Michigan’s economy is experiencing some of the lowest sustained unemployment rates since before 9/11, with a return of thousands of manufacturing jobs swept away by the Great Recession. With an unemployment rate below 5%, this is mostly good news, despite wages that generally remain stagnant.
But nowhere does Michigan shine brighter than western Michigan, where two counties, Kent and Ottawa, account for one-fifth of all new jobs in the state, despite accounting for only one-tenth of the population.
In Ottawa, the unemployment rate in April was 2.7%. It was 2.9% in Kent. Both are historic lows not seen since 2000. An estimated 70% of employers tell business leaders that finding skilled workers is one of their toughest jobs right now.
The success is not limited to these two countries: the neighboring counties of Barry and Allegan, just south of Grand Rapids and Holland, are also doing well and a series of counties from Lansing to Lake Michigan have the highest unemployment rates. down state.
It’s a success story that has caught the attention of economists and others who look to West Michigan for economic advice.
“It’s definitely something people are talking about,” said Charley Ballard, an economist at Michigan State University. He noted that the region’s population is growing, has a high per capita income, and its economy has been ahead of state economic trends for years.
A stubborn downside: Salaries are still mostly at 2010 levels, albeit slowly rising. In West Michigan, only Ottawa posted slight gains from 2010, when adjusted for inflation. Wages fell nearly 10% in Allegan County and rose about 1% in Barry and Kent. Statewide, average weekly wages remain down 2.1% since 2010, though they increased nearly 3% between 2014 and 2015.
But the low unemployment rate in West Michigan should help push up wages, said Robert Dye, chief economist at Comerica Bank. Job growth could slow, he said, but employers will have to pay more to get the workers they need, he said.
While some are looking across the country for replicable models of economic recovery, like Pittsburgh’s turning steel into higher education, others say other parts of the state can just look down I -96.
“I think we have a model in our state. We don’t need to look to Pittsburgh,” said Sean McAlinden, vice president of strategic studies and chief economist at the Ann Arbor-based Center for Automotive Research. . “But it’s a really tough model to follow.”
Not as simple as “just add water”
For years, West Michigan’s economy has outpaced the rest of the state. When the unemployment rate in the worst-hit counties exceeded 20% at the height of the Great Recession, West Michigan’s rate was half that. Today, it continues to do better, a by-product of a diversified economy and a focus on shared success, according to economists and advocates for the region.
“West Michigan’s uniqueness is the concerted effort to connect business leaders and community leaders (to) work together,” said Jennifer Owens, president of Lakeshore Advantage, which promotes Allegan counties. and Ottawa. She said companies used to look to their neighbors in the area, either through the local chamber or their own industrial park, to find suppliers and business partners.
It may sound like a marketing pitch, and you’ll hear it often from Owens and his peers. But Ballard and other economists have also noted this. “You get a sort of ‘progressive-going-about-their-business’ vibe,” Ballard said.
On a civic level, the business community works together to identify and achieve goals, from helping found Grand Valley State University decades ago to expanding its campus in downtown Grand Rapids. Regional leaders have supported downtown in other ways, promoting its famous breweries and events like ArtPrize, the public art event funded by some of the region’s biggest corporate sponsors. It is estimated that 400,000 people visit ArtPrize each year.
The results have been impressive: the Grand Rapids area is one of the fastest growing economies in the country.
But replicating West Michigan’s success elsewhere in Michigan can be difficult.
“I think there’s a common culture on the west side of the state that’s as strong or stronger than other parts of the state,” Ballard said.
A number of the region’s leaders came from the same background, rooted in the waves of Dutch immigrants who began settling in the region in the 19th century. In 1900, 40% of Grand Rapids’ population was of Dutch descent.
Metro Detroit, on the other hand, is much more diverse, with its people coming from all over the world and spread over a large area. Agreeing on a vision for a region of 4 million people can be trickier. And then there is the automotive industry. Although western Michigan has long been a supplier to the industry, automotive work does not dominate there as it does in the Detroit metro area.
“Western Michigan has been able to grow in a way that Southeast Michigan hasn’t because Western Michigan hasn’t been hampered as much by the shrinking auto industry,” he said. said Ballard.
Some of it was accidental, but some was intentional. Steelcase, the furniture giant, has had strong business with the automotive industry. But he has diversified his portfolio, reducing his reliance on automotive work, said McAlinden, the auto economist.
“Western Michigan has dodged a bullet in terms of industrial mix,” MSU’s Ballard said. But, “that’s not all they got lucky.”
Big company, but ready to help
This West Michigan mix includes office furniture (Steelcase, Herman Miller, Haworth), pharmaceuticals (Perrigo), advanced manufacturing (Johnson Controls, Gentex, Magna International, Lacks Enterprises) as well as hospitals and higher education institutions.
“The western Michigan region doesn’t hang its hat on just one producer,” said Owens of Lakeshore Advantage.
These companies are the anchor points of the region. But they are also advocates for new ventures.
Jeff Disher, who began his career as an engineer for the former Prince Automotive (acquired in 1996 by Johnson Controls; later sold in several transactions), aspired to own his own company. He started in 2000 with just one employee – himself.
Innotec, a relatively new company in 2000 that included other Prince alumni, agreed to take a chance on Disher. It worked and now, more than 15 years later, Disher, his design and engineering company, employs over 100 people in neighboring Zealand and Ann Arbor.
“People see that when you help out your neighborhood, there’s a reward for everyone,” Disher said.
That could be West Michigan’s mantra. Birgit Klohs, president and CEO of The Right Place, which promotes West Michigan, sells the area to others this way: “It’s a very engaged and collaborative area,” said- she declared.
When business meets politics
However, some conservative business principles adopted in West Michigan have spread across the state in ways that have not gone down well with everyone.
The area has one of the lowest organized labor force participation rates in Michigan. About 5% of private sector workers in the Grand Rapids area are unionized, compared to 11% in the Detroit metro area and statewide.
Owens said lower labor costs are one reason outside businesses are drawn to western Michigan.
What angered many supporters of the labor movement, however, was the strong push by a West Michigan family in an ultimately successful campaign in 2012 to enact right-to-work laws – making union membership volunteer – in a state that was the birthplace of the United Auto Workers.
Many see the DeVos family’s support for the right to work as part of a conservative business agenda with outsized power that isn’t working everywhere in Michigan.
The DeVos family is among the state’s top political donors. They also support Conservative candidates and causes nationwide.
“They’re kind of the 800-pound gorilla of the state,” said Michigan AFL-CIO spokesman Zack Pohl, who railed against DeVos family influence in Lansing. .
Residents of West Michigan may think differently of the DeVos family. They are a visible part of the fabric of the community; the family name is on medical, educational, and civic buildings whose organizations have shared their philanthropy. And he backed a $15 million venture capital fund in 2012, giving entrepreneurs five minutes to pitch a pitch that could net them $5,000 in backing.
Start Garden ultimately backed 190 business ideas with $5,000 each and another 91 with larger investments. The group is currently developing a new model with the aim of supporting “businesses in development” on a larger scale.
It’s part of a business attitude that promotes growth, said Disher, the engineer.
“People have opportunities,” he said. “Like-minded people attract each other.”
And now he’s doing his best to attract even more. At a time when the economy is hot, Disher added to his business: He became a talent scout.
West Michigan economy heats up
Michigan’s lower western counties are setting the pace — falling — for unemployment rates. Click on a county to see its unemployment rate and other economic indicators.
Source: Michigan Department of Technology, Management, and Budget