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The Labor Market in Michigan:
Trends and Policy Challenges
Rebecca M. Blank
Gerald R. Ford School of Public Policy
University of Michigan
A. Adjusted Median Weekly Wages Among All Workers
400
420
440
460
480
500
520
540
560
580
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
Ad
j. M
edia
n W
eekl
y W
age
U.S. OH
MIIL
B. Adjusted Median Weekly Wages Among Workers with Less Than a High School Degree
240
260
280
300
320
340
360
380
400
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
Ad
j. M
edia
n W
eekl
y W
age
U.S.
MI
OHIL
B. Adjusted Median Weekly Wages Among Workers with Less Than a High School Degree
240
260
280
300
320
340
360
380
400
Year
Ad
j. M
edia
n W
eekl
y W
age
U.S.
MI
OH IL
C. Adjusted Median Weekly Wages Among Workers with Only a High School Degree
390
410
430
450
470
490
510
Year
Ad
j. M
ed
ian
Weekly
Wag
e
U.S. OH
MIIL
So
Unemployment Rates Among All Workers
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
Un
emp
loym
ent
Rat
e (p
erce
nt)
Source: Author's tabulation of Current Population Survey Data, Outgoing Rotation Groups
MIOH
IL
U.S.
Michigan Unemployment Rates Among All Workers by Education Level
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
Un
emp
loym
ent
Rat
e (p
erce
nt)
No High School Diploma
High School Diploma Only
Some College, No B.A.
B.A. or Higher
Source: Author's tabulation of Current Population Survey Data, Outgoing Rotation Groups
B. Male and Female Labor Force Participation Rates
47.0
52.0
57.0
62.0
67.0
72.0
77.0
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
Lab
or
Fo
rce
Par
tici
apti
on
Rat
e
IL malesU.S. males
MI males
OH males
IL females
U.S. females
OH females
MI females
Source: Current Population Data, Outgoing Rotation Groups
Policy Issues• Nationally, rising minimum wages and
expanding Earned Income Tax Credit have offset some of the wage declines for less skilled workers. The effect of the two together:
1989 2000 1. Minimum Wage $4.40 $5.15 2. Maximum EITC Subsidy Single Mother (1 child) $1,195 $2,353 Single Mother (2 children) $1,195 $3,888
3. Earnings (Single mother working full-time at minimum wage)
Single Mother (1 child) $9,995 $12,653 Single Mother (2 children) $9,995 $14,188
Issues for Less-Skilled Women
• Big LFP increases, especially in the late 1990s following welfare reform
• Big shift in income composition, with increased earnings and declines in public assistance income. This produced a rise in the working poor.
• The EITC and higher minimum wages definitely increased LFP and incomes among less-skilled women.
• Other issues key to women’s LFP:
* Child care availability and subsidies
* Health care availability
Can we do better at covering low-skilled working adults with health care? Wisconsin Badgercare is one model.
• Job Training issues-- Availability of low-cost loans and subsidies for community college and vocational training-- Effectiveness of job training system/WorkFirst! Program
What’s the appropriate balance between work first programs and training programs? Is there too little focus on more disadvantaged workers?-- Improvements in school outcomes for the non-college bound are probably the most important long-term issue.
Larger U.S. Labor Market Questions in 2004
• Why is job growth non-existent in this recovery? Particularly given the recent high rates of GDP growth.
Total Employment (Nonfarm)
100000
105000
110000
115000
120000
125000
130000
135000
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
To
tal
Em
plo
ye
nt
(th
ou
sa
nd
s)
Source: Department of Labor, Bureau of Labor Statistics, Series ID: CES0000000001Note: Seasonally Adjusted from January 1994 to December 2003
Theories of lack of job growth
• Employer caution due to an unusual degree of international uncertainty
• Restructuring due to recent technological advances are finally producing productivity gains
• International competition continues to result in loss of some U.S. jobs
A major policy issue at the national and state level must be how to deal with the “losers” due to job restructuring. Expect to see ongoing discussion of policies designed to slow down restructuring; provide retraining to job losers; and/or provide subsidies that allow time to adjust to these changes.