With the highest unemployment rate in the country and not a single annual job gain this decade, Michigan’s economic woes can make for a depressing campus event.
But Economics Prof. George Fulton, along with other experts at the 57th Annual Economic Outlook Conference, had some more optimistic views for the downtrodden state.
“So how much more economic pain do we have to endure before the tide begins to turn and we are creating more jobs than we are losing?” Fulton, the director of the Research Seminar in Quantitative Economics, pondered before an audience of academics and business professionals assembled in the Rackham Amphitheater last Friday.
RSQE’s 2010-2011 forecast for Michigan’s economy, delivered by Fulton during the conference on Friday, predicts that the state’s currently dire economic situation will improve by the end of the 2011 calendar year.
RSQE is a program at the University that has compiled outlook reports for the state and national economies since 1971.
According to the RSQE report, employment and personal income levels for Michigan hit record lows during 2009. Employment shrank by 6.8 percent, while personal income decreased by 3.4 percent.
RSQE estimates that a total of 282,900 jobs will be lost in 2009; that figure is predicted to shrink to 54,000 jobs lost in 2010, with losses in 2011 shrinking further to 36,000. However, the RSQE forecast also predicts that there will be modest levels of net job creation for Michigan by the fourth quarter of 2011, a trend that is expected to continue into 2012 as well.
Fulton, who spoke on the second day of the conference, said Michigan’s particularly weak economy this year “is related, of course, to the unprecedented industry crisis that the domestic automakers and their suppliers went through in 2009.”
At least since the early 1990s, Fulton said, automotive sales and overall employment levels across the state shared a “striking correlation.”
In closing, Fulton emphasized the importance of diversifying the state economy, as well as the need to reevaluate and retool the state budget process to bring revenues and expenditures into alignment.
Following Fulton’s speech, Arthur Schwartz, general director of labor relations for General Motors Corp., gave a presentation about the company’s recent experience with the challenges of corporate restructuring. According to Schwartz, a University alum, GM’s position in 2009 is grim but improving.
While admitting that the Chapter 11 bankruptcy experience was arduous, Schwartz said GM is already emerging from restructuring a leaner and more profitable company.
Much like Michigan’s economy suffered from dependence on the automotive sector, Schwartz said that GM ultimately placed too much of its hopes on continued demand for trucks.
In addition to a diversified product lineup and better profit margins across vehicle classes, Schwartz said that GM’s successful efforts to manage debt and curtail expenditures signal that better times are ahead for the company.
The third and final speaker at the conference on Friday was Timothy Bartik, senior economist for the W.E. Upjohn Institute for Employment Research. Bartik’s presentation offered eight specific policy recommendations that he argued would promote Michigan’s economic development in the long run.
Notably absent in Bartik’s presentation was any mention of the automotive industry. Instead, he most prominently suggested increasing educational investment. Among other recommendations, Bartik claimed that expanding pre-kindergarten programs, career academies and summer school offerings would provide cascading benefits over several decades as students enter the workforce with better educations and stronger credentials.
As for educating adults, Bartik said that job re-training closely linked to specific employers — like apprenticeships — was another cost-effective way to improve Michigan’s long-term economic prospects.
Bartik closed by saying that state lawmakers should invest “at least a billion (dollars) or two a year” in these educational programs.
“If you’re not willing to invest that, then you’re not serious about affecting things,” he said. “You’re just playing games.”