Oakland County economy enjoying rebound from pandemic despite high inflation, U-M economists say
Oakland County is rebounding from the pandemic and recession, with dramatically dropping jobless rates and rising wages, though national and global factors such as inflation and war in Ukraine still pose economic risks.
Oakland, one of the most populous and prosperous counties in Michigan, is expected to surpass its pre-COVID-19 employment level during the third quarter of this year and see its unemployment rate drop below 3% by the end of 2024—nearly a half percentage point below its average level in 2019.
In its annual forecast of the Oakland County economy, the U-M Research Seminar in Quantitative Economics predicts the number of jobs will grow by 4.3% this year, 2.9% in 2023 and 1.7% in 2024. The county’s payroll jobs count in 2024 is forecast to exceed the 2019 level by about 12,500 jobs, the report says.
Oakland lost 148,900 jobs, or 20% of its payroll employment, in the second quarter of 2020. By the third quarter of 2021, the county had regained more than two-thirds of that loss. Up to that point, Oakland’s recovery was roughly on par with the state’s, but economists expect the county’s job growth to outpace the state’s by 2024. As of February, the county’s unemployment rate stood at 3.8%, down from the nearly 20% reached in May 2020.
“Oakland County’s recovery highlights its strengths as a region, including its educated workforce and focus on 21st-century manufacturing and engineering,” said Gabriel Ehrlich, director of RSQE.
Blue-collar industries are expected to be among the quickest to recover: By the end of 2024, economists expect that the job count within that sector will be 5.1% higher than the pre-pandemic level. Higher educational attainment jobs are expected to see a slight pickup—about 2.1% over the pre-pandemic level by the end of 2024—but that sector also lost comparatively fewer jobs, researchers say.
The lower educational attainment services sector, which fared the worst during the pandemic, is forecast to return to its pre-pandemic levels during the first half of 2024 and exceed those levels by 1.1% by the end of that year. That expectation is rosier than for the state overall, where the outlook for those service jobs are 1.9% below their pre-pandemic levels by the end of 2024.
U-M economists say they are seeing a stronger recovery for the county than Michigan overall because of a relatively larger private sector that’s grown more quickly than the government sector, a tighter labor market and strong uptake in federal pandemic relief efforts designed to help small businesses continue to pay their workers. Oakland ranked first among Michigan counties on nearly every metric in the Paycheck Protection Program, including total funds, funds per resident, local jobs supported and total loan forgiveness.
In all, more than 1 in 5 of Michigan’s dollars from that program went to Oakland businesses.
The economists forecast the county’s average real wage to resume growth through 2024, finishing the period with an average wage of $71,700 in 2021 dollars, or about 7% above the pre-pandemic level. That’s despite inflation currently running at its fastest pace in 40 years.
They expect inflation to remain uncomfortably high in the near term as the recent spike in gas prices reinforces trends, though they note improving supply chains and contractionary fiscal and monetary policy should lead to some inflationary easing later this year.
Researchers also examined regional computer- and math-aided jobs and found the county and the rest of the Detroit metropolitan area has a slightly higher share of related jobs than the nation as a whole but the median wage for those occupations is well below the national average—even after adjusting for differences in the cost of living.
In order for the region “to remain the research brain” of an increasingly computerized automotive industry, economists say, leaders will need to make wages more competitive.
The 37th annual U-M forecast of Oakland County’s economy was hosted by the county’s Department of Economic Development.