Unemployment in Michigan’s Great Southwest continued to improve in September, moreso than in many parts of the state, and with that backdrop the team at the Kinexus Group which keeps close tabs on a tremendous amount of data was at one and the same time both upbeat about that news, and cautionary to both employees and employers Friday.
During a monthly roundtable discussion on the state of the region, the leadership team at Benton Harbor’s Kinexus kicked things off with Al Pscholka launching the good news, saying, “So it’s been slow and steady but, all of a sudden the unemployment rate, at least in Southwest Michigan, is now under 8-percent and Jake will talk about some of the some of the reasons why maybe Southwest Michigan is actually faring a little bit better than Southeast Michigan or the rest of the state, and actually this may be one of those times when our proximity to our friends to the South who we call Hoosiers is actually working to our advantage. Two of our three counties border Indiana and keep in mind that a lot of our people who live in Berrien and Cass Counties actually go over the border and work in Indiana and the unemployment rate in Elkhart is down around 5-percent, South Bend is about six-and-a-half. So a lot of our folks are crossing the border and that means that they’re working.”
That was Chief Operating Officer Jake Gustafson’s cue for details. He says, “We’re continually seeing strong growth. I don’t want to oversell it too much, the regional unemployment rate here for Berrien, Cass and Van Buren Counties is running about 7.3 percent. Right before the pandemic put us in a COVID lockdown in March and February we were at just about 3.9 percent, so still outsized to that but coming from the highs of the early summer where we were looking at the high teens or low 20s, this is a strong continued growth.”
Looking at the numbers, Gustafson says, “It’s a steady curve that seems to be going up. in fact we’re seeing a little bit stronger growth here as compared to the rest of the state. Our unemployment rate is about a percentage lower than the state as a whole. and if you dig into some of those key numbers, Southwest Michigan’s even doing a little bit better by comparison to say, Wayne County — obviously one of the more populous counties — they have an unemployment rate of about 12.5-percent, and when you move out to Saginaw or Flint, you’re looking at unemployment rates of 8.5- to 9.5-percent and Macomb County is over 9-percent. As Al mentioned our sub 8-percent which is a great result for this past month and actually beat our expectations a little bit because we were concerned about some seasonal things that normally happen in the fall regardless of COVID. So as things like tourism, hospitality and leisure are starting to wind down things that happen unique to our time frame, the hiring surge over the summer will start to wind down, but we’re actually seeing some continued strength.”
The cross border dynamics are interesting for our region along the state line as well. Gustafson notes, “In Cass County for instance, our best estimate is three out of every five people that wake up in Cass County everyday drive to Indiana to go to work. So that kind of unique position where our labor force is able to take advantage of the most flexible rules to continue their employment has worked out really well for us. We’ve seen some continued strength.”
Strength is all relative, though, inasmuch as pre-COVID the unemployment rate in Berrien County was in the 3-plus percent range, and the Kinexus team says that even when you drive around the region there are billboards for companies across West Michigan like Holland-based Gentex that are hiring, and they’re hiring for West Michigan. There are manufacturers actively engaging in finding talent much like we have here everyday.
Kinexus CEO Todd Gustafson says, “There are still lots of opportunities for hiring. you just have to drive around and you’ll see signs out and about, but you know what we are seeing is not unusual. We’ve had a huge disruption in the labor market in the last six months and so what we’re seeing is still a bit of a mismatch between labor demanded and labor available.”
His unrelated namesake, Jake Gustafson jumps back in to note, But what’s unusual about this time is that we’re looking at high unemployment. 7-percent unemployment is high unemployment, but we’re looking at it in a time where there still is generally pretty vibrant hiring activity going on as well, and those will probably exist for the next six months or so, because one of the ongoing issues in talking to companies in the region is they can’t find talent.”
Todd responds, “They’re still trying to find people and so a growing concern for us that we’re watching the level of unemployment and the duration of unemployment, which is really important because the longer people are unemployed, from our experience in the Great Recession, is the more difficult and challenging it is to help them find a job or for them to actually get re-employed. So, for those people that are sitting on the sidelines right now waiting to see how this pandemic ends up, don’t wait too long. If you’ve got a good skill-set and there are companies out there who are hiring, we strongly encourage you to get re-engaged in the labor market because the longer you wait the more difficult it will be to find a job.”
On the flip side the employment equation, Team Kinexus also advises employers looking for help in either hiring or retraining workers to take advantage of the window just opening now for a new round in the Going Pro program which was recently added back into the state’s budget. Pscholka says, “It’s about 10 million dollars less than it was, but that will give companies some flexibility to get some training and do some things to try to address the issue.”
Todd Gustafson says, “In fact, our team right now is working with a number of companies that are going to submit an application in November. So if there are any companies out there that are interested in applying for the Going Pro money, please contact our offices where Paul Brohman, Mark O’Reilly, or even Lily Brewer can help out.
The best part of Going Pro is the direct correlation of direct dollars to train workers in your businesses. So, Kinexus is really excited to help focus on that program, working hard now, but there is a ticking clock. All applications must be in by the end of November to be considered. Application work is underway right now, and the state will start taking them in on November 2nd, so Kinexus says, “Please, please reach out. We’re happy to help.”
Jake Gustafson says that our unique position of not only our close proximity to larger markets like Grand Rapids and South Bend is even further enhanced when you punch the envelope out to the advantages of being in the middle of the major crossroads connecting Chicago and Detroit, the hospitality and leisure sector in Southwest Michigan stands to continue to gain in a time when fewer people are buying airline tickets for vacations and driving to their destinations instead. By way of example he says, “If you’re in the Chicago metropolitan area, you can go to the airport and go really anywhere in the world, but if you’re going to drive for a vacation or if you’re going to rent an RV or go camping well now all of a sudden you need to draw a circle with a radius around the Chicago area and luckily we’re inside of that.”
Continuing in that timeframe, Gustafson notes, “We’ve seen really strong tourism and leisure and hospitality related activity over the last quarter related to things specifically in Berrien County, but also in Van Buren and to a lesser extent Cass, around this Regional tourism driven by folks flowing in from other larger metro areas. Dollars that would probably be spent still on tourism, leisure and hospitality otherwise, but are being spent in our region because it’s probably the most viable option going forward. It’s been one of the strengths. So I think if you combine this this kind of catbird seat were sitting in here kind of straddling the Grand Rapids and South Bend metros and to a larger extent Detroit-to-Chicago we’re able to draw from the strength of those labor markets and along with this. we’ve actually been weathering this better than many other geographies across the Midwest and Michigan especially.”
There’s been a tremendous amount of talk surrounding what appears to be a surge of people moving across the border from Indiana and Illinois, buying homes and real estate in Southwest Michigan. Gustafson was asked if that comes into play with the improving unemployment picture here. He cautions, however, “We’re gonna have to wait for that to develop, but that’s a totally plausible hypothesis. Sometimes you need to wait for some lagging metrics to catch up to the hypothesis, but there’s certainly some indications that there’s some unusual labor market trends that we might see become a little bit clearer. Unfortunately its one of the slower metrics for us to track but maybe by mid-2021 we’ll know if it’s real.” He adds. “Certainly one of the more interesting notes is that the real estate market has been remarkably hot, remarkably active, which is very counter-intuitive to some of the first things that came out of COVID which is the flexibility in the workforce, as more larger employers and corporations are putting in more long-term flexibility options for work.”
Looking at the advantages of living along the shores of Lake Michigan as opposed to battling congested traffic in major metro areas, Gustafson says, “There’s a hypothesis that says we could stand to gain white-collar remote workers from areas like Detroit or Chicago or even Indianapolis. I mean honestly with remote work, it could be anywhere. So that’s part of it and we’ll kind of need to wait to see where folks file their taxes which is always a good indicator and then where businesses pay their payroll taxes as well. So it will take a little longer to suss that out. But it’s a good point, and it’s one that we’re watching certainly with the strength of the real estate market seeming to suggest that.” So, in short. Stay tuned.