Midland County Recovers to Full Employment as 2020 Closes
By Amy DeGeer Roten
The year is coming to an end. No one will likely have warm, fuzzy memories of 2020. Moving into 2021, a bit of reflection can help plan for the future. One of the key indicators that business executives use to identify how our economy is doing is unemployment. Here’s why:
Unemployed workers lose their purchasing power, which can lead to unemployment for other workers, creating a cascading effect that ripples through the economy. In this way, unemployment even impacts those who are still employed.
Unemployment trends paint a picture of the economy and can help business owners plan for the year ahead. I spoke with Chris Rishko, CEO of Michigan Works Great Lakes Bay Region and Tina Lynch, Director of Economic and Workforce Development at the MBA to gather insight that will help you make decisions as you map out 2021.
Where We Started: Pre-COVID-19 Workforce Challenges
Before the pandemic, Midland County was at full employment. Full employment means the unemployment rate was at or below 4.0% and indicated that all the people who wanted to work were working.
“An area of interest is considered at full unemployment when the number of unemployed individuals falls below 5% of the Labor Force. Labor Force equals individuals actively employed plus individuals actively seeking employment (source: www.bls.gov). The unemployment rate, the predominantly reported metric for the status of an area’s workforce, is sometimes misrepresented. Lower is not better.
As related to the stability of a region’s economy, the optimum unemployment rate is between 5% and 7%. At those levels, there is a healthy amount of turnover in the workforce to stabilize wages and allow employers access to the talent they require. Unemployment above 7% tends to lower wages (talent surplus, similar to recession of 2008-2012) and rates below 5% indicate a labor shortage and wages increase (2019),” said Chris.
The information gathered during MBA in-person business retention visits showed that overall, there was a low supply of skilled workforce and a high number of open jobs. This data aligned with Michigan Works data.
Where We Went
March through December 2020, COVID sent businesses on a hellacious rollercoaster ride (which isn’t over yet). Due to COVID shutdowns, at least 20% of Michigan’s bars expect to close, and 20% of restaurants reported they would not survive a second shutdown, according to a Bridge Michigan article.
Where We Are Today
National and local labor force data, combined with employment and unemployment numbers and our first-hand knowledge from business retention visits, indicate if our economy is in recession, stable, or growing.
Nationally, The Bureau of Labor report’s Establishment Survey Findings for November 2020 reports “total nonfarm payroll employment rose by 245,000, following gains of larger magnitude in the prior six months. In November, nonfarm employment was below its February level by 9.8 million, or 6.5%. Notable job gains occurred over the month in transportation and warehousing, professional and business services, and health care. Employment declined in government and retail trade.”
In Michigan and in Midland, we are making a comeback to pre-COVID employment rates, but again these numbers only report part of the story.
Unemployment rates for November 2020 in Midland (per Michigan Bureau of Labor Market Information and Strategic Initiatives, www.milmi.org) were reported at 3.8% (not seasonally adjusted), which is 3.3% lower than Michigan and 3.8% lower than the U.S. In November of 2019, Midland reported 3.0% unemployment. A positive indicator when compared to the unemployment rates of April and May of 2020 but still well below the optimum level of 5%. Midland also reports total non-farm employment fell by 7.2% since November 2019.
“Employers who are facing an already difficult time finding the talent needed to fill demand are now faced with a smaller workforce. Fewer individuals are available to work.
The cause for this decrease is directly related to COVID.
Fear associated with increases in COVID infection rates across the region and the State, the implementation of virtual learning models in schools across the region, and the expiration of extended unemployment benefits have caused some to leave the workforce,” Chris said.
Generous social benefits programs are known to increase unemployment and decrease labor force participation rates. While the CARES Act unemployment benefits were necessary, the unintentional consequence was a decrease in incentive for the workforce to return to work upon callbacks. Early in the summer, it was a concern that unemployment packages were encouraging people not to re-enter the labor force.
On a positive note, the majority of the workforce in Midland is skilled labor and professional roles that earn a higher wage. These positions were generally not encouraged to stay home, but instead to work from home.
Michigan Works reports that Midland’s labor force is flat, and that’s a positive thing. Our unemployment numbers were double that of last year, but as fast as the jobs went away in the spring, they have come back. “It’s a V-curve. We have rebound to pre-COVID unemployment rates much faster than in 2008, which took two years. The State is currently at 5.5%. Midland is back to 4.9 %. The numbers should continue to fall when unemployment benefits expire.” said Chris.
Where We’re Going: Potential Workforce Solutions and Trends
“One solution is a job fair,” said Chris. Michigan Works recently hosted a job fair that attracted 100 people. This service is free to all businesses in Region 5.
Tina Lynch, Director, Economic and Workforce Development at the Midland Business Alliance said, “The trends that we are seeing relate to the challenge of shifting from in-person to a remote workforce. Employers have had to rethink how to keep employees engaged and informed as well as new ways to onboard employees who are new to their organization.”
Once a vaccine is available to the public, the hesitancy of employees to return to work should end. “Hopefully, the vaccine will be available before spring to support seasonal jobs and seasonal business. If they lose 2021 on top of 2020, the overall impact will be significant,” said Chris. In the meantime, employers should do their best to find efficiencies and make the most of the talent they have.
Some of the pre-COVID workforce retention and attraction tactics are being used, including raising wages to keep talent as well as hiring for soft skills and then training for technical skills. This tactic also helps create a career path for employees, which increases retention.
Michigan Works Can Help Your Business
In 2020, specific sectors took a huge hit, and at this writing, they are on round two of shutdowns and restrictions that keep them from operating at full capacity. Restaurants, gyms, and bars are showing their grit and perseverance like never before.
The MBA supports and commends all businesses on their herculean effort through 2020. Their continued resiliency, unwavering strength, and courage is a testament to the human spirit and the American Way. Holistically, the hardship they face impacts the quality of life for all. It should never be minimized or overlooked. For business support and resources, contact firstname.lastname@example.org or visit mbami.org/midlandreopens/.
“Michigan Works is standing by for employers and offering recruitment services and programs, and virtual job fairs, all free of charge. The Business Solutions Provider team is working remotely and ready to help. Our philosophy is that organizations are our employers. Michigan Works is ready and standing by with a plethora of programs to help business with workforce needs.” Chris said. Businesses can go to michworks.com and talk with a team member about what they need.