Washtenaw County is expected to add more than 12,500 jobs over the next three years, building on four consecutive years of steady job gains in the area.
That’s a key message from a 2014-2016 economic forecast conducted by University of Michigan economists George Fulton and Donald Grimes for The Ann Arbor News.
The jobs forecast is upbeat for the area; it shows Washtenaw County is in the midst of a seven-year economic rebound that will result in 31,147 job additions from the bottom of the downturn in 2009 through 2016.
By early 2013, the county surpassed its previous peak level of employment that was achieved in 2002, fueled by job gains in the professional and business services sector, health care and higher education.
“I think, what makes that particularly noteworthy, is in the state and many of its constituent localities, they’re not even close to getting back all of the jobs being recovered, and (Washtenaw County has) and we’re gaining on top of that,” Fulton said in an interview.
Still, not everyone in the region is feeling the recovery, and the eastern part of Washtenaw County was hit much harder by the recession than Ann Arbor. The median wage in the county also declined by $599 per year from 2005 to 2012.
The employment-to-population ratio in Ypsilanti fell from 69.9 percent in 2005-2007, to 63 percent in 2010-2012, according to data from the U.S. Census Bureau. Ann Arbor’s employment-to-population ratio remained steady at 75 percent during those time periods.
“Geographically, economic performance is much weaker in the eastern part of the county, particularly in the city of Ypsilanti and Ypsilanti Township,” Fulton said. “There is a much lower employment-to-population ratio that spiraled downward during the recession in those areas. There’s much lower and sinking family income, and there are much higher poverty rates.”
Fulton and Grimes have been forecasting local job growth since 1986, with an annual average error of 0.6 percent. Their 2013 forecast was accurate, with the projected job growth of 1.9 percent matching the actual outcome.
The county is expected to add 3,474 jobs in 2014, 4,247 jobs in 2015 and 4,864 jobs in 2016. That follows four years of job losses from 2006 through 2009, and four years of job gains from 2010 through 2013.
New jobs will be added across most major sectors in the county, reflecting a broad-based recovery.
Grimes called Washtenaw County’s economic resilience “remarkable,” given some significant setbacks to local employment that have occurred. For instance, Pfizer’s closure in 2007 and the loss of Borders in 2011 resulted in thousands of layoffs in the region.
“We’ve endured some really bad events,” he said.
But as employment declined in certain industries over the past two decades — the region shed 78 percent of its automotive-related workforce from 1990 to 2009 — jobs were added in other sectors, such as state government. That sector includes the University of Michigan and its health system.
The forecast predicts Washtenaw County’s unemployment rate will fall from 5.8 percent in 2013 to 5.7 percent in 2014 and 5.1 percent in 2015. By 2016, the unemployment rate is expected to drop to 4.4 percent.
The region’s forecasted unemployment rate remains high compared to the 3.6 percent the county averaged between 1990 and 2007.
“One disappointment is that the unemployment rate is not lower still,” the forecast says.
The “New Economy”
The distribution of employment in Washtenaw County has shifted dramatically since 1990.
The manufacturing sector went from having 19.7 percent of all jobs in the county in 1990, compared with 7.6 percent in 2013. That sector is expected to add 821 jobs through 2016.
“What we’re seeing is a shift from a very predominately manufacturing focused economy in the Ann Arbor region to one that, right now, is equal in terms of manufacturing and professional technical jobs,” said Paul Krutko, CEO of economic development group Ann Arbor SPARK.
“We are diversifying our economy so that we are more resilient. If there’s a downturn in one area of the economy, it doesn’t cause the entire economy to turn in a negative direction,” he added.
In 2013, there were 197,371 jobs in Washtenaw County. About 63 percent of jobs were in the private sector, while about 37 percent of positions were government jobs.
The forecast predicts there will be 12,585 jobs added through 2016, with 9,495 in the private sector and 3,090 in the government sector.
The top job producers over the next three years are higher education; private education and health services; and professional, scientific and technical services.
“All of these sectors are central players in the New Economy,” the forecast says.
The three private service-providing industries that lead job growth through 2016 are: Professional and business services; private education and health services; and trade, transportation and utilities.
The professional and business services sector, which includes most of the region’s technology companies and consulting firms, is expected to add 2,535 jobs through 2016, fueled by rapid growth at smaller companies.
One of those companies, Ann Arbor tech startup Nutshell,recently expanded to a new office in downtown Ann Arbor to support its growth. CEO Guy Suter said Nutshell, along with his other startup Lift Me, are looking to collectively fill six positions.
“We are successfully finding workers, but it’s not quite keeping up with our own individual demand,” he said. “I expect that to continue. Just from the business side, I know for a lot of established businesses, revenues are picking up so they are investing and growing their teams.”
Technology companies such as PRIME Research and Barracuda Networks have hired additional employees over the past several years, tied to expansions in downtown Ann Arbor.
Domino’s Pizza, one of the county’s largest employers with 550 workers at the Ann Arbor Township-based headquarters, is hiring to support the company’s store count growth.
“We’re trying to grow, grow, grow,” said Sherri Enright, who leads Domino’s Pizza’s human resource department.
Enright said the company is heavily investing in its technology department, which accounts for about half of the workforce at the headquarters.
“We have very exciting, high-tech kind of Silicon Valley jobs here in Ann Arbor. With over 40 percent of our sales in the digital arena, we need that workforce to support that,” she said.
The private education and health services sector lost 127 jobs in 2013, the first decline in the industry since 1998. The losses were concentrated in the health services component, which can be traced to private hospitals, emergency relief and vocational rehabilitation services, the forecast says. That sector is forecasted to gain 1,953 jobs through 2016.
The county’s local government sector, which includes public K-12 education and Washtenaw Community College, loses jobs each year from 2010 to 2015, before starting to grow again in 2016.
Washtenaw County’s state government sector, which includes Eastern Michigan University, the University of Michigan and U-M’s health system, has added jobs every year since 2001. The forecast predicts the sector will grow by an average of 1.8 percent per year.
U-M and the university’s health system lead the way as Washtenaw County’s largest employers with a combined workforce of 38,191, according to numbers from Ann Arbor SPARK.
“One lesson that struck me is how very important the University of Michigan and its health system is to the prosperity of Ann Arbor,” Grimes said.
Kara Gavin, a spokeswoman for the U-M Health System, said there are job openings in various nursing departments and there will be a career fair Sunday to fill those positions.
Housing market’s effect
Washtenaw County’s improving housing market is directly related to its economic recovery.
Home sale prices were up 18 percent in 2013, and all 25 municipalities in Washtenaw County experienced gains inaverage home values this year for the first time since before the recession.
The county is also seeing a rebound in new home construction after years of stagnation. A 176-home subdivision is proposed on West Liberty Road in Scio Township, a 323-home subdivision is proposed on Staebler Road between Jackson and Park roads in Scio Township, and a 154-home subdivision isproposed on Ann Arbor’s Pontiac Trail.
According to data from the Southeast Michigan Council of Governments, builders pulled 461 single-family building permits in Washtenaw County last year, compared with 315 in 2012 and 158 in 2009.
Grimes said the housing market’s recovery impacts the county’s economic outlook in a variety of ways; a strong real estate market boosts jobs in the construction industry, the finance sector, the retail industry and the manufacturing sector.
“In many ways, residential construction helps the overall economy,” Grimes said.
Fulton added: “There are a lot of local supplier industries that are going to benefit from it.”
The forecast predicts the construction industry in Washtenaw County will grow by 11.4 percent, or 365 jobs, through 2016, largely due to a revival in residential construction.
“Local builders have struggled through a long dry spell, but business appears to be looking up for them,” the forecast says.
Howard Hanna’s Nick Lacy, also the president of the Ann Arbor Area Board of Realtors, said Ann Arbor area buyers are starting to turn to new construction due to a shortage of homes for sale in the area.
Not everyone’s recovery
To be sure, not everyone in Washtenaw County is feeling the economic recovery.
Fulton said the gap is widening in terms of unemployment and wages between people who have only a high school diploma, and those who have a bachelor’s degree or more.
“Not only is it widening, it’s widening rapidly,” he said.
The employment-to-population ratio for people who have only a high school diploma has declined at a rate of 0.9 percent per year since 2005. Meanwhile, the employment-to-population ratio for those with a bachelor’s degree or more has increased by 0.3 percent per year since 2005.
“Job growth is occurring in industries and occupations…that require more educational attainment to fill those jobs — nurses, doctors, computer programmers. Generally, those people have much higher levels of education,” Grimes said.
Eastern Michigan University sophomore Taylor Wilson said she is struggling to find a part-time job in Washtenaw County in the retail or food industry. She has been combing online websites to find open positions, but hasn’t managed to land a job yet.
“It’s very frustrating and stressful, because you fill out applications and literally take tests, answer questions and essays, and some people don’t even call you back or you have to keep calling them…and if you do get a job, it’s probably not your ideal job,” she said.
She added: “I need to pay my bills.”
Fulton and Grimes noted that in some cases, people with a bachelor’s degree or more are displacing workers with less education.
Krutko said one of the goals of Ann Arbor SPARK is to help people get the skills they need to fill the open jobs in the county.
“The jobs we bring back aren’t going to have the same skills,” he said. “There are going to be different jobs that require higher levels of skills. That’s why it needs to be really tied to what we’re doing with education and retraining.”
