Despite the office being closed physically, Oakland County Michigan Works! staff have stayed busy with programs and assistance to help workers affected by the COVID-19 pandemic.

Despite the office being closed physically, Oakland County Michigan Works! staff have stayed busy with programs and assistance to help workers affected by the COVID-19 pandemic.

Photo by Deb Jacques


Economists say Oakland County primed for economic recovery from COVID-19

By: Jonathan Shead | C&G Newspapers | Published October 6, 2020

 Career Advisor Heather McKenzie sits at her desk at the Troy office of Oakland County Michigan Works!

Career Advisor Heather McKenzie sits at her desk at the Troy office of Oakland County Michigan Works!

Photo by Deb Jacques

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OAKLAND COUNTY — At the epicenter of Michigan’s first wave of COVID-19 in southeast Michigan in March, Oakland County’s economy took hit after hit.

A staggering 50% of small businesses shuttered temporarily during the pandemic’s first two months, at one point recovering to only 11.6% shuttered in early July before plateauing to around 25% closed as of August. Unemployment numbers spiked up to 19.5% in April and 19.3% in May, but have since stayed around 9.1% to date, a stark comparison to the 3.4% the county saw in 2019.

Job losses in the county’s second quarter roughly equated to the total number of jobs the county lost throughout the 2000s, breaking a 10-year streak of job growth for the county in the years prior. Heralded as Michigan’s largest gross domestic product GDP provider, the county is expected to see a 4.4% decline in real GDP from the end of this year to the end of last.

With all those impacts and figures in mind, however, economists still believe Oakland County is primed for a slow but strong recovery from the devastation caused by the COVID-19 pandemic. On Sept. 19, University of Michigan economists Gabriel Ehrlich and Donald Grimes released the 2020-2022 economic outlook report for the county.

“We expect a full economic recovery in Oakland County to take multiple years because of the depth of the initial recession,” said Ehrlich, the director of the U-M Research Seminar on Quantitative Economics. “Thanks to Oakland County’s strong economic fundamentals, however, we expect it to enjoy a faster recovery than the state of Michigan overall.”

Oakland County Executive David Coulter said the county has taken an aggressive stance on the “two-front war” of fighting against the public health crisis and trying to maintain economic prosperity, acknowledging that the latter can’t come before the former.

“You can’t reopen businesses to where they need to be with the pandemic raging,” he said, adding that he fears that another spike in positive tests during the colder months could put the county right back where they began in March. “While we’ve been able to reopen businesses in a new way, it becomes that much more important from an economic perspective that we do it safely. … The pandemic will, unfortunately, dictate what we can do economically going forward.”

The forecast does show Oakland County returning close to pre-pandemic figures in some regards, but the economists have forecasted that the county’s economic recovery may not kick into high gear until a vaccine becomes widely available, which they anticipate will be mid-2021. Pre-pandemic levels may not be seen until quarter four of 2022, the report states.

“This isn’t a sprint. This is going to be more of a marathon to get through this to where we’ve recovered to pre-pandemic levels,” Coulter said.

Oakland County Commissioner Michael Spisz, who serves as the Republican vice chair of the Pandemic Response and Economic Recovery Committee, agrees with 95% of the findings, but he believes the county’s recovery may be slower than what’s predicted.

“Until we can open up fully, it’s going to continue to affect the recovery plan that has been forecasted, and that we see,” Spisz said, adding that safety is still his No. 1 priority. “As long as you put in place social distancing and wearing masks, I think you can open many of these businesses out there that continue to be shuttered.

“Even if you open up at a lower capacity, and then increase capacity as we go on … I think that’s a better avenue from a business and economic perspective.”

Spisz believes a vaccine will make people more comfortable but doesn’t think it’s the end-all solution. “The vaccine is not going to eliminate the virus, so we as a society are going to have to continue to manage, understand and heal with this virus,” he said.

Despite the uncertainty looming over the next four-six months before a possible vaccine is widely accessible to the public, Coulter said he’s stayed optimistic, given the strides the county has made and the support they’ve been able to give out through CARES Act funding.

Coulter described the funding as “lifesaving,” stating the county wouldn’t have seen the economic recovery it has had thus far without those federal dollars. Of the $219 million received, the county allocated funds to support small businesses, manufacturers, service-industry retailers, municipalities, public and charter schools, nonprofit organizations, museums and cultural institutions, and rent, mortgage and utility assistance programs. Oakland County also received $12 million in state aid, bringing the county’s total to $231 million.

Coulter said at a Sept. 21 virtual presentation of the economic outlook information that all $231 million has been allocated. The county also provided 15,000 COVID-19 safety kits countywide.

With lower-wage service industry jobs hit hardest by the pandemic — the report states the industry saw a 15% decline this year, though the economists acknowledge some losses may come from a rise in internet shopping rather than the pandemic — Coulter said he’s grown ever more focused on supporting that sector of the county’s economy moving forward.

“It’s always great to land an Amazon or a major global headquarter, and we’ll continue to try to pursue those kinds of projects, but we’ve also been talking about how we need to be more proactive in all levels of economic activity,” he said. “Those numbers reinforced for me the importance of looking at those (lower-wage) sectors of our economy and making sure we don’t take our eye off the ball in that sector at the expense of the larger business attractions that have historically been a large focus in Oakland County.”

Coulter said a more acute focus on small businesses and entrepreneurial ventures will be implemented as part of a forthcoming economic development strategy the county plans to unveil next month.

One consequence, Grimes said Sept. 21, from the hit to lower-wage jobs could be exacerbated inequality issues, as many workers, primarily younger, in the sector have less educational attainment and are just entering the workforce.

“The recovery is doing really well. We’re above trend, but over the longer term, we’re going to have to be cognizant of the fact that it’s not equally distributed,” Grimes said.

The economists’ forecast 2020 to close out with a 9.1% decrease in overall jobs in the county, but they predict the county will recover most of those jobs and sit only 2% lower in available jobs by 2022 than it had available in 2019. High-wage and blue collar jobs won’t see declines as steep as lower-wage jobs have seen and will see, the report states.

If the economists’ forecast is right, Oakland County is primed for a relatively expedient recovery of its job market; however, economists don’t expect the county’s unemployment numbers to bounce back as quickly. Sitting at roughly 9.1% as of the report’s release date, the forecast predicts unemployment numbers to be 7.2% in 2021 and 6.0% in 2022.

One factor Coulter said will be important for the county and the state is returning the county’s GDP output back to pre-pandemic levels.

“We have been Michigan’s economic engine from a GDP perspective for a long time, and it’s so important for Michigan’s economy that Oakland County gets back on its feet.”

With the current CARES Act funding set to expire at the end of the year, a second round of federal- and state-level funding would help the county’s GDP get back on track and benefit the whole of its economic recovery.

“If we all acknowledge we’re going to be dealing with this through next year, I think another round of funding is going to be critical, and I hope Congress can get it done.”

Even without a second round of funding, Coulter believes the county is going to be OK. The best indicator of that, he said, is property values, which the county and its local municipalities rely on for revenue. While property values fell drastically, causing great loss during the Great Recession, Coulter said the comparison of that to this pandemic isn’t apples to apples. Economists are forecasting positive growth in property values despite the pandemic, he said.

Still, Coulter said he’s watching those values closely, as they could become “the wild card” for the county once eviction moratoriums expire and lenders reduce their leniency.

“We’ll keep looking at the property values, business activity, GDP, unemployment and the like, and make modifications as we go, but overall, I think we’re in as good a position as we can be given the incredibly devastating pandemic that started right here in southeast Michigan,” Coulter said. “The way we respond to this pandemic can make a difference for us economically.”

For more information, visit oakgov.com/economicoutlook.

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