Benchmark: Jobs
In its first six months, Mayor Mike Duggan's administration is building confidence that more jobs are on the horizon, though experts say hard evidence is sketchy and that much of the growth so far continues to bypass the city’s struggling neighborhoods.
Business leaders say results from the early months of Duggan’s term portend greater progress in the months and years ahead.
“We’re used to elected officials not living up to the hype, but Mike is doing exactly the opposite,” said Sandy Baruah, president and CEO of the Detroit Regional Chamber. “That’s very much the feeling on the ground. Mike has restored confidence.”
Little data exist showing exactly how the city’s economy has performed since Duggan took office in January. Most government statistics that track jobs, income and number of business establishments in cities are done on an annual or multiyear basis.
“The full picture won’t come in for some time,” said Jim Rhein, an economic analyst at the state Bureau of Labor Market Information & Strategic Initiatives.
Monthly statistics that estimate the number of employed city residents show somewhat more Detroiters are working so far this year compared with the same period a year ago.
Those jobs aren’t necessarily all in Detroit, though. Many could be in surrounding communities. Rhein said the government does not compile total payroll jobs in cities on a monthly basis, so it’s hard to know where those new jobs held by Detroiters are located.
Nevertheless, there were an average of 284,404 Detroit residents with jobs during the first four months of this year, up 3,199 jobs compared to the same period in 2013. That’s according to the latest data from the federal Bureau of Labor Statistics.
The unemployment rate for Detroit residents also has been falling in recent months. April’s jobless rate of 14.5 percent was the city’s lowest since March of 2008, when the rate stood at 14.2 percent. Unemployment among city residents exceeded 20 percent as recently as July 2012.
[highcharts]
[/highcharts]
Source: Michigan Department of Technology, Management and Budget
Some of Detroit’s jobless rate decline reflects a labor market that has shrunk a bit since January, the result of retirements, discouraged job seekers dropping out of the labor force and people leaving the city, Rhein said.
And Detroit’s jobless rate still is nearly double the state’s rate of 7.4 percent.
A new report by Comerica Bank economist Robert Dye suggests double-digit unemployment in the city could partly be a result of sluggish employment in the six-county metro Detroit region.
Payroll jobs in metro Detroit have been flat at about 1.8 million jobs between April of 2013 and April of this year, and down about 10,000 jobs since a peak in June 2013, according to the report.
Dye is projecting anemic job growth in the region through 2015, even while noting that young entrepreneurs and high-tech workers are flocking to downtown and midtown Detroit.
April’s unemployment rate in metro Detroit – the state’s largest labor market – was 7.9 percent, 0.5 percent above the state jobless rate.
“At best, the near-term economic outlook for the Detroit area is hardly stellar,” he wrote. “At worst, we could see a continuation of the long slide in employment that was visible by early 2001.”
Some see promise
But Detroit economic developers say they see a bright future for job-creating business growth in the city.
The Detroit Economic Growth Corp., a private nonprofit organization that operates as the city’s economic development arm, has this year aided more than a dozen new business and multifamily residential projects.
Those projects are expected to create nearly 1,000 jobs and invest roughly $100 million in the city over the next several years, the group claims.
“The landscape looks pretty good,” said Malinda Jensen, director of business development at the DEGC.
In 2013, the DEGC provided financial and technical assistance to about a dozen commercial projects representing 1,789 jobs and $208 million in investment, according to the DEGC’s annual report.
That did not include last year’s announcement of a new hockey arena for the Detroit Red Wings and surrounding development which DEGC estimated to generate $650 million in private investment.
DEGC officials don’t compile monthly investment and jobs tallies and say this year’s totals could be less than in 2013. The DEGC said that’s in part because the group is focusing on assisting smaller businesses.
For example, the DEGC has aided the establishment of four grocery stores in the city that didn’t create a lot of jobs, but were important elements of their communities.
“Grocery stores are not large job generators, but they are anchors for neighborhood development,” Jensen said.
DEGC officials also say their statistics reflect only projects they are assisting, and that there are fewer new building projects that are asking for their help.
“There was once a time when DEGC touched almost any deal of significance in Detroit because so few investors or developers or company owners had the resources or the will to come into the city without some public help to mitigate the risk,” DEGC spokesman Robert Rossbach said in an email.
“Not so much any more,” he said. “There is a substantial amount of activity that does not require the gap-filling that DEGC facilitates.”
Among those are the dozens of downtown buildings purchased in recent years by Quicken Loans founder Dan Gilbert.
Eliminating red tape
Detroit has a long-held reputation for bureaucratic fumbling and excessive red tape that makes it hard for entrepreneurs to start businesses in the city.
Baruah said he thinks the situation is improving, based on conversations with chamber members, but said he doesn’t have solid evidence to prove it.
Officials from Duggan’s office and city departments in charge of business permitting did not respond to inquiries from Bridge on how they’re clearing red tape and speeding the business permit process.
Duggan has said repeatedly he is focused on improving basic city services, such as street lighting and bus service during his first six months in office.
He said he’ll spend the next six months concentrating on jobs and business growth in the long-neglected neighborhoods.
“Everything we are doing in our city with economic development will be geared toward bringing jobs and development to neighborhoods in Detroit,” Duggan said in a statement.
Duggan has appointed Henry Ford Health System CEO Nancy Schlichting to lead a 17-person advisory committee that will develop an “Innovation District” hub in the greater downtown area that the mayor contends will lead to others in the neighborhoods.
Innovation districts are envisioned as areas with clusters of offices, residential buildings, schools, business start-ups, and mixed-use retail, tied together by transit and wired for digital technology, according to a new report by the Brookings Institution.
In other words, Brooklyn, with less flannel.
Such districts in Detroit and other cities across the country have the potential to revitalize urban cores, reduce income inequality and create economic growth through developing new products, the Brookings folks say.
“We have right now some great creative energy occurring in downtown and midtown,” Duggan said. “The focus of the Innovation District will be to create an anchor to support neighborhood business incubators across the city.”
About 55 percent of Detroit’s jobs are located in the 3.1-square-mile greater downtown area, according to Duggan. Creating more jobs and businesses in neighborhoods is key to the city’s revitalization, civic leaders say.
“If we can get enough of those entrepreneurs in the neighborhoods, it would be hugely transformative,” Baruah said.
See what new members are saying about why they donated to Bridge Michigan:
- “In order for this information to be accurate and unbiased it must be underwritten by its readers, not by special interests.” - Larry S.
- “Not many other media sources report on the topics Bridge does.” - Susan B.
- “Your journalism is outstanding and rare these days.” - Mark S.
If you want to ensure the future of nonpartisan, nonprofit Michigan journalism, please become a member today. You, too, will be asked why you donated and maybe we'll feature your quote next time!