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March 31, 2004

Job growth expected for Wayne County through 2006

ANN ARBOR, Mich.—The Wayne County economy will add nearly 16,000 jobs over the next two-and-a-half years, after losing more than 50,000 jobs the past three years, say University of Michigan economists.

About 3,500 new jobs are expected in the second half of this year, followed by projected gains of 6,300 jobs during 2005 and 5,900 jobs the year after, they say.

"The job growth projected through 2006 can be characterized as moderate, and although it is not robust, it is sustained—a welcome departure from the persistent job losses of the past several years," said George Fulton, an economist at the U-M Institute of Labor and Industrial Relations (ILIR), part of the University's Business School and School of Social Work.

In their annual forecast of the Wayne County economy, Fulton and fellow ILIR economist Donald Grimes say that all of the job expansion in the forecast period will occur in the service-providing sector, with strongest employment growth in professional and business services and leisure and hospitality services.

Professional and business services will add 7,000 jobs through the end of next year—two-thirds of them in higher-wage jobs, such as computer professionals, engineers, architects, managers of companies and employees at corporate headquarters.

"This runs counter to conventional wisdom, which views the service industry generally as being made up of low-wage jobs," Grimes said. "The scheduled relocation of Robert Bosch Corp. headquarters and GM OnStar and the opening of Visteon Village are reflective of Wayne's growing prominence in this higher-wage category of services."

The leisure and hospitality industry is expected to add another 2,400 jobs over the next two years, as Wayne County continues to attract the entertainment dollar from both residents of and visitors to the county, Fulton and Grimes say.

Other service-providing industries that will add jobs are air and truck transportation and wholesale trade. Retail trade and health care and social assistance are forecast to lose jobs.

While the service-providing sector, overall, will add jobs, the goods-producing sector will not. All of the job losses in this sector will take place in manufacturing, the economists say.

Manufacturing employment will decline by 2,900 jobs (2.5 percent) between 2003 and 2005, with jobs in motor vehicle manufacturing projected to fall by 1,100 (1.7 percent) during that time, the forecast predicts.

Though almost all of the main industries in manufacturing are expected to lose jobs through next year, except machinery and plastics products, another goods-producing industry—construction—will add 900 jobs over the next two years.

Fulton and Grimes say that although their forecast covers the short run, the changes they see over the next few years suggest a more permanent reorganization of the Wayne County economy.

As recently as 2000, manufacturing companies in Wayne County employed 25,000 more workers than professional and business services. By 2006, the reverse will happen—the latter will employ 25,000 more workers than the former, the economists say.

"One of the keys to Wayne County's future prosperity will be its ability to continue attracting and retaining high-wage jobs in the service sector, while at the same time reinforcing its growing tourism trade and the image-building that comes with it," Fulton said. "Much of the right strategy has to do with exploiting existing advantages rather than trying to develop new ones that might be a better fit elsewhere."

These advantages, say Fulton and Grimes, include world-class automotive engineering, research and design; a high concentration of headquarters and other managerial activity; and high-quality health care facilities.

"The key policy implication from all of this is to invest in education, a skilled work force and technology that make these high-end activities grow and provide a more productive society," Grimes said. "Considering the difficult economic times Wayne County has faced in the past few years, it is certainly understandable that much attention is devoted to the current business-cycle problems. Establishing and preserving the county's competitive advantages, however, will ultimately determine its position as a player in the New Economy."

Contact: Bernie DeGroat
Phone: (734) 936-1015 or 647-1847
E-mail:bernied@umich.edu