Report: Detroit Employment Grows Faster than State Employment, Trend Expected to Continue

The city of Detroit released a forecast, created in partnership with the University of Michigan in Ann Arbor, that showed increased rates in household income, employment, and labor force participation through 2024. In 2019, the city had a 1.7 percent employment growth rate, exceeding the 1 percent growth rate of household employment in Michigan overall.
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Detroit skyline
Detroit and U-M have a released a study that shows employment has and will grow faster in the city than in Michigan overall. // Stock photo

The city of Detroit released a forecast, created in partnership with the University of Michigan in Ann Arbor, that showed increased rates in household income, employment, and labor force participation through 2024. In 2019, the city had a 1.7 percent employment growth rate, exceeding the 1 percent growth rate of household employment in Michigan overall.

Donald Grimes, an economist at U-M, says labor force participation is expected to rise from 47.3 percent to 48.5 percent between 2018 and 2024. Job opportunities will be created from developments such as the FCA Mack Avenue plant on the city’s east side and the Gordie Howe International Bridge in southwest Detroit.

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

According to the forecast, the city’s unemployment rate went from 18.7 percent in 2013, the year Detroit filed for bankruptcy, to 8.6 percent in 2019. It is expected to drop to 7.9 percent by 2023 and 2024, improving faster than the statewide measurement.

While the forecast supports positive trends for the city’s tax revenue, many of its major revenue streams, including property tax and state revenue sharing, will have constrained growth due to state laws.

“We expect Detroit’s ongoing recovery to form a key component of Michigan’s economic growth through 2024,” says Gabriel Ehrlich, director of U-M’s Research Seminar in Quantitative Economics. Economists from the group are part of the partnership with economists in the city, at Michigan State University, and at Wayne State University.

By developing data specific to Detroit, the city can quantify local economic conditions to plan, design, finance, and evaluate programs for Detroit residents.

“Detroit has vastly improved its financial position and prepared for any future financial hiccups by doubling its rainy-day fund,” says Daniil Manaenkov, an economist at U-M. “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.”

An estimated 6,700 jobs are expected to arrive in Detroit through 2024, with most coming from service sector jobs such as financial, professional, and business services; leisure and hospitality; and education and health care. Construction projects also will add to resident employment.

Manufacturing is expected to remain Detroit’s second-largest sector, making up 16 percent of overall employment.

Total resident income is expected to rise by 4 to 4.7 percent per year from 2020 to 2024, outpacing statewide income growth.

Most of the public economic data used in the first Detroit forecast is only available at the county or regional level. The city’s office of the CFO and its University Economic Analysis Partnership are working with the state’s Bureau of Labor Market Information and Strategic Initiatives to produce payroll employment and wage estimates for the city, providing new insights into the local economy not previously available for use in forecasts.

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