While Oakland County job losses in the second quarter of 2020 nearly totaled the same number of those lost during all of the 2000s, the county is expected to end up close to its pre-COVID-19 jobs picture by the end of 2022, according to a new study by economists at the University of Michigan in Ann Arbor.
The county is one of the most populous and prosperous in Michigan and enjoyed more than a decade of job growth through early 2020. In its annual forecast of the Oakland County economy, the U-M Research Seminar in Quantitative Economics (RSQE) predicts the county will lose 68,000 jobs in 2020 and recover 39,100 next year and 14,300 in 2022. That would put it at 14,700 jobs, or 2 percent short of 2019 levels by the end of 2022.
“We expect a full economic recovery in Oakland County to take multiple years because of the depth of the initial recession,” says Gabriel Ehrlich, director of RSQE. “Thanks to Oakland County’s strong economic fundamentals, however, we expect it to enjoy a faster recovery than the state of Michigan overall.”
Oakland’s jobless rate, which dropped in the years following the Great Recession, was 3.4 percent last year, below the U.S. mark of 3.7 percent. Researchers say the job losses forecast this year drive the rate up to an average of 9.1 percent, compared with the U.S. rate of 9.2 percent.
The predicted unemployment rate represents an improvement from the beginning of the pandemic. The county’s rate spiked to 19.5 percent in April and was almost as high in May. The forecast also calls for further reductions: 7.2 percent next year and 6 percent in 2022, the latter expected to be nearly 1 percentage point lower than the U.S. rate.
The county is well-positioned for growth, the economists say. The county is expected to see faster job recovery than Michigan due to its educated population, high share of managerial and professional jobs, and standard of living. The researchers predict modest job growth in most high- and middle-wage service industries, with engineering services a particular bright spot as the auto industry shifts toward electric and autonomous vehicles.
Employment in high- and middle-wage services industries are expected to grow by about 5.5 percent until 2022, and blue-collar industries and lower-wage service sectors will see growth of about 11 percent. Part of the faster growth in those sectors stems from their greater initial job losses in the pandemic, however.
“Although the lower-wage service industries experience high growth in the recovery period, those industries also saw the greatest decline this year from the pandemic, especially in the retail trade and leisure and hospitality sectors,” says Donald Grimes, economist and researcher for the RSQE. “We forecast that by 2022, the lower-wage services industries will have 11,400 fewer jobs than in 2019, while employment in the high- and middle-wage service industries will be 5,100 lower, and jobs in blue-collar industries will actually be 1,900 higher than in 2019.”
The economists caution the forecast incorporates several strong assumptions about the pandemic’s trajectory and the federal economic policy response to it. They also say the economy of the county and country can’t completely recover until the public health situation allows for people to safely resume their daily routines.