Michigan economy takes a beating

The state is suffering the longest stretch of job losses since the Depression, most of them in manufacturing.

By Jenny Jarvie and P.J. H Uffstutter, Los Angeles Times

Last update: May 26, 2007 – 4:42 PM

WEST BLOOMFIELD, MICH. - When Ronald Griggs was looking for his family’s dream home in Michigan nearly a decade ago, he focused his search on this affluent suburb of Detroit, where the Motor City’s middle-class was migrating.
But after a decade of grim economic news, and with the Michigan state government now poised to shut down as legislators face an estimated $800 million deficit, Ronald and his wife, Shirley, want out – out of West Bloomfield, and out of Michigan.

"It just got to the point where I said, ‘What am I? Am I stupid living here?’ " said Griggs, 65. “I need to get out of here as fast as I can.”

Michigan has long been the poster child for the disappearance of manufacturing jobs and the country’s dwindling industrial base, but state leaders say its financial plight hasn’t been this bad in decades.

It is suffering through the longest stretch of job losses since the Great Depression, driven by the downward spiral of the domestic auto industry. The big three – Ford Motor Co., General Motors and DaimlerChrysler – are laying off tens of thousands of workers, and the outlook for auto workers is expected to remain grim.

This month, DaimlerChrysler announced that it plans to sell its troubled U.S. auto division to a New York private equity firm. Chrysler, which had already announced plans to cut 13,000 jobs, or 16 percent of its workforce, is expected to seek even more steep concessions from the United Auto Workers when talks on a new contract begin this summer.

The state’s economic news grew darker this month: Michigan lost 53,000 jobs last year – nearly 28 percent in manufacturing – and will likely lose at least another 46,000 this year, according to findings by the University of Michigan’s Research Seminar in Quantitative Economics.

The state’s unemployment rate, estimated to average 6.9 percent this year, is anticipated to reach 7.5 percent in 2008.

Add to that weaker tax revenue – particularly in business, personal income and sales – and a growing welfare, Medicaid and prison population, and “our economy is the most challenged in the nation,” Gov. Jennifer Granholm said in an interview.

From jobs to homes

The fallout of the budget crisis, and the state’s broader economic woes, are being felt acutely in the housing market.

From the neoclassical mansions of Bloomfield Hills to the modest suburban tract homes in south Warren, residents at nearly every economic level are having trouble making their house payments.

When homeowners who have lost jobs try to sell, houses often sit on the market for a year, without a single offer.

Last week, the Griggses put their 7,000-square-foot home on the market for about $1.4 million – about 15 percent less than it could have sold for two years ago. But even listing it at that price may not be enough.

They’re not alone.

Jean Nielsen, owner of Hayes Self Storage in Shelby, a suburb north of Detroit, said about 240 of 383 of her company’s storage units are rented – nearly a 20 percent increase from the same time last year, she said. To the east of her shop, entire swaths of upscale new subdivisions stand empty.

“Lots of people are downsizing, lots of people are moving to other states,” Nielsen said.

That kind of a sentiment chills state leaders, who agree that losing population would only speed up the state’s problems.

For weeks, the issue of how to bridge the deep budget gap has divided state leaders along party lines, who are racing to find a solution before June 1, when deep cuts to Medicaid and schools are poised to take effect.

Granholm and fellow Democrats are pressing for tax increases as well as budget cuts. Republicans, who control the state Senate, insist the shortfall can be overcome by cuts alone.

“The idea that tax cuts alone is going to propel a state to greatness has been proved untrue” all across the country, Granholm said. “No state in this country is going to be a lower-cost place to do business than China.”

Republican state senate majority leader Michael Bishop disagrees. “If you ask citizens about what needs to be done, the last thing out of their mouth is that they should pay more to live in Michigan,” he said.

Joe, pack your bags and move to Boulder. The economy is always fantastic and our Denver chapter kicks a$$.

I once lived in Colorado for about a year in a little town called Alamosa, very fond memories, but I like Florida real good. :smiley:

Hey, can you help me write some code courses? I know home inspectors don’t do code inspections but I’m reading the IRC and I think we should come up with “A Hundred Codes Every Home Inspector Should Know About” course. I think it would be very popular and could be taught online or in a 1 day (or less) classroom setting.

Granholm, during election time kept saying she would not raise taxes but, of course we all should have known that would not be true. Most elected officials don’t understand that higher taxes means that people will spend less. That, then causes less taxes to be collected.

Also, she kept saying that she was bringing jobs to Michigan… Yes, she replaced 14,000 jobs that payed over $20.00/hour with 1,800 jobs that at least half would go to out of state transfers to MI to train the other half that would receive pay at less then $12.00/hour.
She didn’t bring in any jobs worth talking about… she needed to keep the jobs people already had, here in MI.

She also kept saying, If you think things are good here in Michigan now, just wait and see how they are in 5 years! She implied that in 5 years things would be great here in Michigan. (In 5 years, that is 1 year after her term in office would be over!:roll:)

The housing market has fallen apart here. Yes, people keep moving out of the state. They find a job on-line out of state, then they refinance their house for 125% of an inflated value that the finance co. gets placed on the property. Then they don’t make any of their payments so they can save to move. Next thing you know, the house is in forclosure. What do they care, they have already found a new job, moved out of state and bought a new home with the money from refinancing.

Where are they all moving to: TN, KY, CO, IA, MO.

OK, so I’m frustrated! I don’t need to hear any backlash about what I wrote. I feel better now. (Kind of.) :neutral: