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Why increasing labor force participation is essential for Michigan’s economy

February 3, 2022

By SBAM President & CEO Brian Calley, originally posted in Crain’s Detroit Business Forum

We are facing massive challenges as a state and country, but the lack of jobs is not the main problem. Our population is aging, the labor force participation rate is low and has been trending downward for decades, and our education system has had a difficult time keeping up with the increasing demands of our global economy. Our biggest economic problem is that we do not have enough people to meet the demands of our economy, let alone maximize its potential.

Regardless of party affiliation, most people running for office feature some sort of jobs agenda. More jobs; higher paying jobs; tech jobs. Our current and previous presidents both called out a need to bring back manufacturing jobs. But a more urgent matter is to encourage higher labor force participation rates while seeking to increase the population over the long-term. Some jobs attract people, but a capable, large workforce will always attract jobs.

In the U.S. today, there are over 10 million open jobs. Employers everywhere are struggling to fill positions of all kinds, and Michigan is no exception. However, a desire for growth is a sign that there is room for more economic prosperity. Having more jobs is good, but that growth won’t happen without more people to fill those jobs.

While it is tempting to try to decide which jobs the government should try to attract, the economy is vast and demands change often. Programs developed in silos around specific, current needs are not likely to move as fast as the economy. We need a versatile and resilient workforce and we need to be thinking on scale. The bipartisan win on Reconnect (tuition-free community college for adults wishing to obtain an associate’s degree) is a prime example of how we need to be thinking. 

In the short-term, an increase in H2B visas available to meet needs in Michigan would go a long way in our tourism and hospitality sectors, along with a more direct pathway for international students educated in Michigan universities to stay. Immigration reform at the national level has been wrought with controversy, but the political system, as dysfunctional as it is, ought to be able to rally around these modest and impactful measures.

Increasing Michigan’s labor force participation rates should be at the top of the agenda. States with the strongest economies have much higher labor force participation than Michigan, though the nation has seen a downward trend over the last 20 years. This will be challenging because the solutions are multifaceted based on many different segments of people sidelined today. It will require progress made on issues such as child care, transportation, higher education, criminal justice reform, mental health, addiction, disabilities, and kids aging out of foster care to name a few. Success will come from sustained efforts on many fronts over the long term.

Rather than focusing on attracting jobs and chasing people, our state would be well served with an all-hands-on-deck approach to reducing the number of people currently sidelined. There’s so much that divides our nation today; helping our economy to grow through increasing the number of people able to participate in the economy should be something we can all agree on.

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