©2018 Michigan Economic Development Corporation

Economic Diversification Study Finds Marked Changes

Wednesday, August 25, 1999

Kathleen McMahon
(517) 335-4590

MEDC Commissioned Study Attempts to Assess State's EconomyMichigan workers are more likely to keep their jobs throughout the business cycle, with 25,000 fewer job losses in the next recession, according to a study commissioned by the Michigan Economic Development Corporation. The study, conducted by the Anderson Economic Group, found that Michigan's economy today provides a higher return to Michigan workers, both in income growth and employment growth, with less risk, than at any previous time in the last quarter century. "We wanted to take an objective look at whether Michigan's economy has become significantly more diversified in the last 25 years," said Doug Rothwell, president and CEO of the Michigan Economic Development Corporation. "These results lend credence to the idea that Michigan is becoming more diverse." The study also indicates that changes in Michigan's economy have lessened the likely severity of the next recession. "With the recessions of the 1960's and 70's, Michigan got hit hard, with up to a 4 percent loss in employment," Rothwell said. "This survey shows that if a recession hit today, our losses would be about 20 percent less severe due to diversification. That's 25,000 people insulated from the effects of the next downturn in the business cycle." The study noted several other improvements including:

  • Michigan's manufacturing sector, which accounted for 30 percent of employment 25 years ago, now makes up only about half that share. However, Michigan still has a larger percentage share of manufacturing employment than the U.S. as a whole;
  • Much of the manufacturing decline comes from the automotive industry, but accounts for only a few less workers in absolute numbers, since larger growth has occurred in other industry sectors;
  • Michigan's manufacturing firms represent high-wage, high-skill, and high-output jobs;
  • Michigan's manufacturers are better prepared to compete internationally;
  • The service sector of Michigan's economy has doubled in the last 25 years, from 15 to 30 percent. This sector includes those in the health care industry, accountants, attorneys, engineers, and many other high-skill jobs.