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Michigan’s Lower Unemployment Rate Masks Deeper Issues

State has highest rate in the Midwest for working families living in poverty, according to a report by the Michigan League for Human Services.

Michigan’s unemployment rate has dropped dramatically since it hit 14.2 percent in August 2009 and the state is no longer No. 1 in unemployment, but the lower rate masks serious problems with employment in Michigan, a Labor Day report concludes.

In fact, Michigan has more “lost workers,’’ than unemployed workers. Lost workers are those who have left the workforce and are not counted in the employment statistics as either unemployed or employed. In addition, Michigan has the biggest share in the Midwest of working families who live in poverty, despite holding down jobs.

The Labor Day Report, “Michigan Falling Unemployment Rate Masks Serious Concerns,’’ was released by the Michigan League for Human Services on Friday.

“Thankfully we no longer are known as the state with the highest unemployment in the country, but that doesn’t mean our workers are all doing well,’’ said Gilda Z. Jacobs, president & CEO of the Michigan League for Human Services. “It’s still important that we address policies that will give workers a career ladder and the ability to cover their basic needs.’’

Michigan has a shrinking labor force with 4.66 million workers, down from 5.12 million in January 2001. Slightly more than 60 percent of the state’s adults were in the labor force in 2011, the lowest on record, dropping from nearly 69 percent in 2000, the highest on record.

Of Michigan’s working families, one in every 10 was living in poverty in 2011, the highest percent in the Midwest. Poverty is about $18,000 a year or less for a family of three and $23,000 a year or less for a family of four.

Washtenaw County has seen a 3 percent drop in its labor force since 2001. According to the report, there were 190,582 employees in 2001, and 184,659 in July 2012. The city of Ann Arbor has lost about 1,800 jobs since 2001.

Other findings:

  • More than one in every four of Michigan’s workers are in low-wage jobs (earning $10.39 per hour or less) – the highest share in the Midwest except for Illinois.
  • Michigan’s employment-to-population ratio is at its lowest since 1982, the state’s worst recession.
  • Black workers suffered the most over the decade with 60 percent of black adults working in 2000, falling to just 42 percent in 2011.
  • Of the seven occupations in the state with the highest number of workers, five have a median wage that will not lift a family of four out of poverty, while three will just barely keep a family of three out of poverty.
  • Michigan men earn $3.84 an hour more than Michigan women, the biggest gap in the Midwest except for Indiana.

“This report reinforces the fact that education makes a difference in the lives of workers. A worker with an associate degree earns $3 more an hour on average than someone with only a high school diploma,’’ Jacobs said.

About 37 percent of working age adults holds an associate degree or higher, though there are stark disparities based on race. Only 22 percent of Hispanic workers and 23 percent of black workers have an associate degree or higher, compared with 39 percent of white workers.

The report calls for Michigan policymakers to:

  • Invest in reducing barriers to child care and transportation.
  • Encourage or mandate employers to offer time off for family leave.
  • Seek ways to reduce time spent on developmental education for adult learners.
  • Facilitate participation in regional partnerships serving adult learners.
  • Reduce barriers for ex-offenders to build skills.
  • Restore the state Earned Income Tax Credit to 20 percent of the federal credit to offset taxes paid by working families.

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