Pre-pandemic prosperity provides optimistic outlook for Oakland County’s recovery

‘We have a great foundation here’

By: Jonathan Shead | C&G Newspapers | Published June 22, 2021

 A map shows the borders between the eight public use microdata areas, or PUMA, regions in Oakland County.

A map shows the borders between the eight public use microdata areas, or PUMA, regions in Oakland County.

Image from Oakland County Economic Outlook 2021-2023 Report

 Report A chart shows a comparison of incomes for lower-, middle- and upper-class residents in Oakland County, versus the state.

Report A chart shows a comparison of incomes for lower-, middle- and upper-class residents in Oakland County, versus the state.

Image from Oakland County Economic Outlook 2021-2023

 A graph shows the incomes for an adjusted average three-person home based on which of the eight regions residents live in.

A graph shows the incomes for an adjusted average three-person home based on which of the eight regions residents live in.

Image from Oakland County Economic Outlook 2021-2023 Report

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OAKLAND COUNTY — Previous economic prosperity may help the county fully recover to pre-pandemic levels, according to an economic outlook report conducted and presented by University of Michigan economists Gabriel Ehrlich and Donald Grimes, among other colleagues.

The 36th annual report for 2021-23 was presented June 9.

“I think that, fortunately, Oakland County’s economy has proven very resilient, and you see that in terms of the V-shaped recovery we’ve experienced,” Oakland County Executive David Coulter said.

Across the board, in topics ranging from average income, unemployment and employment growth, wages, labor supply, and others, the county remained on par or outperformed the state’s averages. Oakland County continues to have a AAA bond rating and ranks in the top 10 against peer counties with comparable population density across the United States.

Looking at Oakland County from a wide view, one might see the county’s economic standing through rose-tinted glasses, but Ehrlich said the county’s prosperity hasn’t been evenly distributed.

The county’s economic prosperity was broken down by public use metadata areas, or PUMAs, to highlight and help the county better focus its financial resources to those areas so they can rebound as quickly as the county’s more prosperous regions.

“I think there has been a general assumption that if you only look at Oakland County as a whole, we’re doing better than the state, which is great, but that it’s not evenly distributed throughout the county. There are areas that are doing very well, but there are some areas that are struggling,” Coulter said.

 

An uneven divide
Despite there being some advantage to living in Oakland County across the board, Ehrlich said there are some sharp disparities that still exist within the county across geographic boundaries.

The most prosperous region in Oakland County, the central Birmingham and Bloomfield region, has an adjusted household income of around $200,000 per year and sits at almost two times more prosperous than the county’s least prosperous area, the central area outside of the Birmingham and Bloomfield region, which includes Waterford and Pontiac.

Seven of the eight regions in Oakland County sit above the state’s average, with only the central area outside of the Birmingham and Bloomfield region lagging behind.

Disparities aren’t only seen along geographic lines, but also among different ethnic and racial populations as well, Ehrlich explained. There are fewer minority populations living in low-income housing in Oakland County compared to the state, 18% versus 28%, Ehrlich said, but Black and Hispanic people are still more likely to live in low-income housing in Oakland County than people of other races.

Coulter said he hopes to shift the county’s focus to helping those areas recover from the effects of the pandemic.

“We haven’t always thought that way,” he said, as he discussed a $3 million U.S. Department of Commerce grant the county received in April and plans to invest in economically distressed areas.

Ehrlich added that the disparities across geographies and races are longstanding, and they tend to be consistent over time, though that could be changed through legislation, he said. While those disparities largely existed before the pandemic, the county’s recovery for businesses and employers is predicted to show some variance, the economists say, based on industries and wages.

“On one level (the county is) very fortunate and resilient. Our business community has come back and rebounded, but the other thing I also keep my eye on is the recovery has been uneven,” Coulter said, adding that restaurants and retail industries have taken the brunt of the damage.

While unemployment rates have settled from the 19% spike seen in April 2020 and sat around 2.3% for Oakland County and 3.9% for Michigan one year later, the return to business as usual will likely be “skewed toward industries that pay above-average wages,” Grimes said.

Industries like management, finance, wholesale trade, professional and scientific services, construction, and manufacturing are expected to recover exceptionally well, Grimes said, while accommodation and food service, retail, health care, and social service industries likely won’t see as complete of a recovery.

An increased migration to e-commerce and the deferment of elective procedures during the pandemic may be two culprits. The retail industry is predicted to lose 12%-15% of its labor supply as online shopping becomes a permanent fixture in the economy, Grimes said. He expects there will be 1,800 fewer hospital jobs through 2023.

“We expect more than a full recovery in terms of jobs,” Grimes said, adding that the county had recovered roughly 60% of lost jobs by the first quarter of this year, but that recovery will be heavily reliant on employers’ ability to find available workers.

It may take a decade for the county to get to the level of employment growth that it’s capable of, Grimes predicted.

Coulter called Grimes’ prediction “sobering,” and he believes that retaining young graduates in the county will be important in that effort. “Growing our population and growing our workforce is going to be even more important moving forward,” he said.

Implementing strategies that focus on lower-education workers, such as women who left their jobs due to child care needs, will be important to fostering a more robust workforce, Oakland County Michigan Works! Director Jennifer Llewellyn said, as will tapping into previously untapped markets and using creative hiring strategies.

One area of concern looking forward is wage stagnation. Regardless of industry, wages have stayed relatively the same the past decade, the report shows. Wages saw a quick increase during the pandemic, as lower-wage jobs were cut from payrolls, Grimes explained, but they are expected to decline back down over the next few years as lower-wage jobs are reintroduced.

“Wages have not kept up wto profits and shareholder value, and I think that contributes to a lot of the economic anxiety people feel. When your wage hasn’t gone up, but we know that prices go up, and the world gets more competitive, it adds a real pressure on all of us, but especially those in the lower-income jobs,” Coulter said.

Coulter hopes the issues can receive more attention in the Legislature. “It’s not just an issue in Oakland County. It’s a state and national issue, but I think it deserves a more robust response so that everybody has an opportunity to participate in the prosperity of this economy,” he said.

 

The road to recovery
The road to economic recovery for Oakland County may require more targeted investments and focused strategies to close the county’s gaps in prosperity, but Coulter believes the resiliency of the county will help see it through to the other side.

The $257 million federal and state funds the county received, including $90 million for small businesses, were critical to the county’s relatively positive position more than a year after the pandemic began, he added.

He hopes other countywide initiatives, like Oakland80 — a program that hopes to help 80% of the county’s population earn a postsecondary degree by 2030 — and a two-to-one match program the county plans to implement to help targeted cities in need, will strengthen the county’s economic recovery.

“We know the jobs that are getting created require, for the most part, more than a high school degree, and we were always focused on that, but I think this report highlights the needs to get the training that people need, and frankly, that our employers need to get the employees they need to be successful,” Coulter said.

Coulter also acknowledged that the county will need to invest in helping manufacturers, and their employees, become ready to survive and change with the future. He plans to remain bullish with investments in those areas, he said.

“Helping our manufacturers get the skills, expertise and the machinery that they need to be Industry 4.0 ready is a challenge, but if we meet that challenge, there’s no reason why industries like that can’t continue to be very productive, growing industries moving forward; but we can’t take them for granted.”

Overall, Coulter said he’s optimistic about the county’s economic recovery. “We have a great foundation here. We’re doing very well.”

For more information, visit oakgov.com/advantageoakland/business.

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