By Aaron LaRoy
aaron.j.laroy@wmich.edu

Unemployment rates in the nation have declined dramatically since the deepest part of the recession. A local analyst suggests that the decline in Kalamazoo’s unemployment rate is a result of job growth — not because people are giving up on looking for work, which has been the reason in some other cities.

The unemployment rate in the Kalamazoo area peaked in March 2010 at 12 percent, according the Bureau of Labor Statistics.  Since then, it has steadily declined, hitting 6 percent in November of last year, which was the lowest point that the unemployment rate had been since 2008.

What the Unemployment Rate Doesn’t Count

Explanations of the unemployment rate can be skewed by several variables.

People who have not looked for work in the last four weeks are no longer counted in the labor force and neither can those who may have relocated to find work.  Both of these scenarios would lower the unemployment rate, but not because hiring has increased in the area.

The rate also doesn’t take into account those that are underemployed.

Comparing Kalamazoo to Other Michigan Cities

From Dec. 2011 to Nov. 2012, the number of people without work in Kalamazoo fell by almost 3,000 and the number of people employed increased by about 5,000.  The amount of people in the labor force also went up by 2,100 people, indicating that more residents are looking for work.  A marginal gain in the number of employed workers in the area indicates that the unemployment rate has declined because residents found jobs.

However, the unemployment rate doesn’t always reflect that.

George Erickcek, senior analyst at the W.E. Upjohn Institute, compared the unemployment rates of Kalamazoo and Battle Creek from several months ago.  He said that the unemployment rate in the Battle Creek metropolitan area was falling, but it was for a different reason than the decline that Kalamazoo had experienced.  It was because people were giving up.  The city of Flint experienced the same problem.

The unemployment rate also doesn’t show how long a person has had to look for a job before finding employment.  According to an article in Forbes last October, 40 percent of those who are unemployed in the U.S. are without work for longer than six months.

“For someone who has been unemployed for 6 months, that truly takes a bounce out of your step,” Erickcek said.

Why Kalamazoo Employment is Growing

The accuracy of the unemployment rate is questionable.  However, nationally, output is increasing.  This naturally leads to an increase in hiring at the local level.

“I think it’s really important for small metropolitan areas, like Kalamazoo, to think that we are responding to national demand characteristics,” Erickcek said.  “I always think of Kalamazoo as a small boat in a big ocean.  I think, what we’re seeing with this drop in the unemployment rate is just that when the tide comes in, all boats rise.”

The main areas of job growth in Kalamazoo are in the health care industry, according to Jerome Kisscorni, executive director of the Kalamazoo Economic Development Corporation.

Borgess and Bronson, as well as Stryker and Pfizer are big reasons why Kalamazoo has seen an increase in jobs over the last two years, in contrast to Flint and Battle Creek, where their unemployment rates have declined due to people dropping out of the labor force by not looking for work.  The educational institutions in the community also provide stable employment.

“One thing that I think we try to do [in Kalamazoo] is having an environment that’s positive,” Kisscorni said. “I believe, if you went out there, the folks and developers that we work with, they’ll tell you that they like working in Kalamazoo.”

 

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