The Labor Market in Michigan: Trends and Policy Challenges Rebecca M. Blank Gerald R. Ford School of Public Policy University of Michigan.

The Labor Market in Michigan:

Trends and Policy Challenges

Rebecca M. Blank

Gerald R. Ford School of Public Policy

University of Michigan

A. Adjusted Median Weekly Wages Among All Workers

400

420

440

460

480

500

520

540

560

580

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Ad

j. M

edia

n W

eekl

y W

age

U.S. OH

MIIL

B. Adjusted Median Weekly Wages Among Workers with Less Than a High School Degree

240

260

280

300

320

340

360

380

400

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Ad

j. M

edia

n W

eekl

y W

age

U.S.

MI

OHIL

B. Adjusted Median Weekly Wages Among Workers with Less Than a High School Degree

240

260

280

300

320

340

360

380

400

Year

Ad

j. M

edia

n W

eekl

y W

age

U.S.

MI

OH IL

C. Adjusted Median Weekly Wages Among Workers with Only a High School Degree

390

410

430

450

470

490

510

Year

Ad

j. M

ed

ian

Weekly

Wag

e

U.S. OH

MIIL

So

Unemployment Rates Among All Workers

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Un

emp

loym

ent

Rat

e (p

erce

nt)

Source: Author's tabulation of Current Population Survey Data, Outgoing Rotation Groups

MIOH

IL

U.S.

Michigan Unemployment Rates Among All Workers by Education Level

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Un

emp

loym

ent

Rat

e (p

erce

nt)

No High School Diploma

High School Diploma Only

Some College, No B.A.

B.A. or Higher

Source: Author's tabulation of Current Population Survey Data, Outgoing Rotation Groups

B. Male and Female Labor Force Participation Rates

47.0

52.0

57.0

62.0

67.0

72.0

77.0

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Lab

or

Fo

rce

Par

tici

apti

on

Rat

e

IL malesU.S. males

MI males

OH males

IL females

U.S. females

OH females

MI females

Source: Current Population Data, Outgoing Rotation Groups

Policy Issues• Nationally, rising minimum wages and

expanding Earned Income Tax Credit have offset some of the wage declines for less skilled workers. The effect of the two together:

  1989 2000 1. Minimum Wage $4.40 $5.15  2. Maximum EITC Subsidy  Single Mother (1 child) $1,195 $2,353 Single Mother (2 children) $1,195 $3,888

  3. Earnings (Single mother working full-time at minimum wage)

  Single Mother (1 child) $9,995 $12,653 Single Mother (2 children) $9,995 $14,188

Issues for Less-Skilled Women

• Big LFP increases, especially in the late 1990s following welfare reform

• Big shift in income composition, with increased earnings and declines in public assistance income. This produced a rise in the working poor.

• The EITC and higher minimum wages definitely increased LFP and incomes among less-skilled women.

• Other issues key to women’s LFP:

* Child care availability and subsidies

* Health care availability

Can we do better at covering low-skilled working adults with health care? Wisconsin Badgercare is one model.

• Job Training issues-- Availability of low-cost loans and subsidies for community college and vocational training-- Effectiveness of job training system/WorkFirst! Program

What’s the appropriate balance between work first programs and training programs? Is there too little focus on more disadvantaged workers?-- Improvements in school outcomes for the non-college bound are probably the most important long-term issue.

Larger U.S. Labor Market Questions in 2004

• Why is job growth non-existent in this recovery? Particularly given the recent high rates of GDP growth.

Total Employment (Nonfarm)

100000

105000

110000

115000

120000

125000

130000

135000

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

To

tal

Em

plo

ye

nt

(th

ou

sa

nd

s)

Source: Department of Labor, Bureau of Labor Statistics, Series ID: CES0000000001Note: Seasonally Adjusted from January 1994 to December 2003

Theories of lack of job growth

• Employer caution due to an unusual degree of international uncertainty

• Restructuring due to recent technological advances are finally producing productivity gains

• International competition continues to result in loss of some U.S. jobs

A major policy issue at the national and state level must be how to deal with the “losers” due to job restructuring. Expect to see ongoing discussion of policies designed to slow down restructuring; provide retraining to job losers; and/or provide subsidies that allow time to adjust to these changes.