Michigan: Epicenter of Unemployment

The state with the nation's highest unemployment rate dreams of diversifying as automaking jobs vanish

by David Kiley

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The line forming at the former high school in Southgate, Mich., on a recent Thursday morning stretches some 150 feet outside the front door. The parking lot had filled up early, and now people are cantering up Northline Road from parking spaces they scrounged on side streets and the Sam's Club up the street. With the rush and anticipation of the crowd, you might think that tickets to a Bruce Springsteen concert are going on sale. But this is serious business. Another job fair has come to the beleaguered suburbs of Detroit.

Michigan, once the center of America's industrial heartland, now holds a more dubious distinction: It leads the U.S. in joblessness. The state's unemployment rate hit 8.5% in May. That's up 2 percentage points from April, and compares with a figure of 5.5% for the whole U.S. in May.

There's little mystery as to the cause. Detroit's bet on big trucks and sport-utility vehicles has turned snake-eyes. With each tick of the gas price above $4 comes another announcement that General Motors (GM), Ford Motor (F), or Chrysler are cutting back production (BusinessWeek.com, 6/3/08) of big pickup trucks and SUVs, or closing a factory. Overall U.S. vehicle sales are expected to drop below 15 million this year. Three years ago, the industry sold 17 million cars and trucks.

Numbers Don't Tell the Whole Story

But bad as those unemployment figures look, the reality is actually worse. The official number is arrived at by surveying households and learning how many family members are unemployed but seeking work. So it does not reflect those who have given up finding a job, or those who are not yet looking but soon will be. That second category covers thousands of auto workers who are accepting buyout checks to drop off the payrolls of the companies that make autos or auto parts.

Some are starting their own businesses or retiring; many, though, will be looking for work again in coming months. "It is worse than the numbers tell," says Jim Perry, executive director of Downriver Community Conference, which put on the job fair in Southgate.

Go to a job fair in Michigan and you'll find you are surrounded by people who fit all categories of joblessness, official and otherwise. At this one, more than 1,000 people fill lines that snake through tables hosted by more than 50 employers, ranging from Arby's to the FBI. What the job seekers have in common is they're all looking for a crack in what otherwise looks like a solid concrete wall.

Gregory Boyd, 50, a computer programmer and IT specialist, saw his job at Ford outsourced to India three years ago. Then, he caught a break with a job at DTE Energy, Michigan's biggest electric and gas utility. But that was eliminated last fall. He has been limping along with some freelance projects since then, but needs something permanent.

"I've been close a few times, but the competition is fierce," says the former marine and veteran of Desert Storm. Boyd is single and could leave Michigan if it gets bad enough. But he wants to stay. He was born in Saginaw and now lives in the town of Trenton, 22 miles south of Detroit, and his extended family is in Michigan. "It would seem like giving up to leave," he says.