Today's Real News: Jobs Returning to Detroit

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JONATHAN COHN JANUARY 19, 2012

Today's Real News: Jobs Returning to Detroit

Forget Mitt Romney's tax returns and Newt Gingrich's marriage. Here's the most important news of the day, via John Gallagher of the Detroit Free Press:

Michigan's unemployment rate in December declined another half-percentage point to 9.3%, the state's lowest rate since the 8.9% rate recorded in September 2008, said the Michigan Department of Technology, Management & Budget. And data released Wednesday confirmed that 2011 marked the first year since 2000 that Michigan posted a net increase in jobs.

Other economic reports this week of strong U.S. manufacturing and also increased per capita economic output in metro Detroit could be indicating a fuller recovery ahead.

Michigan's economy, like the nation's economy, is still pretty weak: The state suffered huge losses, dating back to before the recession, because of the decline of the auto industry and all of the jobs associated with it. According to Michigan State University economist Charles Ballard, whom the article quotes, the state has regained only 12 percent of the 800,000 jobs it has lost between 2000 and 2010. You can see that driving around the state. Even in prosperous cities like Ann Arbor, where I live, strip malls are full of closed businesses.

But recovery clearly seems to be underway, most likely because the auto industry is growing again. Government statistics show that the big job gains were in manufacturing and business services. Anecdotally, all three of Detroit's carmakers seem to be doing well now, adding shifts, reopening plants, and adding jobs. (They're also making pretty good cars, although, as you may have heard, the Chevy Volt has some battery problems.) According to a new economic growth index that the Brookings Institution put together, Detroit last year ranked ninth among the nation's  57 largest metropolitan areas. 

President Obama and his allies will claim credit for this resurgence. They should -- and not just for the obvious reasons.

The decision to rescue the Chrysler and General Motors in early 2009 was not particularly popular. The only way to save the industry was to put up federal dollars, something presumptive Republican nominee Mitt Romney now says he opposed. It was certainly not what the public, already tired of bailouts and (in some cases) unions, wanted to hear. 

But even in Michigan, the plan provoked ambivalence. The Obama administration was serious about using the structured bankruptcy to reorganize the companies into leaner, more competitive firms. That meant layoffs and, over the long-term, significantly lower pay for unionized auto workers. Only recently has the upside started to become clear.

A lot can still go wrong, with the industry and with the economy. Car sales are particularly sensitive to the business cycle: As in the rest of the United States, Detroit's fortunes depend heavily on what happens in Europe. And it's downright painful to think how much stronger the Michigan economy could be if, even as the private sector is expanding, the public sector weren't shrinking.

But positive job growth in Michigan is clearly good news -- not just for Obama and his allies but also, and more important, for the people of the Midwest.

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posted in: jonathan cohn, politics, detroit, detroit free press, charles ballard, michigan

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