Skip to Content

Autos aren’t what they used to be in Michigan. Here’s what that means for state’s economy

By Chris Isidore and Tami Luhby, CNN

New York (CNN) — Few states are as closely associated with a single industry as Michigan and autos.

But auto jobs aren’t as dominant in the state as they once were, and Michigan which holds its Republican and Democratic primaries on Tuesday – has lost many of the automotive jobs it once had to other parts of the country.

Jobs in the state’s auto plants, parts factories and corporate offices shrank by 35% since 1990, according to figures from the Bureau of Labor Statistics. And those jobs make up only 3.7% of the jobs in the state, roughly half what it was in 1990. Today, more than four times as many workers in Michigan have jobs at one of the state’s hospitals than at an auto assembly plant.

Some of the auto jobs disappeared because of automation. Some evaporated as auto plants moved to Mexico since the passage of NAFTA and as some auto manufacturing shifted to nonunion plants in Southern states.

Back in 1999, the traditional Big Three — General Motors, Ford and the automaker then known as Fiat Chrysler — sold a total of 11.5 million vehicles to US buyers and had 68% of that market, according to data from Edmunds.

But by last year, US sales at GM, Ford and Fiat Chrysler successor Stellantis had fallen by 47% to 6.1 million vehicle and only 39% of the domestic auto market. Most of that lost market share was captured by Asian and European automakers that built plants, mostly across the South, to supply US dealerships.

However, the waning number of Michigan auto jobs in the BLS data doesn’t tell the full story of the industry’s impact on the economy, said Patrick Anderson, CEO of Anderson Economic Group, a Michigan research firm. With cars far more technologically complex today, many tech jobs in the state focus on serving the auto industry, along with traditional support industries like trucking and other suppliers that don’t show up as auto parts makers.

“I’m not saying it’s as important as it ever was. Go back to the 70s, auto employment was dominant,” Anderson said. “But it is still the cornerstone of the Southeast Michigan economy. The categories understate the importance.”

But other segments of the Michigan economy now rival autos.

Health care for aging residents

Michigan’s population is rapidly growing older. It was the 29th oldest state in 2001, but the 14th oldest by 2021, according to the Michigan Center for Data and Analytics. The share of residents aged 55 and older is expected to increase by 14% between 2021 and 2050.

That demographic trend is spurring growth in the state’s health care industry — both for workers and facilities, said Brian Peters, CEO of the Michigan Health & Hospital Association.

Health care is already the state’s largest employer, with more than 500,000 jobs at the end of 2023. But there are at least 27,000 job openings in hospitals for workers at all levels. One rural hospital recently had to temporarily close its cafeteria because of a lack of staff, Peters said. Many nurses and other clinicians are also approaching retirement age, which increases the pressure to hire.

The need will only grow as more Michigan residents hit their senior years.

“Those folks who are headed off to their retirement days, they are the ones who demand more health care services,” Peters said, noting that outpatient clinics, ambulatory surgical centers, rehab and skilled nursing facilities and specialty doctors’ offices and other providers are all expanding.

Incomes falling behind

The tough times in the US auto industry over the last 20 years have hurt Michigan, Anderson said. Two of the Big Three companies, GM and Chrysler, went bankrupt in 2009 and needed federal bailouts to survive.

That took a bite not only out of employment, but out of auto wages, as the United Auto Workers union agreed to deep concessions, including a lower tier of wages, to help keep all three companies alive. But that helped drag down wages in the state overall.

The state’s median household income was higher than the national average until 2000, according to the Growing Michigan Together Council, a group formed by Gov. Gretchen Whitmer to develop solutions to Michigan’s challenges. The state’s median income declined relative to the US level over the past five decades.

Today, the median household income in the state was just under $67,000 in 2022, compared to just under $75,000 for the US, according to the latest data from the US Census Bureau.

However, following a six-week strike last fall at GM, Ford and Stellantis, the United Auto Workers union won immediate pay increases of at least 11% for its members. Pay for members is expected to rise more than 30% during the life of the contract, which expires in 2028.

Recovering lost jobs, new threats ahead

While jobs in the state’s auto and parts plants have stabilized in recent years, jobs in the manufacturing sector overall have edged up by 4.5% since the end of 2020. But that still hasn’t recaptured jobs lost in that sector during the first year of the pandemic.

Overall employment in the state in December was up 9.6% from the end of 2020, but still off 0.5% from December of 2019, on the eve of the pandemic.

Moreover, the union and its members face serious challenges as automakers move ahead with plans to shift from vehicles powered by traditional internal combustion engines (ICE) to electric vehicles, or EVs.

Many of the jobs needed to manufacture EVs will be those building the large batteries that power them, not the more complex engines and transmissions with far more moving parts that are used in ICE vehicles.

While some debate how many hours of work will be needed to build an EV compared to building an ICE vehicle, it’s clear that most of the nearly two dozen US EV battery plants now planned or under construction are being built outside of Michigan, most frequently in Southern states.

One of the only Michigan battery plants, planned by Ford in Marshall, Michigan, saw construction halted last fall. When it resumed, Ford announced scaled back production and employment plans at the plant.

Shrinking population

Other demographic issues are also dragging on Michigan’s economy.

The state’s been steadily losing population, and with it income, to other states, Anderson said. His data shows a net loss of more than 10,000 people to just two states — Florida and Texas — between 2020 and 2021. Inflows from states such as Illinois, New York and California only partly balance that population loss. Michigan now ranks 49th in population growth.

And much of the lost population is younger residents. The share of the population aged 24 and younger is expected to decline by 5% between 2021 and 2050.

“We are losing more young residents than we’re attracting, and our population is aging faster than those of our neighbors,” the Growing Michigan Together Council wrote to Whitmer in its December report. The decline and its contributing factors are “a significant threat to our state’s future prosperity and well-being.”

It lags the nation in educational attainment. Only 32.1% of residents age 25 and older had at least a bachelor’s degree in 2022, compared to 35% nationally, according to the Census Bureau.

Decades ago, auto plant jobs provided a pathway to middle-class incomes for those with only a high school diploma, but with fewer of those jobs, and more technological demands for many of those working in the plants, that’s not as much the case.

“If you don’t have a four-year degree, or some other type of additional training certificate after graduating high school, there’s not a lot of jobs that are paying really great wages,” said Monique Stanton, CEO of the Michigan League for Public Policy, which advocates for lower-income residents.

Living in Michigan is less expensive, which helps soften the blow of lower incomes. It had the nation’s 10th-lowest cost of living in 2023, according to analysis by the Missouri Economic Research and Information Center.

Still, though the typical home value is lower in Michigan than in the US overall, many families struggle to find housing they can afford, Stanton said.

“It still takes up a good chunk of somebody’s paycheck,” Stanton said of housing costs.

Mixed views on economy, personal finances

Not surprisingly, the economy is the major issue in the minds of many Michigan voters, with 93% saying it’s an important factor in deciding their vote for president, according to a Fox News survey of registered voters earlier this month. It’s a higher priority among Republicans than Democrats.

Overall, voters trust former President Donald Trump to do a better job on the economy than President Joe Biden by 53% to 42%, the survey found.

When it comes to primary voters’ views on the national and Michigan economies, there’s a notable schism by party, according to a Washington Post-Monmouth University poll conducted in December.

More than half of Democratic primary voters in Michigan think the national economy is “good” or “excellent,” and two-thirds feel that way about their state economy. But 90% of Republican primary voters say the national economy is “poor” or “not so good,” and 85% feel the same way about the Michigan economy.

Primary voters in both are more positive about their own financial situation. Just over half of Republicans and 69% of Democrats say their personal finances are “good” or “excellent,” the poll found.

Some 58% of GOP voters say their finances are “stable” or “improving,” while 42% feel they are “struggling to remain where they are financially.” Among Democratic voters, 76% say their financial situation is “stable” or “improving,” while 23% feel they are “struggling.”

The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

Article Topic Follows: CNN - Money

Jump to comments ↓

CNN Newsource

BE PART OF THE CONVERSATION

KION 46 is committed to providing a forum for civil and constructive conversation.

Please keep your comments respectful and relevant. You can review our Community Guidelines by clicking here

If you would like to share a story idea, please submit it here.

Skip to content