Green Shoots for Michigan

To help temper the discouraging unemployment numbers, UM-Flint professor of economics and finance Mark J. Perry comes to the rescue with a statistical glimmer of hope for Michigan.

The Geography of a Recession

They don't call it the Great Recession for nothing.

If you'd like to get very depressed before the Super Bowl, check out The Decline: The Geography of a Recession by Latoya Egwuekwe, an interactive map that charts unemployment data. The saddest part is that the rest of the country basically turns into Michigan over the course of three years.

Thanks again Duane "Perfect Attendance" Gilles for cheering us up on a Sunday morning.

The Hardest Job of All

Can someone help out a UM-Flint grad answer the question so many are asking these days...How do I find a job?

The Real Rate of Unemployment

The New York Times has a good story that explains why the official unemployment rate in cities across the nation, including Flint, doesn't capture the true extent of joblessness in America.

Michael Luo reports:

The official jobless rate, which garners the bulk of attention from politicians and the public, was reported on Friday to have risen to 9.7 percent in August. But to be included in that measure, which is calculated by the Bureau of Labor Statistics from a monthly nationwide survey, a worker must have actively looked for a job at some point in the preceding four weeks.

For an increasing number of people in this country who would prefer to be working, that is not the case.

It is difficult to assign an exact figure, because of limitations in the data collected by the bureau, but various measures that capture discouragement have swelled in this recession.

In the most direct measure of job market hopelessness, the bureau has a narrow definition of a group it classifies as “discouraged workers.” These are people who have looked for work at some point in the past year but have not looked in the last four weeks because they believe that no jobs are available or that they would not qualify, among other reasons. In August, there were roughly 758,000 discouraged workers nationally, compared with 349,000 in November 2007, the month before the recession officially began.

Flint's official unemployment rate was 28.6 % in June.

Flint's Unemployment Rate

Flint's official unemployment rate?

27.3 %.

And keep in mind the real unemployment rate is much higher because you aren't counted as out of work if you've been looking too long or have simply given up.

It's bad enough for Journal columnist Andy Heller to suggest that Michigan be declared a Federal economic disaster zone.

Murder by Numbers

With unemployment levels climbing, it seems the rest of the country is catching on to a reality that Flint residents figured out a long time ago.

Peter S. Goodman and Jack Healy of The New York Times report:

The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business.

“These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A lot of production either isn’t going to happen at all, or it’s going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations. Firms are making strategic decisions that they don’t want to be in their businesses.”

Manufacturing losses are bad enough, but many workers settled for retail jobs when their factory work disappeared. Now retail is drying up? Not good.

The Times also provides a depressing county-by-county breakdown of unemployment numbers across the nation. The numbers are bad in Genesee (12.3%) and Wayne (11.7%), but you have to go Up North to get the catastropic percentages: Presque Isle (20.1%), Cheboygan (18.4%), Baraga (20.6%), and Ontonagon (17.2%). But keep in mind you aren't counted as unemployed when you've given up hope of a job and stopped looking. Genesee County's real unemployment rate is easily over 20 percent.

In California, some of my journalism students have been conducting brief interviews with people about how the recession is affecting them and their families. They've also asked students how much debt they'll have at graduation and how they plan to pay it off. The profiles aren't exactly uplifting:

Name: Nick Arb

Major: Marketing
Year: 2010
Debt: $50,000 and Rising
Deep thoughts on debt: "I have to start paying back six months after I graduate, so I need to find a job and live within my means and not necessarily put a whole lot away. Just pay off the debt as soon as possible. I'm applying for internships this summer and I'm going for the same position as grad students, so I know when I graduate, with or without an MBA I'm going to be going against people with better degrees and more qualifications. I'd like to (pay it off) within 15 years of graduation, hopefully less. The sooner the better. I know there will be something out there. It might not necessarily be your dream job, but you gotta get paid."

As Bad As It Gets?

Susan Saulny and Monica Davey of The New York Times report on just how bad the economy is in Michigan:

"Around the state, home foreclosures are commonplace, the trust fund that pays unemployment benefits is millions of dollars in debt, food banks are struggling and health agencies are reporting an uptick in people with symptoms like anxiety and depression. Suicides were up in recent years, although officials caution against drawing any direct links between deaths and the economy.

"In one sign of distress, in the first nine months of this year, some 130,000 Michigan residents who had lost their jobs remained out of work so long that they ran out of regular unemployment benefits. By the middle of this month, 63,000 people (who had already run out of their ordinary maximum benefit — as many as 26 weeks, at as much as $362 a week) also ran out of an extension authorized by Congress."

Flint Turns Purple

Purple States is a mini-documentary series about "a group of five randomly-selected American citizens following the campaign trail for the Washington Post." In this episode, "Elizabeth Gotsdiner, a college student, and Bert Sobanik, a displaced manufacturing worker, visit Flint...and get a look at an American town at rock bottom." It includes a "frank discussion of free markets and American safety nets. Elizabeth goes to a Michigan McCain rally and Bert meets Barack Obama, but neither come away uplifted by the experience."



The citizens' blogs and daily show can be found at www.purplestates.tv.

Thanks to Don for passing this along.

A not-so-simple question

After reading about G.M.'s dismal second quarter earnings report, redgirl asks:

"What was CEO Rick Wagoner's salary in 2006? In 2007? What will it be in 2008? Hmmm — I wonder if GM will cancel all of his health insurance when he reaches the age of 65...which is what the company did to my 79-year-old mother and God only knows how many other retirees and their spouses ... Angry? You bet I am."

Such a simple question. What is Rick Wagoner's reward for posting huge losses while slashing jobs, wages and benefits?

Turns out it's not so simple, but let's try and get a handle on it.

Effective March 1, 2006, Wagoner agreed to cut his $2.2 million annual salary in half. That meant his new salary was around $1.1 million a year.

Then, in 2007, G.M. announced Wagoner would “continue” to draw a "reduced" salary. Here’s where it gets a little tricky. The new salary was not based on the $1.1 million he’d earned the previous 12 months. Instead, it was based on what he made before the March 2006 reduction.

That worked out to a 2007 salary of $1.65 million a year. In other words, he got a raise, despite claiming he was drawing a "reduced" salary.

Mark Stein at portfolio.com does an excellent job of showing that Wagoner's pay "cut" didn't necessarily mean less money. He also points out that salary only accounted for 17 percent of Wagoner's total compensation:

“The remaining 83 percent of his $10.1 million annual pay package comes in the form of stock awards, option awards, pension sweeteners, and $769,566 in ‘other’ compensation (life insurance, financial planning, personal travel on the corporate jet, bodyguards, and dividends on restricted stock).

Then, in March of this year, G.M. announced that Wagoner “will earn a salary of $2.2 million in 2008, restoring his base pay to the level it was before he took a 2006 pay cut as part of the company's turnaround plan,” according to the Associated Press.

“Wagoner is eligible for up to $3.5 million in incentive payments and a grant of 165,563 shares of GM stock if he meets the internal targets,” according to the AP. “He will also receive 500,000 stock options that will vest over three years and 75,000 restricted stock options that will vest in three to five years.”

Is it a recession yet?

More uplifting economic news from David Kiley at BusinessWeek:

"Michigan, once the center of America's industrial heartland, now holds a more dubious distinction: It leads the U.S. in joblessness. The state's unemployment rate hit 8.5% in May. That's up 2 percentage points from April, and compares with a figure of 5.5% for the whole U.S. in May...But bad as those unemployment figures look, the reality is actually worse. The official number is arrived at by surveying households and learning how many family members are unemployed but seeking work. So it does not reflect those who have given up finding a job, or those who are not yet looking but soon will be. That second category covers thousands of auto workers who are accepting buyout checks to drop off the payrolls of the companies that make autos or auto parts."

The paperboy

What does Flint have in common with Grosse Pointe Woods?

Housebound

Is home ownership increasing unemployment in states like Michigan? This week's New Yorker magazine suggests a link:

"Homeowners are much less likely to move than renters, especially during a downturn, when they aren’t willing (or can’t afford) to sell at market prices.
As a result, they often stay in towns even after the jobs leave. That may be why a study of several major developed economies between 1960 and 1996, by the British economist Andrew Oswald, found a strong relationship between increases in homeownership and increases in the unemployment rate; a ten-per-cent increase in homeownership correlated with a two-per-cent increase in unemployment. (In the U.S., it may be worth noting, the states that have the highest unemployment rates—states like Alabama, Michigan, Mississippi—are also among those with the highest homeownership rates.) And reluctance to move not only keeps unemployment high in struggling areas but makes it hard for businesses elsewhere to attract the workers they need to grow."

Unemployment by the Numbers

If you just want the numbers, the Bureau of Labor Statistics has a concise rundown of Flint's employment statistics.

Losing Your Job at the Unemployment Office

The Onion reminds us that things could be worse in the Great Lake State:

In another devastating blow to the state's already fragile economy, the Unemployment Insurance Agency of the state of Michigan permanently shuttered its nine branch offices Monday, leaving more than 8,500 unemployment employees unemployed.

Announcing the closings at a press conference, Michigan Gov. Jennifer Granholm called them "a tragic coda" to a once-vibrant industry that until this week defined the Michigan economy and served almost one-fifth of the state's employable population.

"This is a sad day for the people of Michigan," Granholm said to a crowd of part-time reporters and former assembly-line workers Tuesday. "Our state has a long, hallowed history of unemployment, and with these closings, we have lost a vital part of our economic and social fabric."