed West Michigan purchasing managers for 38 years and has chronicled the region’s economic recovery.

The Grand Rapids region is the fastest growing in the state, with rapid job growth. Average pay in the region is still below average for Michigan, but rising

The Grand Rapids region is the fastest growing in the state, with rapid job growth. Average pay in the region is still below average for Michigan, but rising

Grand times in Grand Rapids

An analysis of several measures of economic health — overall economic growth, wages, jobs and unemployment, found Grand Rapids has had the most vibrant economy among the state’s metropolitan statistical areas in recent years.

The Grand Rapids region, comprised of Kent, Ottawa, Barry and Montcalm counties, enjoyed the most robust job growth — 21 percent, more than 90,000 jobs — between 2012 and 2015. And though it has some of the lower average wages in the state, they rose a healthy 3.6 percent over the same three years, second best among the state’s 14 metropolitan regions.

Those 14 metropolitan regions, designated by the U.S. Census Bureau, cover just 25 of Michigan’s 83 counties, but more than 90 percent of the state’s economic output.

With a nearly 10 percent increase in gross domestic product (the total value of all goods and services produced) over three years, the Grand Rapids region had the 57th fastest growth among the nation’s 386 metropolitan regions.

The regions surrounding Ann Arbor, Kalamazoo and Detroit rounded out the top four in Michigan’s overall economic rankings. The size of the regions vary considerably: Metro Detroit, covering six counties, had 2015 GDP of more than $221 billion dollars, more than four times the size of Grand Rapids. Bay County, with an economy of $2.8 billion, was the smallest.

West Michigan has benefitted from its more diversified manufacturing base that doesn’t rely as heavily on the auto industry. Long said worker productivity has been higher in West Michigan and wages lower, lowering overall cost and making the region attractive to employers.

Indeed, the region’s 21 percent jump in jobs between 2012 and 2015 is nearly triple the 7.7 percent increase in Monroe County, the region with the second-highest boost in jobs.

“I’ve got people in the market paying $14 an hour and they can’t find people,” Long said.

But the recovery from the Great Recession has proved more elusive in other parts of the state, notably the Saginaw and Bay City regions where continued declines in economic output and stagnant to declining wages have tempered the overall picture of the state’s economy.

Saginaw and Bay counties – though neighbors, each is considered its own economic region by the government – have both seen their regional economies shrink over both one and three years. Once humming with auto jobs, along with nearby Flint, the region along I-75 has struggled like many of the smaller urban areas that previously shared in the state’s once-robust and dominant auto manufacturing sector.

“There used to be more manufacturing jobs in these small and rural areas,” said Don Grimes, economist and senior research specialist at the University of Michigan’s Institute for Research on Labor, Employment and the Economy. “The real prosperity and the real growth is going to be in those larger metro areas.”

The three largest regions in the state – Detroit, Grand Rapids and Ann Arbor – were 3rd, 2nd and 4th in terms of one-year GDP gains, according to the latest data from the U.S. Bureau of Economic Analysis, which publishes the statistics every two years. Flint, which suffered one of the steepest economic declines in the state during the recession, posted the biggest one-year gain, 2.6 percent. Still, its economy is only 93 percent of what it was in 2007, among the slowest recoveries in the state. Only the economies of the Grand Rapids, Kalamazoo and Muskegon regions are bigger than they were before the recession.

“A big part of the problem is demographics. A lot of young people and immigrants don’t want to live in rural areas and small urban areas,” Grimes said.

Better times, and beer, flow in West Michigan

While it’s been a well-worn path for many in the Midwest to head to Chicago and Minneapolis, more young workers are heading to the largest city in West Michigan, where downtown has enjoyed a revival with the addition and expansion of higher education and healthcare industries.

That’s attracted more housing for people choosing the urban core and its lofts and new high-rise apartments that are spurred in part by a burgeoning entertainment scene.

Home of award-winning craft breweries, the conservative town now markets itself as Beer City, U.S.A. 

“The city of Grand Rapids is doing extremely well in terms of its revitalization,” Grimes said.

Economic output is down and wages flat in Saginaw, where the recovery from the great recession has yet to reach.

Economic output is down and wages flat in Saginaw, where the recovery from the great recession has yet to reach.

Saginaw and Bay City struggle

The lure of towns like Grand Rapids puts places like Bay City and Saginaw at a disadvantage. While affordable, they aren’t viewed as “hip” like Ann Arbor and even Detroit. But that’s not stopping local leaders from trying to improve the local economy.

Matthew Felan, president, CEO, Great Lakes Bay Regional Alliance of Bay, Midland and Saginaw counties, said the region is working on attracting new industries while leaning upon its existing assets, including the transportation infrastructure that includes the port facilities that open both Saginaw and Bay City industry to international shipping, and the manufacturing might that has long endured along the Saginaw River. “If you want something built, our region can build it,” Felan said.

But Felan knows the job he and his peers face: the region was crushed by the devastating losses of General Motors and cuts at Dow Chemical. The downturn struck all over the region. “Every single company,” he said.

Despite the Saginaw region’s position at the bottom of the Michigan economic stack, at least through 2015, it’s seen some recent successes. For the Bridge review of the state’s economies, the Saginaw unemployment rate was 5.5 percent in 2015. It was at in 4.5 percent in October 2016. Among the bright spots is Nexteer Automotive,  which employees 5,000 people in the region and is going strong, Felan said.

The region’s leaders are hoping to lure more educated workers, more people with doctorates who might invent the next great thing that the region’s workers could build.

A glance at education statistics show how important a college degree can be to the local economy: those counties with the highest percentage of workers with a bachelor’s degree or better were in the regions doing the best.

In Washtenaw County, part of the Ann Arbor metropolitan area, 55 percent of adults have a college degree; In Oakland (part of the Detroit region), 44 percent have degrees; Kalamazoo County, 39 percent, and Kent County, 34 percent.

Only Ingham County, home to Michigan State University and state government, had high levels of education (39 percent with a bachelor’s degree or better) but fared poorly economically. At the other end of the scale, Saginaw, Bay and Monroe counties, where fewer than 20 percent of adults had a degree, did the worst economically. Statewide, 28 percent of adults have a college degree.

To Felan, that is no surprise. “It’s about talent,” he said.

The broader bay region, including Saginaw, Bay and Midland counties, is working to grow its own by working with local schools to develop the next generation of scientists and engineers. The STEM Pipeline project arranges events for younger students and works with local schools.

But for places like Detroit, Flint, Saginaw and Bay City, the future will likely be tied to the auto industry for a little while longer. That may mean accepting a smaller slice of the state’s – and the nation’s – economic pie.

“The auto industry stabilized but it stabilized in a relatively low level of employment,” said Christopher Douglas, associate professor and chair of the economics department at the University of Michigan-Flint.

Since 2015, upon which this report is based, Michigan overall has continued to climb out of the economic cellar, said Grimes, who does long-range economic forecasting  for the state.

“The Michigan economy is looking good, it’s still doing at least as well as the U.S. economy,” Grimes said. And that’s important because typically the state has slipped behind the nation at this point in a post-recession recovery, he said.

“That’s really good,” he said.

Mike Wilkinson is Bridge’s computer-assisted reporting specialist. Mike held a similar role at The Detroit News. See more stories by him here.

25 comments from Bridge readers.Add mine!

  1. R.L.

    With Mrs. DeVos in Washington she will help to make America Great Again. Ya RIGHT. Fix our roads and increase the cost of gas, license I fees, gas tax, all on many who can least afford it. Mrs. DeVos where did you choose to educate your children and grand kids? Make Charter schools fully accountable, and don’t funnel money to the parochial schools. My parents paid for 4 of us to be educated in the Catholic schools. . Bring back Career and Technical Education. . Spread the blame and credit where it belongs, the home, school, society. etc. Have a nice day. R.L.

    1. Mary Fox

      You got that right R.L. The ride to Port Huron on I 69 is a nightmare. The roads and highways in the state are abysmal and and the continuing subsidizing of business isn’t appreaciated by the bueiness men. their sense of entitlement is corrupting. That 9.6 billion each year goes into subsidizing business means that 2 billion needed for roads isn’t there, 2 billion to fix infrastructure isn’t there, 2 billion to help students and fix schools isn’t their and 1.6 billion does’t help families and the environment. When will tax dollars be SPENT on TAXPAYERS AND THEIR NEEDS?

    2. J McNeal

      We should not be so quick to judge Charter Schools. Many of our charters are alternative education buildings. They are helping reduce the dropout rates and keep students engaged when they would have dropped or been lost in a traditional school setting.

      If you don’t think that Career Tech Education (the trades) is not an easy path. How many of us can calculate ohm’s law or the length of the hypotenuse of a rafter? Manufacturing is not a take and put job anymore.

      1. Mary Peterson

        Trade schooling is not easy; there just isn’t enough of them.
        My beef with for profit charters is that they use my tax dollars, but don’t have to account to the taxpayer. Betsy Devos made sure of that.

  2. Larry Good

    Mike, I like the piece overall but have a few quibbles. First, the headline and the story don’t align. This isn’t a story about Michigan’s economic axis tilting away from Detroit; it’s a story about it tilting away from rural/small metro areas to larger ones. Metro Detroit, for example, does nearly as well as Grand Rapids in the one-year economic change stats, and is ranked only 12 slots below Grand Rapids in rate of growth. In the three-year change of GDP you note, while Detroit doesn’t match Grand Rapids’ increase of 10%, its growth was positive each of those years, resulting in 5% GDP growth. By contrast, Saginaw’s 2015 GDP is 1% smaller than it had in 2012. Second, it’s not surprising that Grand Rapids’ wages would grow faster than those in Metro Detroit given they were starting from a much lower base and Detroit’s were more affected by wage changes in the auto industry. Third, there is a discrepancy between the Grand Rapids GDP one-year growth you cite in the chart (2.3%) and in the paragraph above it (5.3%). The 2.3% is right, meaning that Grand Rapids’ rank in growth is 135th among regions nationally, not 32nd. I’m citing these statistics to argue that the story to emphasize is that Michigan has a set of larger, generally better educated regions that are collectively doing much better economically than are smaller regions and rural areas — a pattern of change being seen nationwide, not just in Michigan.

    1. JohnG

      @Larry Good: “I’m citing these statistics to argue that the story to emphasize is that Michigan has a set of larger, generally better educated regions that are collectively doing much better economically than are smaller regions and rural areas — a pattern of change being seen nationwide, not just in Michigan.”

      By “larger region” I take it you mean more densely populated, rather than larger in area or even a region of larger population. If you mean the latter, one can fudge statistics by where one draws boundaries, no?

    2. Andrea Yokich

      Larry – Good use of data. Thank you

  3. Mary Kovari

    This article was very interesting, especially the segment about talent and the value of a college degree. In Detroit the rhetoric is “not everyone needs a college degree.” The emphasis is on voc tech and getting young people ready and adults connected to jobs in the construction industry. I get this and believe this is very important work but if we in Detroit continue to try and do an end run around math and literacy proficiency – it. will. not. work. If we want to advance our region we must improve our schools.

    1. Carolyn

      Voc tech is not an end run around math and literacy proficiency. Welding trades require knowledge of metallurgy, safety with possible heating of chemicals, math with to use and following prints. Automotive and heavy equipment repair, requires knowledge of fixing both computer and mechanical based problems. Any trade requires literacy to keep up with the changes in the industries and most require the ability to follow prints/schematics. The carpenter needs to know math with machine settings and other skills and abilities. The plumber needs to know how to apply Pascal’s Law, solve potential problems with design changes, and other issues. Of course, there are others; skill trades are not unskilled jobs and skilled jobs require literacy. Math is everywhere including: household budgets, doubling/halving recipes, comparison shopping / comparing items to chose the best item on a fair expected lifespan of the item, using tape measure (sewing, construction, home repairs, …), and so on.

      When I lived in Macomb County they had an active literacy group that ran through the County Library, the person running the program said most of the people being helped in the program had good professional jobs. I don’t remember if most where ESL people who might have great literacy in another language. Does Detroit have a literacy group that can help people? If the state in a few years will require volunteering hours for assistance, a literacy group might be good to strengthen now so it can take lots of volunteers and people needing help. The hard thing is connecting a person who needs help reading and can’t read the signs for help. If they are an immigrant literate in another language they have a better chance of getting help than the citizen since information for assistance is often available in multiple languages or the excuse to have someone read it since it isn’t is their preferred language.

  4. Mark

    Another observation is that generations ago, people would move to where the jobs are located. That still happens, but to a lesser degree because of the “comfortable poverty” theory. People in distressed neighborhoods, be it Detroit or Saginaw, should be notified of the job availabilities in other parts of the state. After all, there are ~80,000 or more job vacancies listed on Mworks alone.

    1. Stephen C Brown

      MARK: It’s really hard to ascribe concepts like “comfortable poverty” to folk’s behavior. It’s just assuming an intention, if there is no data to back it up. Where is your data? In my (anecdotal, unscientific) poll, people have mentioned the loss in value of their houses most often. How can people move, when it would mean abandoning their houses and damaging their credit ratings, just to take a big open-ended risk outside their social support network? These migrations were always dependent on social support available at the destination, by family or friends.

      1. Mark

        Stephen- I appreciate the comment. I would answer your question by digging deeper into the culture of urban areas where the theory of “comfortable poverty” is most prevalent. You have generations of people that have no idea of work skills or work culture. Generations of babies born into poverty to single mothers already in poverty. Lack of the traditional family structure has played a large role in the theory. Just look at the current troubles of the construction industry trying to fill skilled trades…..electricians, carpenters, welders, plumbers, etc. The companies and unions trying to fill these jobs with urban area residents is very very hard because of the culture. We all, no matter of our socio-economic status, get comfortable and unfortunately that hurts generations of people.

    2. duane

      People put their on spin on ‘comfortable poverty’ and that creates a lot of mis-communication and misunderstanding of how people on all sides of the problem react to the situation/environment.

      My view. ‘comfortable poverty’ is not so much about ‘poverty’ but the inertia we all must deal with. The physics Law of Inertia is that a body tends to stay in the state it is in, if it is moving in one direction it will continue to move that way, if it is at rest it will remain at rest, until and external force changes it state.

      People tend to stay where they are, what they are doing, and how they are doing it. They are in a state of inertia. The different is that it takes an internal force to change the state.

      Many call it being ‘comfortable’ with what you know, where you live and how you live. When one is surviving in a situation they build a confidence, ‘comfort’, with their ability to manage or survive where they are. They have their micro culture of those they are surviving with reinforcing not to change. They will stay in that state of ‘comfort’, that inertia, until something entices them to change.

      Whether it be those in ‘poverty’ or in ‘wealth’ they will continue live, do, as they are currently living, it is their inertia.’comfort’.

      The questions we should be addressing is what state of motion will they benefit most from and how do they change that state.

      If to move out of ‘poverty’ is a better education [marketable knowledge and skills] then how do we interest people in learning? If it better health, then how to we interest them in improving their health?

      Where a body in physics requires and external force to change their state, in people it is the person who most create the force to change their state. The best others can do is to identify what interests the individual enough for them to make the effort to change their state.

      The reality is that a habit creates its own rationale, it is not logical, it is not based on long-term results. A person’s current state is a habit and it will not change [nor the thinking] until a new habit is established. I would encourage people to look at their lives as habits, identify what your habits are, why you chose those habits, and how can you share the why’s with others in a way that makes that habit appealing to them. The important things is that it must be personal [they can see how it applies to them], it must be immediate [actions/habits will immediately be creating small wins], and must be regularly reinforced.

      ‘Comfortable poverty’ is much like the frog and the boiling water, if it starts easily and gradually changes to dire we will develop confidence we can manage so we will stay in the boiling water too long never realizing we can and need to change to get out.

  5. Rev. Karen Blatt

    Great article. What kind of detailed social-ecomonic data and information do you have on Roscommon County? My interest comes from the fact that I am the Pastor for the Presbyterian Church in Houghton Lake. Thank you, Pastor Karen

  6. R.L.

    Mary Fox thank you at least I know now some one reads my comments. Gov. Snyder’s transparency pledge is and was a joke. He and Gov. Walker in Wisconsin must talk to each other every day. Sometimes they talk and act like. YOU CAN’T HANDLE THE TRUTH. Why not try us for a change. While we drink bottled water in Lansing you drink the tap water now in Flint it is O.K. And you wonder why there is a high level of trust of those in Govt. Peace R.L.

  7. R.L.

    That was so nice to raise the minimum wage to 8.90 so that someone working full time can earn an additional $832 dollars this year if they are lucky enough to get full time employment. I forgot to mention gas went up 30% in the last month car registration up 20% and the gas tax 8 cents. My daughter is fortunate to have a good job but she pays $900 per month for her families health insurance with $6000 deductible for each of the 4 of them. She finally reached her deductible and guess what now she gets to start over. Oh Wow. What’s wrong with this picture.

    1. Mark

      What’s wrong is that a person needs to equip themselves for a different job that pays more or move. In the larger picture, raising the minimum wage by the government does more harm. It decimates against people….some people get a raise, others lose their jobs or get put into part time. Along those lines, as the current Affordable Care Act dissolves, you will see employers that were forced to put full time workers into part time by limiting their number of hours, workers will now be able to be employed 40 hours.

  8. Eric

    The difference between the people of Detroit and Grand Rapids can be seen in the support or opposition to regional transit. People in Kentwood, Wyoming, etc., voted to support it and have a fine view of GR and downtown, whereas you have the opposite in Detroit.

    1. John Q. Public

      Would a lot of people in Kentwood and Wyoming vote to financially support a regional system of multiple bus lines, the majority of which don’t serve Kentwood and Wyoming? That’s what the people of southeast Michigan are asked to do. It isn’t as simple as “…support(ing) or oppos(ing)…” regional transit; the system suburban and exurban Detroit taxpayers are asked to pay for is ludicrous.

    2. Matt

      Sorry Eric but as I recall Wyoming and Kentwood voted against the bus line but because East Grand Rapids was gerrymandered into the issue and Grand Rapids voted in favor the (now failed) Silverline passed. I see 25% full parking lots and watch largely empty buses roll past all day long!

  9. Jim

    I do not understand some of the numbers cited here. If I look up the Grand Rapids-Wyoming MSA, I see an increase from 482,747 to 534,718 employed from 2012 to 2015. That is an increase of 51,971 jobs (10.8 %) by my math, not 90,000 and 21 % – where does that number come from?

    I am using non seasonally adjusted numbers via http://milmi.org/datasearch.

    To compare, the Detroit-Warren-Dearborn MSA had an increase from 1,798,000 to 1,874,000 over the same time period. That is an increase of 76,000 jobs (though a smaller 4.2 %).

    What’s interesting is that if we take more recent data, say from November 2015 to November 2016, we see different numbers.

    For the Grand Rapids MSA, the increase is from 553,165 to 544,426 (+8,739 or +1.6 %).

    For the Detroit MSA, the increase is 1,890,000 to 1,966,000 (+76,000 or +4.0 %).

    Personally, I would combine the Detroit and Ann Arbor statistics, as the regions are very close and very much connected.

    For combined Detroit and Ann Arbor MSA figures, the increase would be from 2,078,272 to 2,162,072 (+83,800, still +4.0 %).

    Okay, so that doesn’t really change much (percentage-wise).

    Let’s look at November 2014 through November 2016 to stretch it out a bit.

    Grand Rapids MSA: 526,870 to 553,165 (+26,295 or +5.0 %)
    Detroit MSA: 1,868,000 to 1,966,000 (+98,000 or +5.2 %)

    I understand that the story was attempting to make (initially) a comparison between GR and Bay City / Saginaw. That’s fine – but that’s not really and west vs. east comparison. It’s disingenuous.

    Here’s my conclusion: There are great things happening in the GR region. There are great things happening in the Detroit region. Both are experiencing a tremendous recovery. If you cherry-pick the data, perhaps there is a large difference. But based upon the numbers I’m reviewing, I do not see a major “tilt”.

    1. Stephen C Brown

      JIM-thanks for the data citations and sourcing. The given headline of this article was a minor symptom of a major disease, even for the NYTimes, where the headline is opposite to the story. The headline will later be cited more than the substance.

    2. Mike Wilkinson

      Using data from the Bureau of Labor Statistics, the numbers we used (from 2012 to 2015 to keep data comparable to our other data sets), you see jobs went from 425,825 to 516,394 in that region, a change of 21.3%.
      — Mike Wilkinson

  10. Jim

    I’m still curious about your data source. The BLS data I found is a bit different. I’m not trying to disagree – I’m trying to understand.

    I should add a disclaimer: I’m stuck on the west vs. east comparison per the headline. It didn’t seem accurate to me, hence the reason I am compelled to dig deeper.

    I’ll compare what I found from December 2012 to December 2015. I didn’t find data that had single-digit precision.

    Using Table 3 (“Employees on nonfarm payrolls by state and metropolitan area”) from:

    For December 2012 data: https://www.bls.gov/news.release/archives/metro_03222013.pdf
    For December 2015 data: https://www.bls.gov/news.release/archives/metro_03182016.pdf

    From December 2012 to December 2015:

    Grand Rapids – Wyoming MSA: An increase from (390.0 + 110.7 = 500.7) to 537.8, in thousands. A change of 31.8 thousand jobs, or +7.4 %.
    NOTE: I have summed in the Holland-Grand Haven numbers due to combination of the MSAs in 2015, for the sake of comparison.

    Detroit – Warren – Dearborn MSA: An increase from 1839.9 to 1964.4, in thousands. A change of 124.5 thousand jobs, or +6.8 %.

    Please let me know where my mistake is?

  11. John Q. Public

    Why is Detroit listed as #1 in average annual wages when they’re less than #7-rated Monroe?

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