Thursday, July 15, 2010

Michigan's Jobless Rate Dips As Work Force Shrinks

July 15, 2010

Michigan's jobless rate dips as work force shrinks

Thousands cited as quitting search for work or leaving state

Detroit News Finance Editor

New unemployment data for Michigan brought good news and bad news Wednesday.

The good news: The state's jobless rate dropped by four-tenths of a percent in June, for the second straight month.

The bad news: The drop came because thousands of people decided either to quit looking for work or quit living in Michigan.

Data from the Michigan Department of Energy, Labor & Economic Growth show the June jobless rate down from May's 13.6 percent to 13.2 percent, and seven-tenths of a point below the June 2009 rate of 13.9 percent. A total of 23,000 more Michiganians had payroll jobs this June than a year ago -- but 42,000 fewer workers were hunting for jobs.

That's the reason the unemployment rate took its second big dip of the year. Even though 3,000 payroll jobs were added during the month, the state's labor force shrank by 20,000 workers. The result is that the smaller group of people looking for work lowers the rate of unemployed workers and boosts the percentage of people holding jobs.

Contrary to popular belief, the drop in the ranks of the unemployed wasn't affected by the number of people who've seen their unemployment assistance end, noted Bruce Weaver, an economic analyst with the state.

"The survey doesn't ask any questions at all about receiving unemployment benefits," Weaver said. "It's unrelated."

The biggest job gains came in manufacturing, which added 4,000 jobs in June; the education and health services sector lost the largest amount, 5,000 jobs, mostly in private education, Weaver said. A loss of 10,000 temporary federal Census jobs was offset by gains in state and local government employment, he added.

The state's shrinking labor force does mean the Michigan employment situation is starting to get more competitive for workers, said Dana Johnson, chief economist for Comerica.

"If your population is shrinking and your labor force is shrinking, then just holding jobs steady is rebalancing the labor market, in terms of it getting easier to find a job and there being less competition for the new jobs that are emerging," Johnson said. "That's the silver lining in an otherwise dark picture of the labor market in Michigan."

For now, "people are voting with their feet and balancing the labor market that way," he said. "You'd much rather balance it with a lot of healthy hiring."

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