Oakland County’s growth favors high-wage jobs

May 5, 2016
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Seal of Oakland County, Michigan via WikipediaANN ARBOR—Oakland County boosted jobs by nearly 94,500 in the past five years and more than four in 10 of those were in high-wage industries, say University of Michigan economists.

The county is now in its seventh year of economic recovery since the recession’s low point in 2009. The county’s job growth over that period of 15.2 percent greatly outpaced both the nation’s at 8 percent and the state’s at 9.6 percent.

Job growth for the next three years is forecast to average 2 percent each year or an increase of more than 44,000 jobs from 2015 to 2018.

In their annual forecast of the Oakland County economy, George Fulton and colleague Don Grimes of the U-M Institute for Research on Labor, Employment, and the Economy predict that the county will add about 14,000 jobs this year, more than 14,500 next year and more than 15,500 in 2018.

Oakland’s unemployment rate of 4.9 percent last year finally fell below the U.S. mark of 5.3 percent, and is forecast to drop to 4.2 percent this year, to 3.7 percent in 2017 and to 3.3 percent in 2018.

“This is a promising profile for Oakland County moving forward, with the growing presence of the county in the technological evolution of the motor vehicle, and with the county’s continuing focus on professional services that are becoming increasingly integral to the New Economy,” Fulton said.

According to Fulton and Grimes, high-wage industries (average annual wages of $75,000 or more) will account for 35 percent of the gains (15,410 jobs) in Oakland County over the next three years.

Job growth in high-wage industries will include testing labs, merchant wholesalers in durable goods, engineering services, management and technical consulting services, and computer systems design and related services.

“Job growth in professional services over the forecast period is concentrated in testing laboratories and engineering services,” Fulton said. “Along with company management, which adds 828 jobs over the next three years, these industries form the core of the white-collar auto industry.

“By 2018, these three industries will account for nearly 8.7 percent of all employment in Oakland, compared with about 7.1 percent in 2000 and only 3.4 percent in 1990—a pattern that is a mirror image of the long-term decline in employment in the blue-collar auto industry.”

Motor vehicle manufacturing, which led the early stages of the economic recovery in 2011 and 2012 before slowing, will see a small rise in job growth over the next three years. Auto factory jobs will account for just 2.7 percent of jobs in Oakland County by 2018.

“While factory jobs in the auto industry are no longer leading the recovery, its white-collar component will continue to expand at much above average rates,” Grimes said.

As the recovery in manufacturing moves into its more mature stages, job growth in the industry, overall, remains relatively flat over the forecast horizon. However, several industries in the professional and business services sector continue to have a prominent presence in the forecast period, including three of the top 10 in the job gain rankings.

In addition to professional services, other areas that are expected to see large job gains include health care and social services, wholesale trade in durable goods, motor vehicle parts and dealers, full-service restaurants and specialty trade contractors.

Overall, Oakland County remains among the best local economies in the nation, ranking 9th among 38 U.S. counties of comparable size on a series of measures that indicate future economic prosperity.

“Oakland is especially noteworthy for its median family income adjusted for the cost of living, where it ranks 5th, and for its share of residents employed in professional and managerial occupations, where it ranks 6th,” Grimes said. “Whether we assess Oakland County with respect to how it is positioned in key economic fundamentals across all regions of the United States, or more restrictively here among many of the elite local economies, it is hard not to see the county thriving as time goes on.”

The 31st annual U-M forecast of Oakland County’s economy was sponsored by 12 regional organizations. Its presentation was hosted by the county’s Department of Economic Development & Community Affairs, Chase and Oakland Community College.