Oakland County’s economy hits cruising altitude
ANN ARBOR—Oakland County roared out of the recession with a job growth rate of 2.4 percent per year from 2009 to 2016—outpacing both the nation’s and Michigan’s job growth in the same period.
Job growth for the next three years is forecast to average 2 percent per year or an increase of more than 44,000 jobs from 2016 to 2019, said University of Michigan economists.
In their annual forecast of the Oakland County economy, Gabriel Ehrlich, director of the U-M Research Seminar in Quantitative Economics, and colleague Don Grimes of the U-M Institute for Research on Labor, Employment, and the Economy predict that the county will add about 15,000 jobs this year, 14,000 next year and 15,300 in 2019.
Oakland’s unemployment rate of 4.2 percent last year was well below the U.S. mark of 4.9 percent, and is forecast to drop to 4 percent this year, to 3.7 percent in 2018 and to 3.5 percent in 2019.
“Oakland County’s economy appears to have reached a comfortable cruising altitude after a turbulent start to the millennium,” Ehrlich said. “If our forecast proves to be correct, the span of Oakland’s current recovery will extend to at least 10 years.”
The county, with a population of 1.2 million, tied for 10th place on a prosperity ranking when compared with 38 other counties of similar size across the nation.
According to Ehrlich and Grimes, employment in higher-wage industries (average annual wages of $75,000 or more) will increase by 6.6 percent (nearly 16,000 jobs) in Oakland County over the next three years. Middle-wage jobs, paying from $35,000 to $74,999, are expected to grow by 5.7 percent (nearly 18,000). Together, these wage tiers make up more than 75 percent of the net new jobs created in the county through 2019.
“The growth in Oakland County continues to skew toward the better-compensated end of the wage scale, although not quite as tilted toward the higher end as in the past six years,” Grimes said. “This growth pattern bodes well for Oakland’s sustained economic prosperity.”
The largest job gains forecast through 2019 are in professional and business services, private education and health services, and leisure and hospitality. While manufacturing saw a boost in 2016, adding 2,232 jobs, the forecast shows slower growth in the next three years.
In particular, motor vehicle manufacturing, which led the early stages of the economic recovery in 2011 and 2012 before slowing more recently, will see few new jobs over the next three years.
“Motor vehicle manufacturing did add 528 jobs in 2016, but we do not expect a resurgence of growth in this industry,” Ehrlich said. “It is important to remember that this industry counts factory jobs only. White collar jobs in engineering services and testing laboratories are expected to continue to grow rapidly.”
Manufacturing employment outside of transportation equipment has tended to grow more rapidly. While employment growth in other manufacturing industries averaged 3.7 percent from 2012-2016, the forecast indicates that the job creation slows in the next three years to an average 1 percent a year.
“Oakland is especially noteworthy for its median family income adjusted for the cost of living, where it ranks 7th, and for its share of residents employed in professional and managerial occupations, where it ranks 8th,” Grimes said. “We believe this comparison suggests that Oakland County is well-positioned to thrive in the future with an educated populace, a high share of managerial and professional jobs, and an attractive standard of living.”
The 32nd annual U-M forecast of Oakland County’s economy was sponsored by 12 regional organizations. Its presentation was hosted by the county’s Department of Economic Development & Community Affairs, Chase and Oakland Community College.