Is Michigan the only state in an economic depression?

Question

Is it possible that the rest of the country is doing pretty well and Michigan is so far into a depression that the health of the national economy can't pull them up? What are the causes and the solutions? Is it Jennifer Granholm's fault or is it just a mess that anyone would have inherited?

Answer 1

Well you can tell who lives here and who doesn't. To those correcting the use of the word "depression", check again. Michigan is in a literal depression, which is characterized by the following:

Like a recession, a depression is characterized by increased unemployment, reduced output and investment, and tightening credit. Price deflation and an increased number of bankruptcies are also manifestations of a depression. What ultimately causes and sustains a depression is subject to debate. Most economists agree that a recession is a normal part of the business cycle, yet the severe downturn (i.e. depression) is abnormal. One theory is that a recession can be exacerbated into a depression by policy errors. Policy errors can either create conditions that set up the economy for a fall in output or simply hinder recovery.


All of these are extremely true of Michigan.

Further, unemployment is not calculated by the number of unemployment claims. It is calculated from the Current Population Survey conducted by the Census Bureau on behalf of the Bureau of Labor Statistics every month. It is calculated by the number of people in the active workforce who are not in a permanent job. Those excluded are the people who have gone back to school or have gotten so fed up with job searching that they've stopped trying. This is all too common in Michigan.

Grand Rapids is doing better than the rest of the state, but it hardly has the healthy economy that surrounding states enjoy. Grand Rapids is probably the most economically diverse region of the state and it benefits from its proximity to Chicago, but it's hardly healthy.

The single greatest indicator of the continued failure of the economy is the continued rise in bankruptcy filings. In my city, which is the home of the second largest chemical company in the world, you can buy a beautiful 5 br/4 bath house for under $150,000 because of the huge number of foreclosures.

Until the jobs return to this state, there is no hope for economic turnaround. It's hardly just the auto workers who caused this, as every sector of the economy has been adversely affected. Even Detroit Edison is chopping another 2000 jobs and they're financially secure.

The sign of how bad things is comes from the State itself. If you're unemployed or on welfare, they'll pay you up to $2000 to move to any other state in the country. That's ominous.


Is it Granholm's "fault"? Maybe, maybe not. But she sure hasn't done anything to help the mess get better. The best she can claim is the creation of 1000 jobs in 5.5 years. Rhode Island can do better than that!

Answer 2

I live in Michigan and there are several factors for this here.
1) Pfizer, the Big 3 (GM, Ford, and Chrysler), Steelcase, and now Delphi are all reducing jobs here.
2) A lot of our manufacturing and other businesses sell to these same companies so when those jobs leave or they use other suppliers those secondary jobs are eliminated.
3) We are not a diverse enough infrastructure here to attract other industries.

I don't believe it's Granholm's fault. Instead, globalization is a huge problem in our state.

Just remember that the unemployment rate here in Michigan is calculated by the percentage of adult citizens currently collecting unemployment, so once you have run out of unemployment compensation, you are no longer "unemployed", or if you went back to work in a part time job (even 1 hour a week) you are employed, so the actual figure is really double the amount on the official tally.

Answer 3

Motor city issues can have a significant on Michigan but I doubt your state is truly in a depression. The correct vernacular should be recession. Gas prices are high and sales on large vehicles are no doubt waning. Hang in there. Economies are cyclical they will come around and yes different areas of the country handle financial hard times differently then Michigan. Some states can be booming while others are facing tougher times. Stay positive and work hard, study hard or at least focus on the positive. Misery loves company and you can get into a pity party funk pretty quick during tough times.

Answer 4

Michigan is in an economic state of flux because the union workers at the auto plants demanded more than the car companies could pay. It has happened in other places, as well. The unions put Eastern Airlines out of business in the early 1990s. They wanted way too much pay for way too little work. This is what they always do. The result is always the same: a company-- or a state-- goes out of business.

Answer 5

Michigan took a really bad hit with all the jobs lost at the auto manufacturers. Michigan is to dependent on the auto manufacturers.

Answer 6

First of all, it isn't the whole state. The Grand Rapids area, for instance, is doing quite well. The unemployment rate is near the national average.

Answer 7

yeah, I think the rest of the country is doing quite well.