New economic data shows Michigan hit a milestone many thought unthinkable just a few years ago. The unemployment rate dropped below 4%, which hasn’t been seen in 17 years and is far removed from the five straight years between 2008 and 2013 where it exceeded 8%.
But beneath this shiny economic veneer lurks a problem that has long plagued the state: a declining labor force. Those statistics tell a different story. The state’s labor force participation rate — the percent of the adult population working or looking for work — is currently less than 62%. This is one of the few indicators that hasn’t fully recovered from the Great Recession, and is well below the 69% peak at the beginning of the century. Meanwhile, there are roughly 100,000 available jobs in the state.
More: Michigan’s unemployment rate dropped to 4.2% in May
More: Why aren’t we more excited about Michigan’s low jobless rate?
What explains this apparent contradiction between the near-record-low unemployment rate and the historically low number of people in the workforce?
Joe Haveman (Photo: Hope Network)
Several factors are to blame. For starters, some people who want to work lack the opportunities to enter or re-enter the workforce. Overly harsh state laws make it difficult for those with criminal records, including those with nonviolent offenses, to find jobs after they re-enter the community. People with disabilities, who are eager to earn a paycheck, struggle to connect to employers and available positions they could qualify for.
Additionally, occupational licensing requirements for semiskilled jobs — like barbers, dance instructors and flower gardeners — lock out those who cannot afford the credentialing process. And the state’s relatively high minimum wage and other labor regulations price some of the least-skilled job seekers out of the market.
But perhaps the biggest factor keeping hundreds of thousands of prime-age, able-bodied Michiganders on the labor market sidelines is the skills gap. In short, those without work often don’t have the qualifications to take advantage of the exciting employment opportunities available.
These job opportunities usually don’t require a four-year degree, but do require some training. Many of them are in the skilled trades, which offer opportunities that pay $100,000 or more per year.
Unfortunately, the skills gap may be poised to widen. Three out of four skilled tradesmen in Michigan will be retiring in the next five to 10 years, according to Kevin Koehler, president of Construction Association of Michigan.
Major state companies — including Integrated Manufacturing & Assembly and Cosma — even have to turn down work because of their inability to hire, threatening Michigan’s continued economic growth.
What can be done?
The nonprofit Hope Network helps to to address the skills gap by connecting Michiganders with barriers to employment to jobs by providing pre-employment training and placement opportunities. It provides employment readiness training, including résumé and interview prep, as well as ongoing support for those who may require a longer transition period to be successful in the position they were hired for.
Apprenticeship programs, which are common in other countries, are also an effective bridge over the skills gap. According to U.S. Labor Secretary Alex Acosta, 90% of apprentices get a $60,000 job upon completion. Apprenticeships provide marketable skills and a debt-free education, two attributes traditional education seldom offers.
President Donald Trump’s focus on apprenticeship training in his recently announced workforce development initiative has exciting potential. The executive order will expand apprentice programs by allowing much more flexibility. It responds to a long-held demand to allow companies, trade associations, and unions to develop the apprenticeships that best suit their unique needs.
This bottom-up apprenticeship approach — directed by local companies and economies, not Washington, D.C., bureaucrats — could create thousands of new apprenticeships in Michigan, directly addressing the state’s skills gap and low labor force participation rate.
Between nonprofits and employers ready to jump-start apprenticeship opportunities, the state’s recent economic performance could be turbocharged.
Joe Haveman is the director of government relations at Hope Network and a former Michigan state representative.
Read or Share this story: http://on.freep.com/2vV4q3v