James M. Hohman, Mackinac Center for Public Policy
Michigan has lost half of its auto jobs since the turn of this century. But it hasn’t lost anything about half of its total jobs. This is because the state economy is much more complex than its reputation.
Auto manufacturing has not been a great industry for job growth. Michigan has a declining share in a declining market. The state’s share of the auto industry has decreased, as has the total number of jobs in the auto sector.
In 1990, Michigan had 27% of the nation’s auto and auto parts manufacturing jobs. Today that share is 18%. The peak number of auto jobs in Michigan did not come in the mythical post-war golden age that some veterans may be thinking of. The peak occurred in 2000.
The total number of automotive jobs in the United States also peaked in 2000. Michigan suffered a slightly worse job trend than the nation as a whole, but national and state job trends are closely watched. The jobs did not move to another state; all the numbers went up and down together.
Michigan remains the state with the highest production of automobiles. The state produces $30.8 billion worth of auto equipment. The next closest state is Indiana at $16.6 billion. The auto industry as a whole is producing more product, but employing fewer workers.
So where are all the jobs in Michigan?
Michigan remains a great manufacturing state, even outside of the auto industry. Those other industries combine to gain a larger share of the state’s job market. There are 2.5 times more manufacturing jobs outside the auto and auto parts production industries than inside them. These include 31,000 jobs in chemical manufacturing, 10,000 jobs in wood product manufacturing, and 38,000 jobs in food manufacturing. Gray Poupon, for example, comes from a Heinz plant in Holland, MI.
The sector that employs the most people is not even manufacturing. It is the large category of business and professional services that covers many things. Engineering firms, lawyers, accountants, and advertisers are included in that industry. Another 72,000 people work in the operations of the company’s headquarters and everything that is included in “business and business administration”. Some 53,000 janitors and others work in the labeled category “services to buildings and homes”.
Now there are many more people working in health care. Health fields employ 577,100 and jobs in these fields have grown steadily over time: 29% since 2000.
There are more people working in banks and other financial institutions in Michigan than in car and auto parts manufacturing. Jobs in the sector have increased by 13% since 2000.
That’s just employment. The value of production, all the goods sold and services provided by people in the state, show that Michigan does much more than make vehicles and parts.
The financial industry produces 2.5 times more workers than the automobile industry. And it shouldn’t surprise us to see that the health care industries are also producing more.
People look for shortcuts to understand what drives a state’s economy. Washington, DC is the government. New York is finance. California is cinema. Nevada is gambling. The idea that Michigan bears the fate of the national auto industry is easy shorthand. Except it doesn’t explain much. To repeat: the state has half the auto jobs it did in 2000, but it doesn’t have half the jobs.
What replaced the lost auto jobs? Lots of different things. There are millions of people in Michigan, and if the Great Lakes state were its own country, its output would make it the 34th largest country in the world. People should not expect a simple answer.
The automotive industry is very important. Lots of people trust it, and Michigan continues to lead all 50 states in car manufacturing. Still, we must recognize that our state builds much more than cars and trucks.
Politics is shaped by what people think. Lawmakers give billions to private companies because people confuse headlines with economic data. The auto industry gets preferences in state politics because enough people think it drives the state’s prosperity. If we change that understanding, the policy will continue. So give everything else in the state some credit.
Editor’s note: James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy.
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