The State of Michigan Talent Michigan Economic Development Association George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research February 24, 2015
Overview Looking at the demand and supply conditions of the state s labor market Hey, I m an economist what do you expect? Demand for labor is up, but we are still a long way from where we were Supply: workers are aging and may be leaving the workforce faster than we think If there is truly a shortage, why haven t wages budged? And if there is a shortage, what should we do? 1
Nationwide, Employment Conditions Have Improved There are less than 2 job seekers per opening 6,000 U.S. Job Openings and New Hires 8 5,000 Job openings at end of month 7 Thousands (000s) 4,000 3,000 2,000 1,000 Job seekers per opening 6 5 4 3 2 1 Unemployed / job openings 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 Source: BLS. 2
Demand conditions Employers are hiring; however, the state has NOT yet recovered from the Great Recession that ended in 2009 3
Michigan Employers Are Hiring; However They Have Yet to Recover from the Great Recession Employment (in 000s) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Michigan Total Employment In the Great Recession, 371,000 jobs were lost; 333,000 have been added during the recovery recouping 90 percent of loss. 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Michigan LMI. 4
Michigan Manufacturers Are Adding Jobs; However They Have Yet to Recover from the Great Recession Employment (in 000s) 1,000 900 800 700 600 500 400 300 200 100 Michigan Manufacturing Employment Since 2000, 37% of the state's manufacturing jobs have been eliminated 330,000 million jobs. In the Great Recession, 152,500 manufacturing jobs were lost with 133,900 added during the recovery 88 percent of loss. 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Michigan LMI. 5
A Major Turnaround in 2013 Annual Change in the Labor Force Status of Production Workers, Age 25 64 Year Employed Unemployed Labor Force Unemployed (percent) In Labor Force (percent) 2008-22,639-3,060-25,699 11.3 84.1 2009-58,276 48,587-9,689 23.4 84.2 2010-8,841-25,935-34,776 18.7 82.5 2011 28,751-16,144 12,607 13.9 84.4 2012-1,474-13,601-15,075 10.8 85.3 2013 38,594-3,340 35,254 9.0 87.3 Source: Ruggles et al., IPUMS USA. 6
Again, the Comparison between 2012 and 2013 Is Outstanding Annual Change in Labor Force Status of Machinists, Age 25 64 Year Employed Unemployed Not in Labor Force Unemployed (percent) In Labor Force (percent) 2008 866-28 838 6.7 88.2 2009-5,651 3,766-1,885 28.6 92.1 2010 3,676-2,747 929 12.5 90.6 2011 2,588-1,030 1,558 6.4 93.9 2012-3,125-221 -3,346 6.4 89.6 2013 5,038-175 4,863 4.2 92.4 Source: Ruggles et al., IPUMS USA. 7
If You Are a Machinist and Not Employed There May Be Something Wrong with YOU Age Composition of Employed and Unemployed Machinists, 2013 Education Percent Employed Percent Unemployed Age 25 to 34 95.8 4.2 Age 35 to 44 96.5 3.5 Age 45 to 54 98.1 1.9 Age 55 to 64 91.2 8.8 Source: Ruggles et al., IPUMS USA. 8
High-Demand Occupations Cut across All Education Attainment Levels Heavy truck drivers Retail salespersons Software developers, applications Registered nurses Computer occupations, all other Sales representatives, wholesale Customer service reps. Retail supervisors Food prep. and serving Maint. and repair, general Childcare workers Medical and health services managers Laborers and freight movers, hand Managers, all other Mechanical engineers Top Occupations, 2014 0 5 10 15 20 25 Postings (000s) Source: BurningGlass Labor Insight, 2014. 9
So What About Supply? We are getting older and experienced workers are retiring early Migration appears to be not a problem I do worry that technical classes in the state s community colleges have empty seats 10
The Age Profile is More Worrisome than the Numbers Suggest Because Percent of employed 40 35 30 25 20 15 10 5 0 Machinists by age (age distribution per year) 25-34 35-44 45-54 55-64 2007 2008 2009 2010 2011 2012 2013 Source: Ruggles et al., IPUMS USA. 11
The Labor Participation Rate Has Not Changed in the Past 13 Years for Production Workers, but Look at the Fall Off at 59 120 100 80 60 40 20 Labor Force Participation by Age 0 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 Production Workers (2013) Production Workers (2000) Source: Ruggles et al., IPUMS USA. 12
Migration Out of the State Is Not a Factor Migration of Production Workers Year Employed Moving Out Employed Moving In Net Flow 2007 4,871 4,068-803 2008 6,642 3,822-2,820 2009 2,722 2,968 246 2010 3,910 4,538 628 2011 5,354 3,530-1,824 2012 4,264 3,695-569 2013 3,679 6,811 3,132 About 1 percent of production workers moved in or out of the area, making the net flow represent less than 0.1 percent of the total workforce. Source: Ruggles et al., IPUMS USA. 13
Year Again, Not Much of a Migration Trend Among the Unemployed Either Migration of Production Workers (not employed) Unemployed and Not in Labor Force Moving Out Unemployed and Not in Labor Force Moving In Unemployed and Not in Labor Force (Net Flow) 2007 3,291 3,074-217 2008 2,425 1,927-498 2009 5,447 2,734-2,713 2010 4,473 3,761-712 2011 2,007 4,266 2,259 2012 2,767 3,554 787 2013 1,719 1,971 252 Source: Ruggles et al., IPUMS USA. 14
So Why Haven t Wages Moved? Old data; businesses may be starting to up their wages to attract workers They are willing to wait for the right person who needs minimal training They are finding the people they need although they may have to go through a lot of resumes Can t afford to pay more 15
Real Hourly Earnings Are Still Declining 30 Average Hourly Earnings of Manufacturing (Production Workers Only) 2014 dollars 25 Hourly earnings ($) 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 Source: BLS CES & CPI. 16
Wages for High-Wage (Skilled) Workers Are Just as Flat as for Low-Wage Workers Annual earnings (in $000s) 80 70 60 50 40 30 20 10 0 Earnings of Full-Time Production Workers (2013 dollars) 10th Percentile 25th Percentile Median 75th Percentile 90th Percentile 2007 2008 2009 2010 2011 2012 2013 Source: Ruggles et al., IPUMS USA. 17
Ok, Maybe Some Wage Pressure for High-Skilled Machinists Annual earnings (in $000s) 80 70 60 50 40 30 20 10 0 Earnings of Full-Time Machinists (2013 dollars) 10th Percentile 25th Percentile Median 75th Percentile 90th Percentile 2007 2008 2009 2010 2011 2012 2013 Source: Ruggles et al., IPUMS USA. 18
So What Should Be Done? We know education matters but the retention rate of students at community colleges and many colleges is very poor Improve communication flows between businesses, job seekers, and educators Provide internships and other pathways that provide experience to adults regardless of educational attainment 19
Education Still Matters Income ($000s) 90 80 70 60 50 40 30 20 10 0 Annual Income by Educational Attainment Less than HS High school Some college Associate's Bachelor's Graduate Source: Ruggles et al., IPUMS USA. 2013. 20
And, Note that Some College Is Not that Beneficial 25 Unemployment by Educational Attainment 20 Unemployment rate 15 10 5 0 Less than HS High school Some college Associate's Bachelor's Graduate Source: Ruggles et al., IPUMS USA. 2013. 21
This Is a Problem that Could Be Fixed: Better job postings would decrease the frustration of too many unqualified job applicants Education and Experience Information 593,430 Postings No Information, 46% Education and Experience, 54% Source: Burning Glass Labor Insight, 2014. 22
60,000 Jobs Require Only High School Minimum Education and Experience Level High school Certificate or associate's degree Only 25,000 jobs require certificates or an associate s degree 10 percent of total job openings. Bachelor's degree Graduate or professional degree Only 30 percent of jobs requiring a bachelor s degree, do not require more than 2 years of experience. 0 20 40 60 80 100 120 140 Job Postings (000s) Less than 2 years 2 to 5 years 5 to 8 years 8 or more years Source: Burning Glass Labor Insight, 2014. 23
Conclusion Manufacturing remains the backbone of the state s economy. If you are willing to accept a statewide 2.5 employment multiplier for manufacturing, the entire recovery can be contributed to its manufacturers. However, manufacturing occupations are a tough sell to many young adults because of their employment track record and image 24
Conclusion Internet Job Postings should be more complete. It is a communication channel that should be better used by employers. Of course employers, Michigan Works!, and community colleges are and should be working together; however, good complete job postings would provide much needed information. 25
Conclusion For small MSA and rural areas, finding skilled workers will simply be hard: Two-income households need two incomes Many careers are built from moving from firm to firm which may mean relocating Paris Still, manufacturing occupations are a tough sell to many young adults because of their employment track record and image 26
The State of Michigan Talent Michigan Economic Development Association George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research February 24, 2015