According to the US Census, Michigan is the one state in the nation to see its population drop over the past decade. The steep decline in the auto industry is mostly to blame for driving people out.
posted December 22, 2010 at 3:18 pm EST
Chicago — Michigan, whose labor force is heavily dependent on the slumping US auto industry, enjoyed the dubious distinction of being the only state in the nation to see its population decline in the past decade, US Census figures show.
An exodus of skilled labor and college graduates helped drive Michigan’s population down. According to Census figures released Tuesday, it dropped by 54,804, or 0.6 percent, to 9,883,640 in November. As a result, the state lost one of its 15 congressional seats.
The decline runs counter to the regional trend in the Midwest as a whole, which saw population rise 3.9 percent. According to Bill Frey, a demographer and senior fellow at the Brookings Institution, one key explanation is Michigan’s consistently high unemployment – it was 12.4 percent in November – which is driving educated and skilled workers out of the state by the thousands.
For example, between 2002 and 2005, southeast Michigan lost 61,000 jobs, or 2.9 percent, according to the Southeast Michigan Council of Governments, a research and advocacy organization located in Detroit. Manufacturing, which includes the auto industry, took the biggest hit with job losses at 58,000, or 16 percent, in that same time period.
‘Not a good decade’
“It just has not been a good decade” for Michigan, Mr. Frey says. “Morale isn’t good there. People who are living there are concerned bout the jobs going away. A lot of young people are leaving, and I think the census is a barometer of that.”
Michigan’s labor force relies most heavily on the automotive industry. In 2009, even after a decade of declines, the industry still accounted for 22 percent of all jobs in the state, compared with just 4.4 percent of jobs in the US as a whole.
The decline in Michigan’s workforce also coincided with falling automotive sales in the US over the same period. In 2000, sales of light vehicles, both foreign and domestic, hit a two-decade peak of more than 17.4 million units. A modest but steady decline followed until 2008, when sales plunged as gasoline prices spiked to about $4 a gallon. By 2009, light vehicle sales were only 10.4 million units, a 40 percent drop from nine years earlier.
The US auto industry responded to these declines with mass layoffs, and its manufacturing facilities were operating at less than 50 percent capacity by the end of 2008, according to the Center for Automotive Research, a nonprofit research organization in Ann Arbor, Mich.
A ‘multiplier effect’
What happened in the automotive industry had “a multiplier effect” on most industries in the state, says Gerald Meyers, a professor at the University of Michigan’s Ross School of Business in Ann Arbor, Mich. The people who are leaving are likely those who have the skills and education to find work elsewhere, he adds.
“The good people are the ones who flee first because they can go, they have talent, they have enough in the way of resources, and they have possibility of finding a job someplace else,” says Mr. Myers. “It’s the people who are least skilled and who are least educated who have to hang around. They can’t sell their house, they’re just stuck.”
Impacting the exodus, Meyers says, is the state’s yearly crop of university students who are choosing to leave the state upon graduation to pursue opportunities elsewhere.
“I haven’t talked with one Michigan grad school student who is going to work in Michigan [when they graduate]. They’re just leaving in droves. It’s a brain drain,” he says.
Meyers is optimistic, however, that if the state pushes for tax incentives to encourage business to put down roots in the state, recovery is around the corner. He adds that pent-up consumer demand for new vehicles is the catalyst that will bolster the automotive sector and increase sales to 15 million units over the next two to three years.
“We shouldn’t read the auto industry as dead and not capable of coming back to life. I think they’re on the edge of good times. That’s saying a lot considering what they’ve been through,” he says.