You know Michigan’s economic situation has to be fairly grim when Comerica’s chief economist begins his monthly newsletter with these words: “Don’t give up hope.“
In fact, Dana Johnson is more optimistic than many other observers. He thinks that Michigan has, “the clear potential to begin a gradual and sustained recovery,” possibly starting late next year.
Till then, however, he acknowledges that things may well get worse rather than better, as more auto jobs vanish. As Johnson says, “by the time that the buyouts are fully in place next spring, jobs, incomes and spending will have taken another big hit.”
He thinks, however, that we’ll start to be all right in the long run if three things happen. First, the national economy has to keep growing. Next, the United Auto Workers and the domestic car companies need labor peace. That means negotiating a new contract next year with a minimum of discord and no strikes.
Third, what he calls the “relentless slide in the market share of American-made cars needs to slow,“ which would presumably prevent, or at least delay, any more auto layoffs.
That last condition may be a tall order, given decades-long trends. Ford already has acknowledged that it will lose market share.
Most economists I’ve talked to expect that General Motors and Chrysler will also have a smaller share of total vehicle sales ten years from now though that decline will possibly happen more slowly .
Right now there doesn’t seem to be too much we can do about that, except hope that our domestic automakers find the magic formula that will enable them to become newly competitive.
But there are some decisions we need to make as a state. First of all, we need to do everything we can to create fertile soil for new business and industry. We especially need high-tech manufacturing and white-collar, service and intellectual property jobs, such as those Google is bringing to Ann Arbor over the next few years.
That means investing in education, especially higher education, and infrastructure. Lousy roads do not attract new residents.
We also need to think about all the thousands of Ford and GM workers who are taking the buyouts, or whose jobs are being permanently eliminated.
What happens to them?
Many of them are still relatively young and very much still need to work. If you are forty and have kids in school, even the maximum buyout settlement of $140,000 won’t last very long.
Thousands of these folks live in Michigan. Nobody is talking about what we can do for them. Many are going to end up having a hard time. Others, probably the best and the brightest, will leave the state for places like North Carolina.
We can accept that, and accept further declines in Michigan’s relative population and political clout in Congress. Or we can try to do something. Let’s hope for open minds, and some creative ideas.
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