Points of View

Unemployment Advances in December, a First since April

Unemployment Advances in December, a First since April

Alex Andrews

Michigan’s Unemployment Rate Advances in December

Reversing the trend of the past seven months, Michigan’s unemployment rate advanced by 1.0 percent in December to stand at 7.3 percent. At the onset of the pandemic, the statewide jobless rate skyrocketed to achieve a historic high of 23.6 percent in April — the highest jobless rate seen for Michigan since at least 1976 — and has steadily fallen over the past seven months to achieve a low of 6.3 percent in November. The state’s unemployment rate exceeded the national rate of 6.5 percent, which also advanced over-the-month (+0.1%), and reflects the displacement of 186,000 workers across Michigan from November to December. This was the largest over-the-month drop in employment observed in Michigan since April, when employment fell by 1.2 million, which brings the size of the employed population to just under 93 percent of pre-COVID levels. The number of unemployed residents in Michigan rose by 36,000 over-the-month, which was the largest monthly increase observed since April when unemployment skyrocketed by 878,000. Although the size of the unemployed population across the state is currently 193 percent larger than February, the labor force remains 170,000 participants shy of the size recorded pre-COVID.

Despite these seemingly negative signs, however, the fact that December marked the first month of unemployment growth since the pandemic began could signal that jobseekers are becoming more comfortable in resuming their hunt for work. Unemployment has continued to fall since April despite amassing layoffs, which signals that a majority of jobseekers halted their search for work amidst the pandemic and thus were no longer considered “unemployed” — which requires an individual to actively search for work over the previous four weeks. If every displaced worker remained in the labor force, the size of the unemployed population would rise in conjunction with declining employment. The opposite trend has emerged since the onset of the pandemic, however, with a growing share of individuals separating from the labor force as they pause their searches for work primarily due to declining optimism and fear of exposure to COVID-19, which has resulting in declining unemployment since the peak recorded in April. The slight uptick in unemployment observed in December could be a positive sign that jobseekers are beginning to return to the labor market as vaccine distribution accelerates, despite declining employment prevalent among the state’s heavily restricted industries of Leisure and Hospitality.

 

Unemployment Growth in West Michigan Lags Behind the State

Despite falling to 4.1 percent in November from April’s record high of 23.0 percent, the unemployment rate in West Michigan followed the trend both statewide and nationally by inching up to 4.6 percent in December. The advance of 0.5 percentage points to the region’s jobless rate observed over-the-month was just half of the growth rate observed statewide and resulted from an employment loss of 27,490 (3.5 percent), while the number unemployed rose by nearly 3,000 (9.0%) to achieve a total of 36,306 jobseekers. Although the size of the region’s unemployed population remains 151 percent larger than February, the labor force remains 6 percent shy of the size recorded pre-COVID, a loss of nearly 48,000 participants.

02.05.21_LF&UR-1

Source: DTMB, Bureau of Labor Market Information and Strategic Initiatives, Local Area Unemployment Statistics

Nonfarm payroll jobs in West Michigan declined by 8,500 (-1.4%) from November to December, signaling the first month of negative job growth for the region since the massive attrition that followed the pandemic-imposed state lockdown in March. The negative growth rate that occurred over-the-month was driven predominately by layoffs among Service-providing industries, which displaced 8,400 jobs (-1.9%), while just 100 jobs were displaced among Goods-producing industries (-0.1%). Over 90 percent of job loss that occurred in West Michigan over-the-moth was attributed to Leisure and Hospitality (-17.7%; -7,700 jobs), though losses also occurred in Professional and Business Services (-2.3%; -1,800 jobs), Mining, Logging and Construction (-1.6%; -500 jobs), Information (+0.7%; +200 jobs), and Other Services (-0.9%; -200 jobs). Conversely, just two sectors in West Michigan experienced job growth in December, led by Trade, Transportation, and Utilities (+1.9%; 2,000 jobs) and Manufacturing (+0.3%; 400 jobs).

02.05.21_Job Loss Indexed to March

Source: DTMB, Bureau of Labor Market Information and Strategic Initiatives, Current Employment Statistics

Although nearly all West Michigan industries have shown evidence of recovery since the onset of the pandemic, total regional job counts remain 47,500 (-7.5%) below estimates recorded in the first half of March, with significant variations across industries and sectors. Roughly 11,500 jobs have been displaced among Goods-producing industries since the onset of the pandemic, a growth rate of -7.3 percent, while 36,000 (-7.7%) jobs have been displaced among Service-providing industries. Pandemic-related job losses were especially pronounced among Leisure and Hospitality — which has lost 35.1 percent of its workforce since March (-19,400 jobs) — and Manufacturing, which possesses 13,500 fewer jobs (-10.3%). As of December, Mining, Logging, and Construction remained the only industry in West Michigan to employ more workers following the lockdown than before it, gaining 2,000 jobs (+7.2%) since March. However, jobs have been shedding in this highly seasonal sector since July at an average of 380 per month. Financial Activities is the only other sector in the region poised to emerge from the pandemic with a net growth in jobs, as employment levels were 400 (-1.4%) below pre-COVID in December and the industry has not experienced job displacement since September.

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