Report: Detroit Region and State Challenged by Labor and Supply Chain IssuesMarch 25, 2022
Mar. 24, 2022
The Detroit Regional Chamber (DRC) today released its 2022 State of the Region report sponsored by Citizens, which showed challenges with labor, supply chain issues, a spike in demand for goods, and a large influx of government spending.
The trends are just some of the multitude of reasons Michigan and the United States have seen the highest inflation levels in 40 years.
Statewide polling by the Chamber and Glengariff Group showed that 90 percent of voters are concerned about inflation, and 63 percent of voters feel the economy is on the wrong track. However, people’s pessimism contrasts with consumer behavior and other promising signs of economic growth.
While the state saw a 0.2 percent drop in real GDP in the third quarter of 2021 — during the first and second quarter of last year real GDP in Michigan was up 2.6 percent and 12.7 percent, respectively — the Detroit region’s real GDP decreased to $220 billion in 2020, a 5.8 percent drop and ranking the region 16th in the U.S.
The report defines the Detroit region as an 11-county area that encompasses more than 300 municipalities and 7,062 square miles with rich geographic, human, and business assets. It is home to numerous educational institutions and more than 376,000 businesses, including 10 Fortune 500 companies.
Light vehicles sales in the U.S. are forecasted to reach 15.4 million in 2022, from 14.9 units in 2021 and 14.6 million in 2020, according the Bureau of Economic Analysis and the National Auto Dealers Association.
The report highlights employers are struggling to fill job positions, especially among highly-skilled positions.
“Despite a substantial increase in job postings in the region throughout 2021, many of these positions continue to go unfilled. This is a national trend, but Michigan’s labor force participation lags significantly behind other states,” says Sandy K. Baruah, president and CEO of the Detroit Regional Chamber.
“More Michigan women than men – 136,000 to be exact – left the labor force in 2020 as well as a significant number of older workers. Labor shortages hindered the economy before 2020, but COVID-19 exacerbated this trend.”
The 2020 Census showed metro Detroit has seen a 1.9 percent population growth since 2010, and the state of Michigan has grown 2 percent at the same time. Washtenaw and Livingston counties saw the largest growth — 8 percent and 7.1 percent, respectively. Detroit saw a 10.5 percent population drop, followed by Lapeer County at 4.6 percent.
“With the disruption wrought by the pandemic, it remains crucial that the private, public, and nonprofit sectors work together to ensure that workers, small business owners, and families have the skills and support they need,” says Jim Malz, Midwest regional executive of Citizens.
Health care, government, and manufacturing are the top three industries in the region. Health care and social assistance account for 14.3 percent of the region’s employment as its top industry. Over 1.1 million people are employed across the top four industries (retail trade being the fourth) while total job numbers decreased 9.2 percent in 2021.
The region is down nearly 56,000 private sector jobs since early 2020 despite gains through 2021. It reached just under 2.1 million private sector jobs by December 2021, remaining 56,100 jobs below early 2020 levels. Since January 2021, private sector jobs steadily increased 7.3 percent, or 141,700 jobs. The region remains down 2.6 percent in private sector jobs since February 2020.
The region has 10 of the states 17 Fortune 500 companies. Ford Motor Co. and General Motors Co. rank 21 and 22, with Penske Automotive Group, Lear Corp., and Rocket Cos., rounding out top five — ranked 143, 179, and 194, respectively. Penske Corp. and Ilitch Holdings Inc. are the two largest private companies.
Prices in the region rose 7 percent over the last 12 months, as measured by the Consumer Price Index for All Urban Consumers (CPI-U). December 2021 core prices, which include all items less food and energy, rose 5 percent the same time.
Not all categories are demonstrating similar rises in prices over the past year. The largest percentage increases in the region can be seen in used cars (37.9 percent), energy (27.4 percent), including higher prices for gasoline (54.8 percent) and piped gas service (17.7 percent), and food (9.6 percent), with the largest food price increases in meat, poultry, fish, and eggs (20.3 percent). Nationally, year-over-year CPI rose 7 percent from December 2020 to December 2021, the largest increase since June 1982.
Real per capita personal income in the Detroit region increased 7.1 percent in 2020 to $54,256. The growth is 2.2 percentage points above the national growth rate of 4.9 percent, reaching $53,504 in 2020. Additionally, the state of Michigan’s real per capita income increased 8.2 percent from 2019 to 2020, ranking second among all states.
Michigan’s labor force participation rate lies at 59.6 percent as of December 2021 according to the report, down from 61.5 percent in early 2020. Nationally, the state is ranked 40th in labor force participation, with the nation’s rate at 61.9 percent.
Economic inequities persist in Detroit despite a decade of growth across many areas. In 2021 Detroit Future City’s Center for Equity, Engagement, and Research released a comprehensive report on the intersection of race and economic equity.
With a commitment to acknowledge inequities, eliminate disparities, and work intentionally toward a more economically equitable future, the report includes six focus areas including income and wealth building; access to quality employment; business and entrepreneurship; education; health; and neighborhoods and housing. The full Detroit Future City report can be found here.
The full report from the Detroit Regional Chamber, available here, examines a number of other factors, including home prices, consumer sentiment, business leader sentiment, and a 2022 economic outlook.