Despite an economy that continues to scuffle, Michigan and Gov. Rick Snyder got some good news when the Bureau of Labor Statistics announced that Michigan’s unemployment rate was as low as it’s been since September 2008 — 9.3 percent. Although that’s good news for students, it doesn’t tell the whole story.
Snyder crowed about the news in his State of the State speech last week, and rightly so, after unemployment peaked at 14.1 percent in August 2009. He heralded the drop in unemployment as the start of what he called “Michigan 3.0” and expressed his feeling that the state was on the rise economically.
Although Michigan’s economy appears to be recovering slowly, one encouraging statistic doesn’t mean the economy magically has been fixed.
Unemployment rate is calculated by taking number of people with jobs and dividing by the number of people in the labor force.
The labor force is a nebulous construction that only includes those with jobs and those without jobs who are actively looking for one. Generally speaking, it’s everyone currently looking for work or working in the state.
Because of the way the unemployment rate is calculated, it is possible to see an artificial decline in the unemployment rate without actually seeing a decrease in the number of unemployed people.
Students should be mildly excited about improvement. The state appears to be crawling out of a deep hole.
More jobs in Michigan and a decline in the size of the workforce means graduating students will have a much better chance of getting a job without having to leave the state. The current long-term trends appear to be stable, which should leave students in much better shape, whether their graduation is this May or in 2016.
However, a staggering amount of people simply have stopped looking for work in Michigan. In the calendar year from December 2010 to December 2011, 100,000 people left the Michigan workforce for one reason or another. This could be one of the reasons the unemployment rate fell to the extent that it did.
That’s why it’s important to look at other factors to determine the state’s direction, such as the number of jobs created and the state’s employment rate, in addition to unemployment rate.
In fact, the number of jobs created is trending upward, to the tune of 13,000 jobs created between November 2011 and December 2011.
That’s reason for students to get excited about the future of Michigan, but not to the same extent as it would seem just from the decrease in the unemployment rate.
Gov. Snyder absolutely is correct when he says Michigan’s economy is recovering, but students have to look at more than just the unemployment rate to understand that.
It’s important for students to remember that although things are not going as well as the governor claims, they’re not going badly.
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