In November 2006, 301 metropolitan areas reported over-the-year increases in non-farm payroll employment, 60 reported decreases, and six had no change. The largest over-the-year employment gain was posted in Phoenix-Mesa-Scottsdale, Ariz., area, (+90,700), while the largest over-the-year decreases in employment occurred in Detroit-Warren-Livonia, Mich., area (-26,400), St. Louis, (-3,300), Flint, Mich., (-3,100), and Dayton, Ohio, (-2,500). The largest over-the-year percentage decreases in employment were reported in Danville, Va., (-4.8 percent), Gadsden, Ala., (-4 percent), Jackson, Mich., (-2.6 percent), and Mansfield, Ohio, (-2.4 percent).

Figure 1 illustrates how the economic structure -- heavily dependent on the domestic auto industry -- of southeast Michigan had resulted in a very different job trajectory for us as opposed to the other top metropolitan areas of the country, all of which have experienced employment growth

Figure 1.  Total Non-farm Payroll Employment Change, 2005-2006, in 13 Largest Metropolitan Areas

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Of the 49 metropolitan areas with a Census 2000 population of 1 million or more, those recording the lowest jobless rates in November were Birmingham-Hoover, Ala., 2.8 percent, Richmond, Va., and Washington-Arlington-Alexandria, District of Columbia-Virginia-Maryland-West Virginia, 3 percent each, and Orlando-Kissimmee, Fla., 3.1 percent.  The large areas with the highest rates were Detroit-Warren-Livonia, Mich., 6.8 percent, and Memphis, Tennessee-Mississippi-Arkansas, 5.6 percent. 

The picture is the same when the geography under review is that of states.  Figure 2 shows the non-farm employment change for the 10 largest states.  While unemployment reports over the last several years have had Michigan jockeying with Louisiana and Mississippi for highest rate, the change in total number of jobs is even more illustrative of the structural difficulties inherent in Michigan’s economy.  Even Ohio, which has been suffering similar plant closings and restructuring, was able to record an employment gain.

Figure 2.  Total Non-Farm Payroll Employment Change, 2005-06, in 10 Largest States

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Data available from the state of Michigan Labor Market Information Division allows us to dig deeper to determine what industries contributed to the job loss, as well as which industries experienced increases.  As one would expect, manufacturing – particularly motor vehicle parts and equipment – were the big losers.  Add to those losses, retail and wholesale trade, construction, government (primarily local) and professional, scientific and technical services.  The winners were educational and health services, health care and social assistance and professional and business services.

Table 1.  Metropolitan Detroit’s 2005-06 Employment Change by Category

Looking toward the future

During the 2006 United Way for Southeastern Michigan Agency Executive Retreat, Lou Glazer, president of Michigan Future, delivered an informative presentation on findings from A New Agenda for a New Michigan , which looks at prospects for the state relative to economic expansion nationally.

 Some of the points Glazer covered include:

• The only reliable path to a high-prosperity Michigan is to be concentrated in knowledge-based enterprises. There is a clear pattern across the country that the states, and particularly metropolitan areas, with the most successful economies are those that are concentrated in high-pay, knowledge-based industries: information, financial services and insurance, professional and technical services, and management of companies. In the past, Michigan was able to flourish with an economic base concentrated in factories, farming, and tourism. No more. In a flat world, these functions increasingly are either being done elsewhere or they are lower-wage industries. Michigan is lagging the nation mainly because of our slow growth in the dynamic, high-wage sectors of the knowledge economy. That, combined with a still astonishingly high dependence on the now uncompetitive domestic auto industry, means that we almost surely will continue to lag the nation for the next several years.
• Economies are regional. States and municipalities are political jurisdictions, not economic units. State economies can best be understood as the sum of their regional economies.
• What most distinguishes successful areas is their concentration of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship. Quite simply, in a knowledge-driven and entrepreneurial economy, the places with the greatest concentrations of talent win. Metropolitan areas without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, nor are they likely to be the place where new knowledge-based enterprises are created. So in a flat world, economic development priority No. 1 is to prepare, retain and attract talent.

The agenda and priority actions that Michigan Future, Inc. puts forward that can best position Michigan to succeed in the context of a flat world are:

1. Build a culture aligned with the flat world. Culture trumps policy. (Michigan Future’s) expectations about the economy and how one constructs a good-paying career are a big driver of how successful we will be in the future. Long-standing Michigan beliefs about the economy are now impediments to our future success. In a world where economic growth is driven by knowledge and innovation, the most successful regions will be those which highly value:
   • Learning. Instilling the love of learning may well be the most important foundation for economic success in a world characterized by accelerating creative destruction of both jobs and enterprises.
   • An entrepreneurial spirit. This is more than starting a business, although we need far more of that. It is a community that stops thinking of employment as a long-term entitlement to a good job and starts valuing competition and constant reinvention of one’s career.
   • Being welcoming to all. The places that do the best in attracting talent from anywhere on the planet, win. This means building a culture that condemns rather than tolerates discrimination and segregation, as well as welcoming, with open arms, talented people from outside Michigan.
2. Invest in higher education first and foremost.
3. Build regions that are attractive places to live. A vibrant, prosperous central city surrounded by attractive and prosperous suburbs.
4. Attract export-based business investment.
5. Align K-12 education with a knowledge-driven economy.
6. New leadership. Big changes cannot happen without strong civic and business (and ultimately political) leadership.

United Way for Southeastern Michigan and its collaborative partners in One D: Transforming Regional Detroit – Detroit Renaissance, the Detroit Regional Chamber, the Detroit Metro Convention and Visitors Bureau, New Detroit and the Cultural Alliance of Southeastern Michigan - support Michigan Future’s conclusions and anticipate addressing a significant number of them as both the One D blueprint and organization’s individual strategic plan are developed.  There is a great deal of work to be done, but the necessary players are aligned as never before, and the future looks bright. 

Kurt's Corner is written by demographer Kurt Metzger, director of research at United Way for Southeastern Michigan. For more information on UWSEM's research visit www.uwsem.org/research, or contact Kurt at kurt.metzger@LiveUnitedSEM.org.