The city of Detroit is recovering faster from the COVID-19 pandemic than many once anticipated and is forecast to see faster jobs growth than Michigan overall although employment in services sectors like hotels could lag for years, according to a new economic outlook released Monday by University of Michigan economists.
The unemployment rate for Detroit residents was 8.5% in June, or about 3% below its pre-pandemic level. That compares to the state’s overall 5% rate in June. Detroit’s unemployment rate averaged 22% in 2020 and peaked at nearly 39% in May 2020.
The U-M outlook, which extends to 2026, anticipates total employment for jobs that are located in Detroit to recover to its pre-pandemic level by the third quarter of 2022 and continue growing, thanks to several big projects:
- The recent opening of the Stellantis (formerly FCA) Mack Avenue assembly plant, bringing about 5,000 new jobs, with about 3,000 of them going to Detroit residents, according to the city.
- The retooling of General Motors’ Factory Zero at the Detroit-Hamtramck Assembly Center.
- Ongoing construction and planned late 2024 completion of the new Gordie Howe International Bridge to Canada.
- Ford Motor Co.’s new Detroit campus in Corktown, including redevelopment of the long-vacant Michigan Central Station with an anticipated late 2022 completion.
- Planned 2022 opening of a new Amazon distribution center and the old State Fairgrounds on 8 Mile that Amazon says will create 1,200 new, full-time jobs.
- Ongoing construction of a large new downtown building and tower at the site of the former Hudson’s department store by Dan Gilbert’s Bedrock real estate firm.
Driven by booming growth in the manufacturing, construction, warehousing and transportation sectors, employment in Detroit’s blue-collar industries is forecast to be 11% above its pre-pandemic level by the end of 2021, 20% higher by late 2023 and 23% higher in 2026.
Employment in what the report calls “higher-education services sectors” will be boosted by Ford’s Detroit campus plans. It is forecast to plateau at about 2½% above its pre-pandemic level in the mid-2020s.
However, the report’s most downbeat forecast is for “lower-education services industries,” including the leisure and hotel sectors. Employment in that category would be 10% below its pre-COVID level by late 2022, and still 3% below that level by the end of 2026.
“The lengthy recovery we are forecasting reflects numerous business closures and an enduring shift to remote work lowering demand for downtown services,” the report says.
The report is from economists at U-M’s Research Seminar in Quantitative Economics, who produced it as part of the City of Detroit-University Economic Analysis Partnership.
“The mayor has a clear strategy, which is to attract major employers that will put Detroiters to work and this study reflects some of our initial success in those efforts,” said Nicole Sherard-Freeman, group eecutive of Jobs, Economy and Detroit At Work. “As the study suggests, we expect our numbers to get even stronger as Amazon and other projects come online and begin hiring more Detroiters.”
The U-M report includes data on visits to more than 7,000 Detroit businesses and establishments obtained through anonymous cellphone location data from SafeGraph. As of June 30, visits to Detroit’s “leisure and hospitality establishments” were 20% below their 2019 levels
One very recent economic development announcement for blue-collars jobs, unmentioned in the U-M report, is a plan by auto supplier Lear to set up a seat manufacturing operation at the site of the former Cadillac Stamping Plant on Detroit’s east side. That operation is expected to eventually employ “hundreds” of workers, although the company has yet to give a specific number or timeframe.
ContactJC Reindl at313-222-6631 or [email protected]. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
