(Source: MIRS.news, Publsihed 01/23/2023) There are 59.9% of Michiganders hard at work every day, while 40.1% don’t participate in the labor market and some of those people could be enticed to rejoin despite a possible recession in 2023.
Iryna Lendel, senior director of regional economic and community development for W.E. Upjohn Institute for Employment Research, has looked into the causes and sectors of the population not participating in the workforce, which includes disabled people, university students and a growing segment of retiring Baby Boomers.
"However, unfortunately, they are not the only segment that is growing," Lendel said.
She said one of the growing areas of nonparticipation has been men in their prime age for employment, which is between the ages of 30 and 50. Compared to previous generations, the current generation of men are staying home more.
She said it could be because of a quick turnaround of wealth when they were in their 20s and 30s, leading to a reduction of work in their 40s and 50s to just living off the interest of investments.
Another reason she cited was men increasingly taking the role of family caregiver.
However, Chris Douglas, an economist with the Mackinac Center for Public Policy and economics professor at the University of Michigan-Flint, said the prime age for both men and women has nearly recovered from the COVID-19 pandemic, with 80.5% of the population before the pandemic and 80.1% as of December.
He said the largest chunk of the workforce not returning was over the age of 54 and many just removed themselves from the labor market during the COVID-19 pandemic.
"You're a 56- 57-year-old worker and times are looking really bad. Do you really want to go through another round of layoffs, downsizing job cuts, or do you just want to call it a career?" Douglas asked.
Lendel said there was also a possibility for some of the early retired people to reenter the workforce.
"We do have a fair number of people who might not be willing to work full time, but who still have the desire to pass their knowledge and pass their experience, and mentor, consult and advise. That's a huge input in businesses and organizations, and I think we shouldn't neglect that," she said.
With Gov. Gretchen Whitmer putting an emphasis on economic growth in Michigan, the question soon turns to whether the state has enough active workers to fill the positions that would potentially be available.
Lendel said it depends on what type of business is being lured.
"To say generally we don't have the capacity to bring businesses, I think is wrong, but it's also wrong to say generally we can accommodate all businesses," she said.
She said targeting specific industries, like clean energy and semiconductors, needs the labor force taken into consideration. She said she has all the confidence in the labor organizations working in concert to bring jobs to the state.
One of the dynamics that has changed both adding to the workforce and workers moving to the state has been remote work and working from home.
Douglas said there are more than 10 million jobs open in the economy, which would be closer to 7 million normally. More than 3 million jobs nationally missing workers, plus a larger than usual death rate, has created a work gap that has left employers struggling to find people.
That gap has flipped the power dynamic to the workers, who haven't been on top for a long time.
"I think people are slow to recognize that because it's such a stark change from what it's been like for the last 20 to 30 years," Douglas said.
That power change has made it hard for employers to demand a return to the office and there is increasing economic pressure from large cities and downtowns to make that happen, which would boost those economies.
The work gap could be fixed, according to Douglas and Lendel. However, their approaches are different; where Douglas sees the problem being fixed by private businesses, Lendel sees a way forward through public policy.
She said the first portion that needed to be fixed, and was in the works by the Whitmer administration, was to address childcare.
"I think Michigan is at the forefront of other states in addressing this and I think that's a great thing," she said.
Another thing that the state should address should be a focus on people's skills and what is required to get people into jobs with the right incentives, because the workforce is a living thing that is impacted by generational ideals.
"You need to constantly update your knowledge on that and constantly update different policies that are better responding and better working in bringing those people into the workforce," she said.
Douglas said there was a recession on the horizon that could organically fix the labor gap.
He said the impending recession could end up just stripping away all the jobs that have not been filled.
He said without data he is hesitant to make predictions on the recession, but early indicators in sectors where there is no labor gap, such as technology and finance, have seen layoffs.
"We don't really have 'mild recessions' in the United States," he said.
He said December sales numbers were an indicator that many people were looking to a pending recession and a record Black Friday was people taking advantage of deals.
"It will be interesting to see if there's a recession in 2023, if that causes the bargaining power to flip back to the employers and that really depends on how severe it is, how long it lasts and that's really impossible to predict," he said.
