Detroit is besieged with high levels of unemployment, the most home foreclosures in the country, and rising crime, all of which are related. The outlook does not look good if you live in Detroit, and if you were to go by the majority of news reports, you would probably follow countless others in leaving not only the city, but also the state of Michigan. In fact, Michigan is one of only two states which declined in population during 2007 (the other is Rhode Island). Many students are planning to leave Michigan for greener pastures once they graduate, following the example of graduates who have already done just that. According to the Census Bureau, approximately half the communities in metropolitan Detroit have declined in population since 2000.
Between June 2007 and June 2008, unemployment in the Detroit-Warren-Livonia metropolitan area increased by 20.7%. This is an increase in the overall employment rate of 1.7%, from 8% in June ‘07 to 9.7% in June ‘08. This figure doesn't really convey the stress on the employment market and job seekers. In March 2008, Detroit's unemployment rate was 14.7%. This was largely the result of job losses, and many of these people were not able to be reemployed in Detroit, which was the only state to record a net loss of jobs last year.
It is important to realize, however, that labor force statistics do not really give a reliable view of the state of employment. They only include the employed and unemployed who are actively seeking employment. The unemployment rate does not take into account people who are under-employed (working far fewer hours than they actually need or want). It also doesn't include people who have tried to find work and given up in discouragement.
To add insult to injury, General Motors has just announced a massive restructuring in order to survive the downturn in their sales. They plan to cut costs by $10 billion, suspend their common stock, and sell up to $4 billion in assets. This is going to cost more jobs, many of which will be white collar jobs. Chrysler and Ford are also planning significant job cuts.
When combined with the sub-prime mortgage crisis which has left Detroit with the dubious honor of having the highest home foreclosure rate in the nation, these job cuts feel like another nail in the coffin for many people who are wondering what their future holds. According to Forbes.com, Detroit has been awarded first place in their inaugural list of America's Most Miserable Cities based on a combined score derived from the unemployment rate, personal tax rates, commute times, crime, weather, and immediate environmental impacts.
So, with so much against it, does Detroit have any bright spots when it comes to employment? Is there hope for those who stay? The only industry super-sector that added more than a thousand new jobs between March 2007 and March 2008 is education and health services. Over the past year, 6,600 new jobs in this sector have become available.
Professional and business services jobs declined by 7,000 between March 2007 and March 2008, followed by a loss of 3,600 government jobs in the same period. IT has been affected by the downturn in manufacturing and construction, but only in some areas. During the same period it lost 800 jobs overall; however, there has been a steady growth in web development jobs, followed by ERP contractors. Much of the job loss was related to Automotive CAD roles.
Ann Arbor sports a much lower unemployment rate of 5%, probably due to the presence of the university and related scientific businesses. This would suggest that science graduates, particularly in environmental and life sciences, have good employment potential. Biotech and aerospace industries seem to be potentially strong employers.
Because Detroit has been so heavily reliant on manufacturing, a much higher proportion of its population has not trained for the new economy. The nature of employment has changed globally. Those who are training in “green” sciences, education, health, law, international studies, and accounting are still in a good position to be employed in Detroit. However, it is increasingly important to maintain a competitive edge.
The people who will be most affected by job losses in Detroit are skilled and unskilled workers involved in manufacturing processes as well as professionals who have specialized in skills used primarily in those processes. Those employed by businesses that provide support to these industries will also be affected. These individuals will need to retrain to another industry, since the automotive industry is downsizing nationally. Changing states will not increase the chances of employment in the automotive or automotive parts industry.
There are still tough times ahead in Detroit, but training and education in certain areas of employment will make the job search process easier and more successful.
