Michigan’s Shrinking Workforce: A Report on a Two-Decade Problem

Michigan’s workforce has shrunk by more than 703,000 people since 2000. The big question: Where did those 703,000-plus people go?

Yes, many retired – the oldest baby boomers began reaching age 65 in 2011. And it’s true Michigan is not a net importer of talent. But demographics alone fail to explain why Michigan’s Labor Force Participation Rate has fallen by 8.7 percentage points since 2000. This decline is a national trend, but our state’s participation rate is falling far faster than the national rate of 4.9 percentage points.

So, what happened over the past two decades? That’s what TalentFirst wanted to understand with a year-long, in-depth examination of who was leaving the workforce, why they are sitting on the sidelines, and how we can get them back.

The result is our latest report, “Michigan’s Shrinking Workforce: Examining a 20-Year Problem.”

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Some key findings:

  • The ratio of jobseekers per job opening in Michigan is at a historic low: There are 6 jobseekers for every 10 openings.
  • The workforce decline has been driven by an unprecedented rise in disconnected youth (16-24) and prime-age workers (25-54), especially prime-age men.
  • Disincentives include social trends, family demands, education gaps and the unintended consequences of outdated policies.

These are all detailed in the report, which also includes recommendations for strategies we can undertake now, next and later to reverse this trend.

 Employer practices + policy reforms

TalentFirst President Kevin Stotts presented these findings recently to the Economic Club of Grand Rapids, along with an encouraging message: Employers can make a huge difference in reversing this trend.

This could include new strategies to attract and retain workers with children, addressing substance use disorders, tapping into the great potential of workers with criminal records, accommodating workers with disabilities, recruiting skilled workers lacking postsecondary credentials, and providing flexible work arrangements and wraparound supports.

Meanwhile, it is time to take a hard look at outdated benefit programs that discourage work and force people to make no-win decisions that can trap them in poverty. The report includes recommendations for policymakers to repair the social safety net by reforming programs such as Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), Medicaid, Social Security Disability Insurance (SSDI), and Unemployment Insurance (UI).

These are all detailed in the report, which also ranks the strategies by level of difficulty and estimated impact.

Why this is important

Publication of the report is just the beginning. As we continue the discussion about the findings and strategies, it is worth remembering why this is important.

The harm from the absence of work is not limited to business. People and communities also suffer.

In West Michigan alone, if we restored the 136,000 labor force participants we have lost since 2000, we would reduce the number of families in poverty by 18% and increase economic activity across the region by $4.2 billion.

We owe it to our community and those who live and work here to fulfill our potential as a place where everyone can thrive.

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