Economic and Demographic Outlook for Michigan and Its Counties to 2035 June 12, 2008 George A....
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Transcript of Economic and Demographic Outlook for Michigan and Its Counties to 2035 June 12, 2008 George A....
Economic and Demographic Outlook
for Michigan and Its Counties to 2035
June 12, 2008
George A. Fulton
Institute of Labor and Industrial RelationsUniversity of Michigan
Grand Valley Metropolitan CouncilAnnual Growing Communities Conference
Background on the Forecasts
• The REMI economic and demographic forecasting and simulation model
• The forecasting expertise of the U-M economists
• Comments and insights of a number of local MPOs and regional planning organizations
The forecast is in partnership with MDOT and is theproduct of:
Included are demographic and economic forecasts for:●
County results can be added to form any region.●
1. Every county in Michigan
2. The state as a whole (a summation of the county results)
Long-term forecasts are intended to identify economictrends
●
— NOT to predict business cycle movements
Forecasts are unable to capture major one-time events●
— unless there is prior knowledge of the event and external information is directly introduced into the forecast
— e.g., Google and Pfizer in Washtenaw County
General Observations on theState and County Forecasts for 2005 –2035
• Some counties have special circumstances that cause them to deviate from the general trends—for example, a county with a large college-age population.
General Observations on theState and County Forecasts for 2005 –2035
• The long-term outlook for regions is governed by:
1. Prospects at the national level
2. Trends in productivity growth
3. The mix of industries within regions (e.g., growing service sector, declining goods-producing sector)
4. Demographic trends
Fundamental Drivers in Michigan’sLong-term Outlook
1. The consequences of profound changes in the auto industry
2. The level of investment in other activities that show promise for future growth and prosperity, and for which the region has supporting assets
3. The impact of the aging of the “baby-boomer” generation, and the migration patterns of the younger and well-educated populace
8
9
10
11
12
50%
55%
60%
65%
70%
75%
Salesin millionsof units
Marketshare
’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07
Detroit Three: Sales of Light Vehiclesand Market Share of Total Sales
United States, 1991–2007
50.4
72.6Market share Sales
Employment Location Quotients by IndustryMichigan, 2006
Location QuotientIndustry
Automobile, light truck, and partsmanufacturing
7.15
Detroit Three vehicle and partsmanufacturing (end of 2005)
12.29
Manufacturing except autos and parts 1.05
Private nonmanufacturing 0.95
GFGP RevenueFiscal 1995 – 2009
0
2
4
6
8
10
12
’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09
1995 $Current $
’96 ’98 ’00 ’02 ’04 ’06 ’08
Billions $
Forecasts of Population for Michigan
9.6
9.8
10.0
10.2
10.4
10.6
10.8
11.0
11.2
’00 ’05 ’10 ’15 ’20 ’25 ’30 ’35
Millions
Actual
Michigan Population, 2000 – 2035
Long-term forecast
Short-term forecast
per+ 0.23%
yearper
– 0.10%
yearper
+ 0.35%
year
*
2014 exceeds 2005population level
– 600
– 400
– 200
0
200
400
600
800
1000
=+ + =+ +
2000 – 2005 2005 – 2010 2010 – 2035
Components of Population Changein Michigan
Net domestic migration
Net international migration
Natural change in population
Total change in population
Thousands
=+ +
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 to 24 25 to 44 45 to 64 65 plus
Population Distribution by Age GroupMichigan, 2005 and 2035
34.6
29.327.5
24.2 25.523.1
2005 2035
0%
5%
10%
15%
20%
25%
30%
35%
40%
0 to 24 25 to 44 45 to 64 65 plus
Population Distribution by Age GroupMichigan, 2005 and 2035
12.4
23.4
2005 2035
Forecasts of Employment for Michigan
5.305.355.405.455.505.555.605.655.705.755.80 Actual Long-term forecast
’00 ’05 ’10 ’15 ’20 ’25 ’30 ’35
Millions
Total Employment in Michigan, 2000 – 2035(BEA definition—includes self-employed, farm, military)
Short-term forecast
per– 0.40%
year
5.85
per– 0.24%
yearper
+ 0.26%
year
*2022 exceeds 2000employment level
Total Employment in Michigan
5,629,498
2000 2005 2010 2035
2000 –2005 2005 –2010 2010 –2035
5,812,239
+ 359,168
Change
5,453,071
– 65,876
– 13,175 + 14,367
5,518,947
– 110,551
– 22,110Avg. per year
Total change
Total Employment in Michigan
1985 –2010 2010 –2035
6.6%28.1%
25-Year Growth Rate
Industry Employment Forecasts
for Michigan
High-Education Industries% of U.S.
Employmentwith Bachelor’sor More, 2000
Average for all industries 27.2%
Private education services 61.2%
Professional & technical services 58.0%
Management of companies 49.1%
Information 39.1%
Financial activities 36.0%
Government 33.4%
Health care, social assistance 32.7%
Average, all high-education industries
$42,157
30,111
68,828
91,798
54,625
49,693
43,403
39,530
MichiganAverage
Wage2006
48,216
Employment in High-Education Industriesin Michigan
2,222,355
2001 2005 2010 2035
2001–2005 2005 –2010 2010 –2035
2,675,277
+ 310,347
Change
2,364,930
+ 43,482
+ 8,696 + 12,414
2,321,448
+ 99,093
+ 24,773Avg. per year
Total change
High-Education Industries in Michigan
Pvt. education svcs.
Prof. & tech. svcs.
Mgmt. of companies
Information
Financial activities
Government
Health care, social assistance
73,183
366,306
68,848
87,123
375,624
699,496
551,775
2001
High-ed. industries 2,222,355
’01–’05
19,105
– 2,267
– 1,558
– 6,409
48,933
– 12,367
53,656
99,093
3,375
18,195
– 1,361
– 1,342
1,804
– 26,529
49,340
43,482
’05 –’10
15,795
104,913
2,131
– 4,759
24,845
– 15,292
182,714
310,347
’10 –’35
Employment Change
Low-Education Industries
Average for all industries 27.2%
Arts, entertainment, recreation 26.4%Other services (repair, personal, civic) 19.5%
Manufacturing 19.2%Trade, transportation, & utilities 16.4%Administrative services 15.5%Farm, natural resources, mining 13.7%Construction 9.7%Accommodation, food services 8.7%
Average, all low-education industries
% of U.S.Employment
with Bachelor’sor More, 2000
$42,157
37,807
26,135
25,700
58,070
35,638
31,241
29,436
46,561
12,664
MichiganAverage
Wage2006
Employment in Low-Education Industriesin Michigan
3,317,532
2001 2005 2010 2035
2001–2005 2005 –2010 2010 –2035
Change
3,088,140
– 109,359
– 21,872
3,136,962
+ 48,822
+ 1,953
3,197,499
– 120,033
– 30,008Avg. per year
Total change
Low-Education Industries in Michigan
2001 ’01–’05 ’05 –’10 ’10 –’35
Employment Change
Arts, enter., rec.
Other services
Manufacturing
Trade, trans., util.
Admin. services
Farm, nat. res., mining
Construction
Accommodation, food
Low-ed. industries
100,369
285,445
843,743
1,007,145
322,152
104,019
304,276
350,383
3,317,532
6,406
13,638
– 142,839
– 37,912
33,941
– 3,658
– 2,923
13,314
– 120,033
3,066
– 3,283
– 74,382
– 22,158
17,744
– 4,708
– 35,611
9,973
– 109,359
30,952
16,162
– 154,412
– 40,532
107,167
– 23,161
26,725
85,921
48,822
2001–2005 2005 –2010 2010 –2035
– 21,872 + 1,953– 30,008Low-ed. industries
+ 8,696 + 12,414+ 24,773High-ed. industries
Summary:
Employment by Educational CompositionAverage Change per Year
Forecasts of Income and Households
for Michigan
0%
0.2%
0.4%
0.6%
0.8%
1%
1.2%
2001–2005 2005–2010 2010–2035
0.3%
0.8%
1.0%
Total Growth over the Interval
1.3% 4.1% 29.2%
Average Annual Growth inMichigan Per Capita Income (2005 $)
Number of Households in Michigan2005 – 2035
2005–2035% Change
Total population 8.7%
Group quarters 32.3%
Population inhouseholds
8.2%
2005
10,100,833
224,190
9,876,643
2010
10,057,256
227,781
9,829,475
2035
10,982,682
296,548
10,686,134
Households 20.0%
Average household size
3,863,662
2.56 NA
3,981,427
2.47
4,635,109
2.31
Distribution of Michigan Householdsby Size, 2005 and 2035
0%
5%
10%
15%
20%
25%
30%
35%
40%
1 2 3 4 5+
Number of persons in household
2035200526.4
30.433.8
36.0
16.014.1 13.811.3 10.0
8.2
County Population and
Employment Forecasts
Change in Populationby Michigan County
2005–2035
Growth statewide average
Growth < statewide average
Decline
Change in Employmentby Michigan County
2005–2035
Growth statewide average
Growth < statewide average
Decline
Change in Employmentby Michigan County
2005–2035
Growth > twice statewide average
Rest of state
Long-Term Population and EmploymentOutlook for GVMC Counties
30-Year Growth Rate, 2005 – 2035
Population Employment
Allegan
Barry
Ionia
Kent
Montcalm
Ottawa
MICHIGAN
18.9%
11.0%
11.2%
21.6%
12.2%
24.2%
8.7%
12.3%
8.0%
2.2%
14.9%
– 11.7%
11.6%
5.3%
Summary and Conclusions
Employment in natural resources, retail trade, andgovernment will decline over the next 30 years.
●
Growth in both population and employment will bemuch slower in Michigan between 2005 and 2035than during the 1990s.
●
The largest declines, however, will be in manufacturing,especially motor vehicle manufacturing, due to:
●
1. Loss of Detroit Three market share
2. Productivity gains in the auto industry and other manufacturing industries
3. Shift in consumer spending away from goods and toward services, especially as we age
Regions with a large share of employment in thedeclining industries will see little if any job gain overthe next 30 years, and many will see employmentdeclines because of the age structure of the existingpopulation.
●
Regions with a large share of employment in thegrowing industries have the potential for relativelyhealthy employment gains over the next 30 years,but job growth will depend on growth in the working-age population.
●
Employment will increase in finance, professional andbusiness services (which includes temporary andleased workers), private education, health and socialservices, and leisure and hospitality services.
●
The fastest-growing counties in Michigan are clusteredin four geographic areas:
●
The tourist-oriented and retiree-friendly northwesternlower peninsula, particularly the Traverse City area
—
The urban and suburban Grand Rapids area—
The suburban Lansing area—
The area most concentrated in high-educationindustries, comprising the counties of Oakland,Livingston, and Washtenaw counties
—
Although the slowest-growing counties in Michigan arescattered throughout the state, there are three generalareas of greater concentration:
●
The rural areas of the Upper Peninsula—
The area along the shores of Lake Huron—
The strip of counties along the state’s southernborder
—
We are getting much older. By 2035, more than23 percent of Michigan’s residents will be 65 orolder.
●
Compare this with the situation in Florida today.In the state known as “God’s waiting room,”17 percent of the residents are 65 or older.
●
Total population in Michigan increases by 8.7 percent
between 2005 and 2035.
●
Group home population increases by 32.3 percent
over this period as the aging population enters assistedliving facilities, including nursing homes.
●
Average household size is declining because older
residents tend to live in smaller-sized households.
Except as related to age, we have not made any other
assumptions about household size preferences.
●
The population living in households increases by 8.2percent, but the number of households increases by20 percent.
●
Inflation-adjusted incomes will increase over time, butMichigan’s economic position will be determined byits residents’ level of education.
●
Despite sluggish job growth over the forecast period,healthy aggregate productivity growth leads to a risingstandard of living.
●
The knowledge-based economy, and the educated workers who fuel it, are the fulcrum of futureprosperity in Michigan.
●
Michigan and its communities need to invest in programsto provide the education and training essential for theeconomy of the future.
●
Opportunities for Economic Developmentin Michigan
Bill Gates observed that for knowledge-basedenterprises, educational attainment trumps everythingwhen they’re deciding where to invest.
●
Among activities with fewer educational requirements, the hospitality industry shows promise for the future,providing services to visitors as well as to a growingnumber of older people.
●
Support personnel for industries with the most favorablegrowth prospects—health care and professional/technical services—require skills but often notprofessional degrees.
●
Other actions may show promise for the economicwell-being of the state, but none is more compellingthan investing in workforce development.
●
Opportunities for Economic Developmentin Michigan
Short-Term Risks to the Economy
Oil prices●
Credit crisis●
Local housing market●
Long-Term Risks to the Economy
Severe labor shortages●
Not attracting knowledge-based and elder-friendly businesses
●
What Can Local Public and Private Leaders Do?
Short-term risks? ●
Longer-term risks?●
Build strong health care system►
Improve recreational and cultural amenities►
Attract emerging industries►
Increase technological collaboration►
Emphasize education and training►
Almost nothing.
UNIVERSITY OF MICHIGANUNIVERSITY OF MICHIGAN
www.ilir.umich.edu/lmr/