New Midwest Jobs Data Shows Indiana Closest to Pre-Recession Employment while Michigan Falls Behind

Minnesota, Wisconsin, Ohio, and Illinois in Middle of Pack

East Lansing, MI–September 23, 2020–An analysis of new employment data by experts at Anderson Economic Group (AEG) shows that states across the Midwest are still reeling from employment losses caused by the COVID-19 epidemic. Between February and April, Midwestern states recorded unprecedented job losses as policymakers shut down large swaths of their economies to contain the spread of the virus. And, while most states saw strong employment rebounds in the spring, recovery has slowed significantly in the last two months and remains far short of February employment levels.

“The Midwest is far from recovered, especially in Michigan, which still has ten percent fewer jobs now than it did in April,” notes Andrew Miller, a senior analyst with AEG. “The losses we have seen in the last six months have been more severe than anything we have seen in the last century, including the Great Recession.” Miller also notes that while employment has grown for three straight months, the pace of recovery is slowing down. “These new employment numbers show that some jobs have come back, but most states are still far from their February 2020 peaks, and policymakers should be concerned that the recovery may be petering out,” he said.

August employment across all industries is down between four and ten percent since February, with some states experiencing faster recoveries than others. Employment in Indiana, which reopened most of its economy well before its peers, is now at 96% of its pre-recession peak, while Minnesota and Illinois are at 93% of their pre-recession peak. In Michigan, employment is only at 90% of its pre-recession peak. “The fact that Michigan has lost one out of every ten jobs, and also saw relatively slow employment growth this summer suggests that a full recovery for the state is still quite far off,” Miller said.

Mr. Miller contrasted the most recent employment declines with the Great Recession, noting that national employment declined by 6% during the Great Recession, while employment in Midwestern states declined between 13% and 24% between February and April.

Industry employment trends show significant differences among jobs lost in different sectors of the economy. Leisure and Hospitality; Retail Trade; and Manufacturing were three industries hit especially hard by the downturn. All states except for Indiana lost over half of their Leisure and Hospitality jobs, while Michigan saw the most severe decline, losing nearly 60% of its jobs. In Manufacturing, states like Illinois, Wisconsin, and Minnesota saw dips of less than 10% between February and April, while Michigan lost nearly 30% of its jobs. Retail Trade job losses were between 10% and 15% in most states, except in Michigan, where one in four retail jobs were lost between February and April.

Among the industries seeing smaller employment losses were Professional Services and Government. Employment in Professional Services has nearly reached its pre-recession peak in Indiana (99%), while states like Wisconsin and Michigan reached 90% of their pre-recession employment level last month. Government employment in all states was between 94% and 98% of its pre-recession peak in August.

Mr. Miller attributed the differences among states to varying severity of their COVID-19 outbreaks, the unique mix of industries in each state, and the relative restrictiveness of stay-at-home orders. For example, Indiana lifted its stay-at-home order nearly one month earlier than Michigan did and has allowed indoor bars to reopen, while Michigan has not. Wisconsin’s emergency stay at home order was declared unconstitutional by the state’s Supreme Court in Mid-May, nearly two weeks before the order was set to expire. “Some states saw more severe initial outbreaks than others, which may have led to longer and more restrictive stay-at-home orders and, consequently, greater job loss,” Miller said. “Michigan was an early epicenter of the COVID-19 outbreak, and its economy was hit particularly hard and has been slower to recover than other states.”

While Midwest states have seen several months of employment growth, Miller cautioned that the employment recovery could slow or reverse in the coming months if policymakers reintroduce restrictions on businesses in response to rising COVID-19 case numbers. Miller also pointed to the end of government stimulus programs potentially slowing down the recovery. “Some of the employment growth in late spring was supported by the CARES Act stimulus checks, supplemental unemployment insurance, and the Paycheck Protection Program,” he said. “Now that most federal relief programs have drawn to a close, some employers may struggle to stay in business.”

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About Anderson Economic Group

Anderson Economic Group, LLC, is a US-based research and consulting firm that specializes in economics, public policy, commercial damages, market analysis, and tax and regulatory policy. The public policy experts at AEG have been following the economic and fiscal impacts of COVID-19 on national and state economies since February, having correctly projected in March that the nation would see unprecedented “depression” level unemployment due to the virus. AEG serves both public and private organizations including governments, corporations, nonprofit organizations, trade associations, and small business, analyzing the impacts of public policies on state and local economies.

About Andrew Miller

Mr. Miller is a senior analyst in the public policy and economic analysis practice area at Anderson Economic Group. His work focuses on economic and fiscal impact analysis. Recent projects have included economic impact analyses of Fermi National Accelerator Laboratory, COVID-19-related festival cancellations, and an interactive science learning center.

About Brian Peterson

Mr. Peterson is a consultant and director of public policy and economic analysis with Anderson Economic Group. His work focuses on economic and fiscal impact modeling, actuarial analysis, and environmental economics. Mr. Peterson has appeared as a guest on several national news publications to discuss the economic impacts of COVID-19, including FOX News and CGTN.