Wayne County’s economy is doing better than you think

(courtesy photo/used under Creative Commons license)

There has been an unrelenting dose of bad news in local newspapers and on national television about the city of Detroit’s financial difficulties, but one measure of business establishment employment in Wayne County is showing relatively healthy growth.

And if the city of Detroit gets its financial problems under control, there is reason to believe that Wayne County and the city of Detroit will look a lot better, economically speaking, in a few years.

The job losses during the Great Recession, and the job gains during the economic recovery in both Wayne County and the U.S. overall are shown in the attached table.  (Comparable employment data are not available for sub-county units like the city of Detroit so we need to look at countywide employment trends.)  The recession began in December 2007, and officially ended in June of 2009, although job losses continued for a few more months. Thus, I am measuring the recession from the fourth quarter of 2007 to the fourth quarter of 2009.

During 2008, private sector employment declined by 5.5 percent, and in 2009 by an additional 7.5 percent, so that over the two-year period private sector employment declined by 81,118.

Private sector employment in the county grew by 1.6 percent during 2010 (fourth quarter 2009 to the fourth quarter of 2010), exceeding the U.S. growth rate of 1.1 percent. During 2011, private sector employment increased by 4.3 percent in Wayne County, absolutely trouncing employment gains in the U.S. of 1.9 percent, although no one seemed to have noticed how good the county’s job recovery was in 2011. During 2012, employment growth in the county slowed to 1.9 percent, slightly trailing U.S. employment growth of 2.3 percent.

Donald Grimes a senior research area specialist at the University of Michigan’s Institute for Research on Labor, Employment and the Economy.

Over the three-year period from the fourth quarter of 2009 to the fourth quarter of 2012, private sector employment in Wayne County increased by 44,855 or 8 percent compared to 5.4 percent in the U.S. overall.  So over the three-year job recovery period, private sector employment has grown substantially faster in Wayne County than in the U.S. overall. Where is the headline trumpeting this good news?

Perhaps more remarkable is that when you look at a different data set generated by the U.S. Bureau of Economic Analysis that looks at annual average employment back to 1969, you can see that Wayne County’s private sector wage and salary employment performance never exceeded the U.S., until 2010.

Not in a single year before 2010 did private sector employment grow faster or decline less in Wayne than in the United States overall.  Yet Wayne has beaten the U.S. in two out of the last three years, and is only slightly trailing the U.S. in the most recent year.

While the manufacturing sector has led Wayne County’s economic resurgence, beating U.S. employment growth rate in each of the past three years, the private non-manufacturing sector has also exceeded the average U.S. rate in two out of the past three years.  All of the efforts to bring “knowledge economy” jobs to Wayne County and the city of Detroit may be beginning to bear fruit.  It is however, a very skimpy harvest so far - we have a long, long way to go before Detroit and Wayne County look like other major urban areas.

Indeed, even if this recent employment growth continues it will take years for Wayne County to regain all of the jobs lost in the Great Recession.  Furthermore, the county will probably never regain most of the jobs lost prior to 2007. There is still a lot of economic pain in the city and county and we cannot forget that.

Most importantly, the good news this data tell does not mitigate the hard and painful actions the city of Detroit and other local governments in Wayne County must take to deal with their budget shortfalls.

Government employment in Wayne County has declined drastically in each of the past five years, and yet local government financial crisis has only gotten worse. Emergency Manager Kevyn Orr is correct in saying that the city of Detroit (and by extension other local governments) needs to stop or at least substantially slow down the cuts in government services. That means that most of the financial adjustment must come from creditors, both bondholders and retirees.

But the data indicate that the prospects for employment growth in the private sector in Wayne County, relative to the U.S., are the best they have been in over 40 years. Thus, once the local government financial problems are brought under control, Wayne County’s economy could have a much brighter future.