First city of Detroit forecast projects faster job growth than state of Michigan

February 10, 2020
Contact: Greta Guest gguest@umich.edu,
Jessica Byrd, City of Detroit essica.byrd@detroitmi.gov

Concept illustration of people and buildings.

DETROIT—The city of Detroit in partnership with the University of Michigan today released its first forecast for the city, which showed ongoing gains in household income, employment and labor force participation through 2024.

The forecast reports a 1.7% growth rate in employment for 2019, exceeding the 1% growth rate of household employment in Michigan last year.

U-M economist Donald Grimes said that labor force participation is expected to rise to 48.5% from 47.3% between 2018 and 2024 as new job opportunities are created from developments such as the FCA Mack Avenue plant and Gordie Howe International Bridge.

“Bringing new jobs to Detroit and filling them with Detroiters has been a cornerstone of the mayor’s economic development strategy,” said David Massaron, chief financial officer for the city of Detroit. “This independent forecast validates that strategy as we work to ensure Detroiters have opportunities for good jobs.”

The forecast was produced by economists at the U-M’s Research Seminar in Quantitative Economics, who are part of the partnership with the city of Detroit and economists at Michigan State and Wayne State universities.

“We expect Detroit’s ongoing recovery to form a key component of Michigan’s economic growth through 2024,” said Gabriel Ehrlich, director of RSQE.

According to the forecast, the city’s unemployment rate will continue to fall from 18.7% in July 2013, when the city filed for bankruptcy, to 8.6% in 2019, and to 7.9% by 2023 and 2024, improving faster than the statewide measure.

“Detroit has vastly improved its financial position and prepared for any future financial hiccups by doubling its rainy day fund,” said U-M economist Daniil Manaenkov. “Despite that progress, Detroit’s economy continues to face well-known challenges, including an elevated poverty rate and relatively low educational attainment among its residents.”

By developing Detroit-specific data, the city government and community stakeholders can quantify local economic conditions and to plan, design, finance and evaluate programs to improve economic opportunities for Detroiters.

“This difference in untapped labor should allow the city to benefit more than the state as labor markets continue to tighten,” said U-M economist Aditi Thapar.

Among the forecast highlights:

  • Employment is expected to expand by about 6,700 jobs through 2024 with most gains coming from service sector jobs such as financial, professional and business services; leisure and hospitality; and education and health care. Major new construction projects will also add considerably to city resident employment.
  • Manufacturing is projected to remain Detroit’s second-largest sector, behind education and health services, making up 16% of overall employment.
  • Total resident income is forecast to rise by 4-4.7% per year from 2020 to 2024, outpacing statewide income growth.

Most of the public economic data used in the Detroit forecast is only available at the county or regional level. The city’s Office of the Chief Financial Officer and its University Economic Analysis Partnership are working with the State of Michigan’s Bureau of Labor Market Information and Strategic Initiatives to produce detailed payroll employment and wage estimates for the city of Detroit. This effort will provide new insights into the local economy not previously available for use in future forecasts.

 

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