Thesis: In Michigan, changes in the labor force due to outward migration cause the state unemployment rate to be an inadequate measure for the state’s economic health.
News of an improved, post-recession economy tends to surround decreased state unemployment rates. The unemployment rate is calculated by dividing the number of people employed by the number of people working and actively seeking work (also known as the labor force). While one hopes that the unemployment rate goes down as a result of increasing the numerator, sometimes changes in the denominator are at fault for the changing rate. More precisely, we often assume that employment is increasing rather than the labor force decreasing. In Michigan, changes in the labor force due to outward migration cause the state unemployment rate to be an inadequate measure for the state’s economic health.
During the recession, Michigan was known for having one of the highest unemployment rates. As it has decreased, reporters and government officials have been quick to point out the “improved economy.” Although some celebrate, MLive.com makes a good point in saying that this is not necessarily as exciting as we would think. The article states in reference to March 2015, “The number of unemployed in the state fell by 14,000 people but total employment only grew by 2,000. That means there was a 12,000 person labor force reduction in March.” 12,000 people either decided to stop looking for jobs or move elsewhere to find jobs. In the case of Michigan, the latter seems more likely.
Looking into outward migration, MLive.com talks about how college graduates are currently migrating out of state at the fastest rate since 2010. Young, educated people are being lured away from Michigan after graduation. When they are in Michigan we count them as being a part of the labor force. As they get jobs elsewhere, the unemployment rate will decrease because their movement lowers the state’s labor force. Confirming the high outward migration in Michigan is the yearly study done by moving company United Van Lines. The company ranks the top 5 inbound and outbound migrating states and according to their 2012 study, “Michigan fell to the No. 6 from the No. 4 spot it held in 2011. Previously it had claimed the top outbound spot every year from 2006-2009.” Given this long line of outward movement, it is safe to say that this is likely the factor affecting Michigan’s unemployment rate most. Though Michigan’s employment seems to be increasing, it is not doing so nearly as quickly as the unemployment rate leads us to believe.