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UM forecast: Detroit to reach pre-pandemic employment in 2023

Crain’s Detroit Business 
Feb. 18, 2022
Dustin Walsh 

Detroit’s economic recovery from the pandemic will accelerate in the coming years, according to a forecast from the Research Seminar in Quantitative Economics at the University of Michigan.

The city has recovered four-fifths of the jobs lost during the economic collapse in spring 2020 and is projected to return to pre-pandemic employment levels next year by adding 12,200 jobs this year and 8,900 jobs in 2023 to reach a forecast 232,170 jobs.

The jobs growth will be led by manufacturing and construction jobs, the report says. Manufacturing jobs in the city will climb to more than 25,000 in 2023, from 16,537 in 2020. Construction jobs will rise above 7,000 in this year from 5,753 last in 2020.

“We have been encouraged by the data showing Detroit’s ongoing recovery,” Gabriel Ehrlich, director of the seminar and lead author of the report, said in a press release. “The pandemic has created important challenges for our nation’s large cities, but we expect Detroit to recover its pandemic job losses next year and continue growing from there.”

Education and health care remain the largest sector in the city’s economy, but aren’t expected to recover to pre-pandemic levels. Forecast growth in those sectors are expected to reach 70,000 by 2025 but remain below the 2018 total of 71,182.

Jobs hit hardest during the pandemic, typically those requiring less education like retail, leisure and hospitality,are also expected to recover and exceed pre-pandemic employment levels by 1.5 percent by 2026.

By 2026, the city is projected to have 8,500 more jobs in total than it did in 2019.

Wage growth in the city hit 9.4 percent in 2020, a result that is almost entirely due to high-wage jobs remaining stable while low-wage jobs were eliminated during the pandemic.

As low-wage workers returned, average wages fell 2.2 percent in 2021, according to the forecast. However, the researchers project wages to climb 4.1 percent in 2022 and 3.6 percent in 2023, faster than the state’s average wage gain during that period.

However, inflation has mostly eliminated any wage gains. Led by ongoing supply chain disruptions, inflation rose to 7 percent year-over-year in December, the highest rate since 1981, according to the forecast.

Inflation is expected to drop later this year and settle in the mid-2 percent range through 2025, the researchers said.

“Our forecast envisions more Detroit residents working, and more Detroit residents who are willing and able to work in 2026 than there were before the pandemic,” the researchers wrote in the study.

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