Points of View

West Michigan's Economic Vulnerability to COVID-19

West Michigan's Economic Vulnerability to COVID-19

Alex Andrews

Assessing Economic Vulnerability in West Michigan

Job advertisements have plummeted across the United States over the past several weeks due to the coronavirus outbreak, with heavy attrition concentrated largely among Food Services, Hospitality, and Entertainment occupations — with each seeing less than half the volume of job postings this month compared to the number of ads recorded last month. In fact, economists at Chmura estimate that the United States could lose an excess of 15 million jobs due to COVID-19 alone, with over half of job loss attributed to just three industries: Hospitality, Food Services, and Entertainment. Although emerging research makes it clear that heavy economic losses are anticipated throughout the nation, what remains unclear is the disparate impact on regional economies (each composed with a unique mix of industries) expected to result from the COVID-19 outbreak.

 

What is the COVID-19 Economic Vulnerability Index?

The Vulnerability Index is a measurement of the negative impact that the coronavirus crisis can have on employment, based upon a region's mix of industries, which was recently developed by economists and researchers at Chmura. For example, Accommodation and Food Services are projected to lose more jobs as a result of the coronavirus, at about 50%, compared to Utilities and Healthcare (with none or little expected job contraction). An average Vulnerability Index score is 100, representing the average job loss expected in the United States. A higher score indicates the degree to which job losses may be greater in a geographic area — an index of 200, for example, would suggest that the rate of job loss in a given area is expected to be double the national average. Conversely, an index of 50 would suggest a forecasted job loss that is equal to half the national average.

 

COVID Econ Vulnerability Index (RESIZED)

 

The Vulnerability Index only measures the impact potential related to the mix of industry employment in a designated geography, and fails to account for variation due to a regions' rate of virus infection, nor does it factor in local government's policies in reaction to the virus. Thus, a region with a high Vulnerability Index may have little to moderate job losses if the region has only slight infection rates and the local government imposes few restrictions. On the other hand, a region with a low Vulnerability Index may still incur large employment losses if the local rate of infection is high or local government restrictions are especially stringent.

 

Economic Vulnerability in West Michigan

Two of West Michigan’s largest industries of employment in 2019 — Manufacturing and Retail Trade — are now among those industries expected to sustain heavy job losses resulting from the COVID-19 outbreak, though to a much lesser extent than job losses expected within Accommodation and Food Services or Entertainment. Considering that Health Care was West Michigan’s second largest sector for employment last year and is also expected to be among the most resistant sectors for job loss, it should come as no surprise that West Michigan’s 13-county Vulnerability Index averaged to just 93.3. This means that anticipated job loss in West Michigan, resulting from the COVID-19 outbreak, is forecasted to be 6.7 percent lower than the national average. In comparison to the Vulnerability Index scores calculated for 3,141 counties located throughout the nation, West Michigan’s average Vulnerability Index of 93.3 would rank 1,446th — or below the 46th percentile in terms of economic vulnerability. Conversely, this means that West Michigan’s mix of industry employment is anticipated to increase the region’s resistance to COVID-related job loss to a degree that exceeds 54% of counties located throughout the United States.

 

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