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Economic Outlook S U M M A R Y 2016 - 2018
Prepared by: Dr. George A. Fulton and Donald R. Grimes Institute for Research on Labor, Employment, and the Economy | University of Michigan Final Report Available June 2016 at: AdvantageOakland.com
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SUMMARY INTRODUCTION
L. BROOKS PATTERSON
OA K L A N D CO U N T Y E X E C U T I V E
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usiness, education and government leaders look to Oakland County and its annual Economic Outlook Summary to provide important data on the economic health and future of the state’s most prosperous county.
B O N D R AT I N G S I N C E 1 9 9 8
Oakland County is a fiscally responsible government partner with resources to support your success.
In the following pages, University of Michigan economists Dr. George A. Fulton and Donald R. Grimes — as they have for 31 years — expertly chart the ebbs and flows of employment in Oakland County. Their three-year projections provide vital information to the region on Oakland County’s economic growth, estimated wages and job availability by industry, and the county’s rank in terms of prosperity when compared with other U.S. counties of similar size. Our business-friendly climate and the innovative programming we’ve worked so hard to institute significantly impacts Oakland County and the state every day. We create opportunities to thrive and prosper. Consider our measureable results from 2015: • • • •
Business expansion, attraction and retention investment of more than $835 million — an increase of $177 million from 2014 More than 10,000 new and retained jobs Direct foreign investment (investment from a company headquartered outside the U.S.) more than doubled from 2015 totals, to $357 million Loans closed of $37.7 million
In simpler terms, more than $2.3 million EACH DAY — on average — was invested here in 2015. Our Emerging Sectors® business development strategy stands at $3.5 billion of total investment since its inception in 2004. Medical Main Street® has topped $1 billion of total investment in seven years. Tech248 — helping companies attract, develop and retain talent — is connecting the county’s 2,000 IT/tech companies while branding us as a global technology hub. I remain grateful to the Oakland County Board of Commissioners for its continued support of our economic development programming and congratulate our economic development team for its hard work. A special word of thanks goes to George Fulton, who informed us that retirement beckons and this is his last report for us. We remain committed to business, education, our entrepreneurs and communities. We appreciate your continued faith in Oakland County.
The Economic Outlook Summary is presented at a luncheon each year by Dr. George A. Fulton and Donald R. Grimes, University of Michigan’s Institute for Research on Labor, Employment, and the Economy. Along with Oakland County, the event is hosted by Chase and Oakland Community College.
2016 SPONSORS Automation Alley | Beaumont Healthcare | Bishop International Airport CAM – Construction Association of Michigan | Huron Valley State Bank | ITC Holdings Kelly Services | Lawrence Technological University | Nexteer Automotive Oakland County Workforce Development | Oakland Schools | Oakland University HOSTS
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Economic Outlook S U M M A R Y 2016 - 2018
P R E PA R E D B Y Dr. George A. Fulton and Donald R. Grimes Institute for Research on Labor, Employment, and the Economy University of Michigan
M AY 2 0 1 6
George Fulton
Donald Grimes
OVERVIEW OF CONTENTS Track Record for Forecasts over the Years Job Growth and Unemployment Rates in Recent History Recent Job Growth by Wage Categories 20 Industries with the Greatest Job Gains Recently Comparisons with Other U.S. Counties of Similar Size Overview of the U.S. Economic Outlook
Outlook for Oakland County through 2018, including: • Employment Growth by Industry Division • Job Growth by Wage Categories • 20 Industries with the Greatest Job Gains • Oakland Employment Growth Compared with Michigan’s • Wage Growth by Industry Group • Local Unemployment and Inflation Rates
The full report will be available in June on the web (updated annually) at:
AdvantageOakland.com | irlee.umich.edu/clmr
Presentation Review
1
Institute for Research on Labor, Employment, and the Economy at the University of Michigan was established in 2008 as a new entity, merging two longstanding university units, the Institute of Labor and Industrial Relations and the Business and Industrial Assistance Division. The Center for Labor Market Research, a division within the Institute, focuses on the transitioning economy and its effects on localities and regions throughout the country. This center has been a pioneer in economic forecasting for regional labor markets, and it has become an integral resource in the area of research-based public policy analysis.
Dr. George A. Fulton
Donald R. Grimes
received his Ph.D. in economics from the University of Michigan. He is a research professor at the University’s Institute for Research on Labor, Employment, and the Economy, where he is director of the Center for Labor Market Research. He is also director of the Research Seminar in Quantitative Economics in the Department of Economics at the University of Michigan. He is a principal adviser to the university administration and to the state government on the economic and fiscal outlook for Michigan.
received his master’s degree in economics from the University of Michigan. He is a senior research area specialist at the University’s Institute for Research on Labor, Employment, and the Economy, where he is assistant director of the Center for Labor Market Research. His primary research interests are in labor economics and economic forecasting.
Dr. Fulton’s special expertise is in economic forecasting and regional economic development. For more than 30 years, he has been forecasting labor market activity for the state of Michigan as a whole and several metropolitan areas within Michigan, as well as for all the state’s counties individually. Twice a year he provides testimony to the state legislature and administration on Michigan’s fiscal and economic prospects, which the state uses as a guide to determining expected future revenues. He currently is a principal and chair of the Detroit Consensus Revenue Estimating Conference. He has directed economic research projects for sponsors such as the Robert Wood Johnson Foundation, the U.S. Department of Commerce, the Michigan Department of Transportation, the Michigan Economic Development Corporation, the Southeast Michigan Council of Governments, and several county governments. His research crosses disciplines, having been published in diverse professional journals and sponsored research reports. He has published one book, A Regional Econometric Forecasting System: Major Economic Areas of Michigan (co-authored with Harold T. Shapiro, former president of both the University of Michigan and Princeton University).
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For more than 30 years, he has been engaged in economic forecasting for state and local governments and is frequently called upon for policy advice. He has worked for many years with the Michigan departments of Transportation and Treasury and the Michigan Economic Development Corporation on policy analysis and evaluating economic strategies. He is co-director of a project to generate long-term economic and demographic projections for all of the counties of Michigan. His past research includes a study looking at Michigan’s industrial structure with a view to identifying sectors that will promote economic growth in the future. He has been involved in research projects sponsored by the U.S. Department of Commerce, the U.S. Department of Labor, the Federal Reserve Bank of Chicago, and the Robert Wood Johnson Foundation. He co-authored a paper, “Change in the Concentration of Employment in Computer Services: Spatial Estimation at the U.S. Metro County Level” (Growth and Change, March 2007). He also co-authored a paper, “Exploring Wage Determination by Education Level: A U.S. Metropolitan Statistical Area Analysis From 2005 to 2012” (Economic Development Quarterly, August 2016).
irlee.umich.edu/clmr
2016–2018 Economic Outlook for Oakland County
Table 1
Report Card: Track Record over the Years Year of % Forecast Error Year of % Forecast Error Year of % Forecast Error Forecast for Total Private Jobs Forecast for Total Private Jobs Forecast for Total Private Jobs 2006 +3.3 1986 +1.4 1996 – 0.5 1987 +0.7 1997 +0.6 2007 0 1988 –1.8 1998 +1.3 2008 +2.2 1989 –1.9 1999 –1.2 2009 +5.5 1990 +2.2 2000 +0.6 2010 –1.6 1991 +3.9 2001 +1.9 2011 – 2.3 2002 +2.5 2012 – 2.2 1992 – 2.0 1993 +0.5 2003 +1.6 2013 – 0.8 1994 –1.3 2004 +2.6 2014 – 0.1 1995 +0.2 2005 +1.4 2015 0 (Positive numbers indicate that the forecast was too high; negative numbers indicate that it was too low.) Average absolute forecast error 1986 – 2015: 1.6% Forecast 2015
Actual 2015
5.3% – 0.6%
4.9% –1.4%
Unemployment rate Consumer inflation rate Forecast date: April 2015
•
In last year’s report, we forecast that the tempo of job growth in Oakland County would pick up again in 2015 following a brief slowdown in 2014.
•
That is in actual fact what came to pass. Private-sector job growth did accelerate in 2015, to 2.2 percent. Moreover, we nailed the magnitude of job growth for 2015, matching that 2.2 percent rate in last year’s forecast.
•
Although it’s not part of the historical track record, we were also spot-on in projecting a tenth of a percentage point decline in government employment for 2015. Thus, with government added to the private sector, we hit the bull’s eye in our forecast of the growth rate for jobs in total, at 2.1 percent.
•
We forecast job gains in all of the major industry divisions in 2015 save two, and we were correct in that projection with only two exceptions. The information and miscellaneous other services sectors both lost jobs in 2015, contrary to our expectations.
•
Job gains most exceeded our expectations in financial activities and in leisure and hospitality services. Our largest overshoot was in information.
Presentation Review
•
Our forecast of the change in the unemployment rate was also dead right: it dropped by 1.9 percentage points, as we had forecast a year ago. The discrepancy in the forecast rate of 5.3 percent and the actual rate of 4.9 percent reported in table 1 is the result of a downward revision of four-tenths of a percentage point in the historical data for 2014 subsequent to last year’s forecast.
•
We were also precisely on target in our projection of the U.S. CPI, a tenth of a percentage point increase for 2015. We did anticipate the large drop in the local inflation rate, but it was even greater than we expected. The size of the decline in local prices is quite pervasive, and quite puzzling to us, particularly in light of the discrepancy between local and national inflation.
•
Overall—considering that we found the center of the target on private-sector employment, government employment, total employment, the change in the unemployment rate, and the U.S. inflation rate—last year’s forecast ranks as our most accurate over the thirty years we have been producing the Oakland economic outlook.
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Figure 1
Job Growth in Oakland County, 2006 –15 40,000 30,000 20,000 10,000 0 –10,000 –20,000 –30,000
24,412 24,865 18,146 12,808 14,218 –1,113
– 5,801 –18,494
–20,433
–40,000 –50,000 –60,000 –70,000
– 59,663
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* *Estimate
NOTES
•
Oakland County endured job losses each year from 2006 to 2009, hitting bottom with a recordsetting decline in 2009 of 59,663 jobs.
•
This low point was a culmination of the national Great Recession along with bankruptcy proceedings for both General Motors and Chrysler.
•
By 2011, Oakland turned the corner to return to positive growth for a calendar year, creating 67,423 jobs in the three years from 2011 to 2013—a sizzling pace of 22,500 job additions per year. This was the county economy’s best performance over three years since the mid-1990s.
•
This red-hot pace was not sustainable, of course, and in 2014 growth tempered to a gain of 12,808 jobs.
•
4
The question then was whether the slowdown in 2014 was foreshadowing a further softening of the county economy moving forward, or instead was simply gravitation to a more sustainable pace of growth. The subsequent performance supports the latter scenario, as growth picked up to add 14,218 jobs in 2015.
•
The continuing recovery in Oakland is consistent with sustained expansion of the U.S. economy, a local housing sector that continues to recover, and increasing Detroit Three vehicle sales. All of this is backed by the county’s strong economic fundamentals and forward-looking policy initiatives.
•
The top job producers in the recovery to date among the major industry divisions have been professional and business services; trade, transportation, and utilities; manufacturing; and leisure and hospitality. The two major industry divisions that have lost jobs over the recovery period are government and information.
•
A primary question is whether the Oakland County economy can sustain its current pace of job growth over the next several years, and if so, what sectors will be the leading contributors to such growth. These questions are addressed in the local forecast section of the report.
2016–2018 Economic Outlook for Oakland County
Table 2
Job Change in Oakland County by Industry Wage Category, 2010 –15
2010
2015
Change 2010 –15
% Change 2010 –15
Total all industries
611,142
705,591
94,449
15.5
High-wage industries ($75,000 or more)
177,205
216,408
39,203
22.1
Middle-wage industries ($35,000 to $74,999)
277,402
310,201
32,799
11.8
Low-wage industries (under $35,000)
156,535
178,982
22,447
14.3
Source: BLS Quarterly Census of Employment and Wages. High-wage industries have an average wage in 2014 about 40 percent above the U.S. average ($51,364), and low-wage industries, about 30 percent below the U.S. average.
NOTES
•
To better understand what types of jobs are being created in Oakland County over the recovery period to date, we dissected the job recovery into wage categories in order to examine relative performance across these categories.
•
The ranking of job change from 2010 to 2015, in top-down order measured in percentage terms, is the high-wage (22.1 percent), low-wage (14.3 percent), and middle-wage (11.8 percent) industries.
•
Specifically, we partitioned the 172 unique industries in our data set into three categories based on their average annual wage in 2014: high-wage industries ($75,000 or more, or about 40 percent above the U.S. average of $51,364); middle-wage industries ($35,000 to $74,999); and low-wage industries (under $35,000, or about 30 percent below the U.S. average).
•
More than four in ten of the net new jobs created in the county from 2010 to 2015 were in the high-wage industries. The relatively weak performance of the middle-wage category reflects large job losses in state and local government; employment in middle-wage private-sector industries increased by 16.1 percent over this period.
•
We then computed the change in employment, both in number of jobs and in percentages, over the period from 2010 to 2015 for each of the three wage categories and for the county overall.
•
In summary, the growth in Oakland over the current economic recovery to date is skewed toward the higher-compensated end of the wage scale, with job growth for high-wage industries well above either of the other two categories.
Presentation Review
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Table 3
Twenty Industries with the Greatest Job Gains in Oakland County, 2010 –15 NOTES
•
It is instructive to break out, at the most detailed industry level available, the top job producers in Oakland’s recovery to date.
•
The professional and business services sector contributes seven of the top twenty job providers, and five of the twelve higher-paid providers.
•
Among the twenty industries with the largest employment gains from 2010 to 2015, twelve of them (60 percent) have wage levels above the average for the county overall, most of them well above. In addition, five of the top seven industries (71 percent) with the largest job gains over the period pay well above average wages.
•
The strength of the Oakland economy is traditionally concentrated in the area of higher-wage, white-collar professional services, which includes—in addition to engineering services and testing laboratories—management and technical consulting services, headquarters, and computer systems design.
•
The top twenty job providers, and the higher-wage portion among them, are dominated by industries in professional and business services, and in auto-related manufacturing as well as trade and transportation.
•
The higher-wage contributors to Oakland’s job growth also include three manufacturing industries (autos, fabricated metals, and machinery); wholesale trade in durable goods; insurance carriers; specialty trade contractors in construction; and motor vehicle and parts dealers.
•
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The top three industries with the greatest job gains are associated with the auto industry, both its white-collar component (engineering services and testing laboratories) and its manufacturing component. The rebound in the auto industry was a major contributor to Oakland’s recovery between 2010 and 2015.
•
This is a promising profile for Oakland County moving forward, with the growing presence of the county in the technological evolution of the motor vehicle, and with the county’s continuing focus on professional services that are becoming increasingly integral to the New Economy.
2016–2018 Economic Outlook for Oakland County
Table 3
Twenty Industries with the Greatest Job Gains in Oakland County, 2010 –15 Change 2010 –15
% Change 2010 –15
Average Wage 2014
94,449
15.5
$56,523
Engineering services
8,725
59.3
77,401
Testing laboratories
7,104
54.3
76,974
Transportation equipment manufacturing
5,868
42.1
88,681
Full-service restaurants
4,855
24.1
17,834
Services to buildings and dwellings
4,764
58.1
25,071
Specialty trade contractors
3,989
35.6
62,859
Merchant wholesalers, durable goods
3,946
19.3
92,104
Business support services
3,659
91.9
41,424
Management and technical consulting services
3,598
64.4
73,625
Limited-service restaurants
3,386
23.2
12,933
Fabricated metals manufacturing
3,284
42.4
63,130
Management of companies and enterprises
3,249
30.5
122,946
Computer systems design and related services
2,642
14.6
84,150
Machinery manufacturing
2,402
27.5
78,383
Social assistance
2,318
29.6
22,990
Motor vehicle and parts dealers
2,261
27.2
62,623
Food and beverage stores
2,245
23.0
22,729
Ambulatory health care services
1,845
4.8
53,709
Insurance carriers and related activities
1,753
12.8
80,020
Truck transportation
1,647
82.5
52,869
Total jobs
Presentation Review
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Figure 2
Unemployment Rates for Oakland County and for the United States, 2010 –15 NOTES
•
•
•
8
The unemployment rate for Oakland County peaked in 2009 at 13.0 percent. From then through 2015, the jobless rate has shrunk dramatically with the recovery in the local labor market, dropping over 8 percentage points in that interval, to 4.9 percent by 2015.
The unemployment rate recorded for 2015 is the lowest annual reading since 2001.
•
Oakland’s jobless rate was higher than the U.S. rate during the recovery period to 2014, but the county rate fell below the national rate by fourtenths of a percentage point in 2015.
•
The last time the county unemployment rate was lower than the U.S. rate was for a twelve-year stretch from 1992 to 2003.
Since 2009, the labor force has declined in only two years. For the other years in the current recovery period, the local labor force has grown, as a greater number of residents seek out expanding job opportunities.
2016–2018 Economic Outlook for Oakland County
Figure 2
Unemployment Rates for Oakland County and for the United States, 2010 –15
14% 12% 10%
Oakland United States
11.8
9.6
9.5 8.9
8%
8.3
8.0
8.1 7.4
6%
6.8 6.2
5.3 4.9
4% 2010
Presentation Review
2011
2012
2013
2014
2015
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Table 4
Oakland County Compared with 37 U.S. Counties of Similar Size NOTES
•
It’s informative to gauge how Oakland County’s economic foundation is positioned, as this can foreshadow future economic success.
•
We ranked Oakland and thirty-seven other counties of similar size in the United States on a series of measures that we judge to be indicators of future economic prosperity. The data underlying the rankings are provided in appendix B.
•
The counties of comparable size to Oakland had populations between 900,000 and 1.6 million in 2015; Oakland’s population was 1.242 million.
•
Many of these counties are among the most prosperous in the nation—and among the small group of U.S. counties, including Oakland, that have the AAA bond rating with multiple rating agencies.
•
The measures used in this analysis are: (1) share of the population aged 25 to 64 (prime workingage population) with at least an associate’s degree in 2014; (2) share of the population aged 17 and under who lived within families whose income was below the poverty level in 2014; (3) median family income adjusted for the cost of living in 2014; (4) share of persons aged 65 and older with income at least five times the poverty line in 2014; and (5) share of employed county residents working in professional and managerial occupations in 2014.
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•
A lower number for the rank indicates a better position for the measure among the thirty-eight counties; i.e., a rank of 1 is best and 38 is worst. Oakland County ranks between 5 and 16 across the five measures.
•
Oakland is especially noteworthy for its median family income adjusted for the cost of living, where it ranks 5th, and for its share of residents employed in professional and managerial occupations, where it ranks 6th.
•
The thirty-eight counties are also ordered by a summation of all of the rankings. This is not meant to be a rigorous measure of overall ranking, but it is at least suggestive of relative standing. Oakland ranks 9th overall among the thirty-eight counties on this basis, an impressive standing considering that a number of these counties house some of the healthiest local economies in the nation.
•
Whether we assess Oakland County with respect to how it is positioned in key economic fundamentals across all regions of the United States, or more restrictively here among many of the elite local economies, it is hard not to see the county thriving as time goes on.
2016–2018 Economic Outlook for Oakland County
Table 4
Oakland County Compared with 37 U.S. Counties of Similar Size* (Ranking based on selected indicators of prosperity) High-Income Associate’s County
Median
Persons
Population
Degree
Child
Family
Aged 65
Managerial,
Sum of
Rank of Sum
State
2015
or More
Poverty
Income**
or Older
Professional
Rankings
Fairfax
VA
1,142,234
1
2
1
1
2
7
1
Montgomery
MD
1,040,116
2
1
4
2
1
10
2
Collin
TX
914,127
5
5
2
9
4
25
3
Middlesex
MA
1,585,139
3
6
3
12
3
27
4
Nassau
NY
1,361,350
11
4
6
3
15
39
5
Bergen
NJ
938,506
9
3
13
5
12
42
6
Westchester
NY
976,396
10
12
11
4
9
46
7
DuPage
IL
933,736
7
8
8
11
13
47
8
Oakland
MI
1,242,304
12
10
5
16
6
49
9
Wake
NC
1,024,198
4
16
9
15
8
52
10
Fairfield
CT
948,053
13
9
10
6
14
52
10
Hennepin
MN
1,223,149
6
18
12
17
7
60
12
St. Louis
MO
1,003,362
14
13
7
18
10
62
13
Contra Costa
CA
1,126,745
18
15
16
8
17
74
14
Fulton
GA
1,010,562
8
28
14
20
5
75
15
Suffolk
NY
1,501,587
22
7
15
10
23
77
16
Travis
TX
1,176,558
17
27
17
13
11
85
17
Mecklenburg
NC
1,034,070
16
20
19
21
18
94
18
Allegheny
PA
1,230,459
15
19
18
29
16
97
19
Prince George's
MD
909,535
32
14
22
7
22
97
19
Honolulu
HI
998,714
21
11
24
14
30
100
21
Franklin
OH
1,251,722
20
26
21
26
19
112
22
Salt Lake
UT
1,107,314
28
17
20
23
26
114
23
Erie
NY
922,578
19
24
23
30
21
117
24
Palm Beach
FL
1,422,789
24
21
27
19
33
124
25
Sacramento
CA
1,501,335
31
25
26
22
24
128
26
Pinellas
FL
949,827
25
22
28
28
25
128
26
Hillsborough
FL
1,349,050
27
23
30
27
27
134
28
Cuyahoga
OH
1,255,921
26
32
25
34
20
137
29
Pima
AZ
1,010,025
30
30
32
24
32
148
30
Orange
FL
1,288,126
23
29
35
33
31
151
31
Milwaukee
WI
957,735
29
33
33
35
28
158
32
Shelby
TN
938,069
35
35
29
25
35
159
33
Duval
FL
913,010
33
31
31
31
34
160
34
Marion
IN
939,020
34
34
34
36
36
174
35
Philadelphia
PA
1,567,442
36
36
37
38
29
176
36
Fresno
CA
974,861
38
37
36
32
37
180
37
Bronx
NY
1,455,444
37
38
38
37
38
188
38
*All counties in the United States with a population between 900,000 and 1,600,000 in 2015. **Adjusted for the cost of living. Source: Compiled by Donald Grimes and George Fulton, University of Michigan, using data from the American Community Survey 2014. Population data are from the Census Bureau population estimates program as of April 2016.
Presentation Review
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Figure 3
Growth in U.S. GDP, 2014 –18 NOTES
•
The future course of the Oakland County economy depends in part on the overall health of the national economy.
•
The best single measure of the U.S. economy is inflation-adjusted, or real, Gross Domestic Product (GDP): all of the goods, services, and structures produced in the economy.
•
Growth in real GDP averaged 2.4 percent in 2015, the same as in 2014. In 2015, final sales to domestic purchasers—a broad measure of domestic final demand—grew by 2.8 percent, the fastest pace during this recovery by far. Annual real GDP growth, however, was only the thirdstrongest since 2009, reflecting a drag from the rest of the world on U.S. exports due to weaker economic growth in foreign countries as well as a sharply higher value of the dollar.
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•
The drag from net exports continues into the earlier parts of 2016, holding down the annual growth rate to 2.3 percent.
•
The headwinds from net exports are expected to moderate, although remaining sizable, during the rest of 2016 and 2017. Coupled with projected growth of final domestic demand similar to 2015, this pattern implies a slight acceleration in GDP growth in 2017.
•
Real GDP growth then tapers off a bit in 2018, to 2.5 percent.
•
Underlying the projection for domestic final demand are solid consumption growth, steady support from residential construction investment, a quick turnaround in business fixed investment, and at last a positive contribution from the federal government sector.
2016–2018 Economic Outlook for Oakland County
Figure 3
Growth in U.S. GDP, 2014 –18
4%
3%
2.8 2.4
2.4
2014
2015
2.5 2.3
2%
1%
0% 2016
2017
2018
RSQE: March 2016
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Figure 4
U.S. Light Vehicle Sales, 1990 – 2018 NOTES
•
Total sales of U.S. light vehicles—cars, minivans, sport utility vehicles, crossovers, and pickup trucks—were in the range of 16 to 17+ million units sold annually from 1999 to 2007.
•
Sales then retreated to 10.4 million units by 2009, and have increased every year since then.
•
The industry crossed the 16-million-unit line in 2014, and then cleared the 17-million-unit line in 2015 at 17.3 million units, finishing approximately on par with 2000, another period of cheap gas and rising truck popularity. This makes 2000 and 2015 so far the strongest years for light vehicle sales on record.
•
In our forecast, we move upward from there. Pent-up demand continues to be a significant factor in the climb, as the average age of vehicles on the road today is still at record high levels, gasoline prices and interest rates remain low, and the labor market continues to improve.
Figure 5
U.S. Light Vehicle Sales, Total vs. Detroit Three, 2014 –18 NOTES
•
Total unit sales of U.S. light vehicles rose from 16.4 million units in 2014 to 17.3 million in 2015.
•
Sales continue to increase in 2016 at a decelerating pace, reaching 17.8 million units, and then inching up to 18 million in 2017 before ticking down to 17.9 million in 2018. The sales forecast for those three years would be the highest annual levels in history.
•
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•
The Detroit Three’s share of the light vehicle market shrank from 44.3 percent in 2014 to 43.6 percent in 2015 due to very rapid growth in nonDetroit-Three sales. We are forecasting increases to 44.2 percent in 2016 and 44.5 percent in 2017 and 2018.
•
The projections for total sales and the Detroit Three’s share of that market, taken together, yield our outlook for Detroit Three sales, which move up progressively from 7.3 million units in 2014 to 7.5 million in 2015 and 7.9 million in 2016, before ticking up by a more modest 100,000 units, to 8 million in 2017 and holding there in 2018.
•
After growing consistently over the recovery period, Detroit Three sales flatten out from 2016 to 2018.
Light truck sales, including SUVs and CUVs, account for all of the growth in our forecast.
2016–2018 Economic Outlook for Oakland County
Figure 4
U.S. Light Vehicle Sales, 1990 – 2018
g
,
Millions 20 18 17 15
10
5
0
'90
'92 '91
'94 '93
'96 '95
'98 '97
'00 '99
'02 '01
'04 '03
'06
'05
'08
'07
'10
'09
'12
'11
'14
'13
'16
'15
'18
'17
RSQE: March 2016
Figure 5
U.S. Light Vehicle Sales, Total vs. Detroit Three, 2014 –18 Millions of Units
20 18 16 14 12 10 8 6 4 2 0
16.4
7.3
7.9
7.5
8.0
2015
8.0 44.5
44.2
43.6
Total
17.9
44.5
44.3
2014
18.0
17.8
17.3
2016
Detroit Three
2017
2018
Annual % Detroit Three market share
RSQE: March 2016
Presentation Review
15
Figure 6
Job Growth in Oakland County, 2006 –18 NOTES
•
Oakland County is now in its seventh year of economic recovery since the recession’s low point at the end of 2009. (The annual data indicate a small loss for 2010, but this is an artifact of calculating job changes based on calendar-year averages, which masks the upturn in employment at the beginning of 2010.)
•
Over the period 2009 to 2015, the county’s job growth (15.2 percent) greatly outpaced both the nation’s (8.0 percent) and the state’s (9.6 percent).
•
Job growth picked up in 2015 to add 14,218 jobs by our estimate, an increase of 2.1 percent compared with the somewhat slower 1.9 percent rate posted in 2014.
•
We are forecasting that job growth will tick down to 2.0 percent in 2016 and 2017 before nudging up to 2.1 percent again in 2018. The growth we foresee moving forward translates into gains of 14,006 jobs in 2016, 14,585 in 2017, and 15,562 in 2018.
•
That growth path generates an increase of 44,153 jobs over the next three calendar years— a healthy pace averaging 2.0 percent per year from 2015 to 2018. The best characterization of Oakland’s economy is that it has achieved a favorable cruising altitude.
•
If our forecast proves to be correct, the span of Oakland’s current recovery will lengthen to at least nine years. The county’s upward trajectory continues to be supported by its strong economic fundamentals.
Figure 7
Total Jobs in Oakland County vs. Michigan, Seasonally Adjusted, First Quarter of 2000 to Fourth Quarter of 2018 NOTES
•
To give some perspective to Oakland’s current recovery, we compare it with the preceding decline, to see how much ground has been made up since employment bottomed out in 2009.
•
We include the same profile for Michigan, with both the county and state employment paths indexed to equal 100 in the second quarter of 2000, representing Michigan’s previous peak employment level.
•
From the spring of 2000 to the state’s low point in summer 2009, the county lost 163,320 jobs, over half of them occurring in the last two years of the decline, surrounding the interval of the Great Recession.
•
Then the recovery followed: from the summer of 2009 to the end of the currently published data in summer 2015, Oakland gained 103,887 jobs.
•
From then to the end of 2018, we are forecasting that the county economy will create an additional 46,798 jobs, thus cumulating to 150,685 job additions from the bottom of the downturn through 2018 (103,887 + 46,798).
16
•
That would replenish 92 percent, or twelve in thirteen, of the jobs lost from the spring of 2000 to summer 2009, returning the county to the job levels posted in spring 2001, a year into the nineyear decline.
•
In contrast, the state as a whole is forecast to fall, by the end of 2018, well short of the employment level enjoyed at its peak in the spring of 2000, a job recovery rate of 73 percent compared with Oakland’s 92 percent.
•
The employment decline was more precipitous in Oakland (a drop of 21.3 index points) than for the state (down 18.3 index points) from the spring of 2000 to summer 2009.
•
Oakland’s recovery, however, has been more vigorous through the summer of 2015, with the county gaining 13.5 index points compared with 8.8 index points for the state. The gap in the rate of recovery continues to widen in the county’s favor through 2018, with its employment returning by the end of 2018 almost to the peak levels achieved in 2000. 2016–2018 Economic Outlook for Oakland County
Figure 6
Job Growth in Oakland County, 2006 –18 40,000 30,000
24,412 24,865 18,146
20,000 10,000 0 –10,000 –20,000
–1,113
– 5,801 –18,494
15,562 12,808 14,218 14,006 14,585
– 20,433
–30,000 –40,000 –50,000 –60,000
– 59,663
–70,000
’06
’07
’08
’09
’10
’11
’12
’13
’14
’15* ’16
’17 ’18
*Estimate Figure 7
Total Jobs in Oakland County vs. Michigan, Seasonally Adjusted, First Quarter of 2000 to Fourth Quarter of 2018
Index (2000q2 = 100) 101 Forecast 98 95 92 89 86 83
Oakland
80
Michigan
77 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 Presentation Review
17
Table 5
Job Change in Oakland County by Industry Wage Category, 2015 –18
2015
2018
Change 2015 –18
% Change 2015 –18
Total all industries
705,591
749,744
44,153
6.3
High-wage industries ($75,000 or more)
216,408
231,818
15,410
7.1
Middle-wage industries ($35,000 to $74,999)
310,201
327,235
17,034
5.5
Low-wage industries (under $35,000)
178,982
190,691
11,709
6.5
Source: BLS Quarterly Census of Employment and Wages. High-wage industries have an average wage in 2014 about 40 percent above the U.S. average ($51,364), and low-wage industries, about 30 percent below the U.S. average.
NOTES
•
•
18
The job change in Oakland from 2015 to 2018 is distributed across industry categories based on the industry average wage, extending the historical data shown in table 2 to include the forecast period. The categories are high-, medium-, and low-wage industries. The method for partitioning the data is outlined in the notes for table 2. The ranking of job change from 2015 to 2018, in top-down order measured in percentage terms, is the high-wage (7.1 percent), low-wage (6.5 percent), and middle-wage (5.5 percent) industries. This matches the rank ordering, by percentage growth, of the 2010–15 period (see table 2).
•
The high- and middle-wage industries make up almost three-quarters of the net new jobs created in the county over the three-year forecast period.
•
In summary, the growth in Oakland is forecast to continue to be skewed toward the better-compensated end of the wage scale, as it is in the current recovery period to date, although not quite as tilted toward the higher end as in the earlier period. This growth pattern bodes well for Oakland’s sustained economic prosperity.
2016–2018 Economic Outlook for Oakland County
Table 6
Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18* Average Annual Wage 2014 $56,523 N.A. 51,947
TOTAL JOBS (Number of persons) (Annual percentage change) TOTAL GOVERNMENT
Estimate 2015 705,591 (2.1) 44,516
Forecast Employment Change ’17–’18 ’15 –’18 ’15 –’16 ’16 –’17 14,006 14,585 15,562 44,153 (2.0) (2.0) (2.1) 67 430 443 939
TOTAL PRIVATE
661,076
13,939
14,155
15,120
43,214
56,838
86,010
1,474
1,581
1,493
4,548
71,807
23,868
935
1,052
1,023
3,009
65,922
62,142 11,032 11,128
539 94 22
529 195 79
470 183 87
1,538 473 188
73,955 63,130 78,383
19,796
95
91
53
239
88,681
20,187 575,066
327 12,466
164 12,574
147 13,627
638 38,666
63,183 54,603
125,901 36,136 77,340
2,650 873 1,377
2,281 829 992
2,295 785 1,017
7,226 2,487 3,386
51,147 90,109 31,784
12,425
401
460
493
1,353
59,194
15,168 50,664 35,083 15,580 185,730
2 1,213 775 437 3,796
198 1,103 686 416 4,549
230 1,233 764 469 4,686
430 3,548 2,225 1,323 13,032
75,973 76,766 90,406 46,743 68,345
106,982
3,514
3,414
3,491
10,419
79,122
13,904
310
336
182
828
122,946
64,844
-29
799
1,014
1,784
38,817
108,888 11,160 97,728 65,701 21,504 1,510
1,820 253 1,567 2,603 382 0
2,160 117 2,043 1,911 371 0
2,654 186 2,468 2,092 436 0
6,634 556 6,078 6,607 1,189 0
47,435 44,631 47,753 19,007 32,754 45,079
GOODS-PRODUCING Natural resources, mining, construction Manufacturing Fabricated metal products Machinery Transportation equipment (motor vehicles) Other manufacturing PRIVATE SERVICE-PROVIDING Trade, transportation, and utilities Wholesale trade Retail trade Transportation, warehousing, and utilities Information Financial activities Finance and insurance Real estate and rental and leasing Professional and business services Professional, scientific, and technical Management of companies and enterprises Administrative support and waste management Private education and health services Private education services Health care and social assistance Leisure and hospitality Other services Unclassified
*Some subtotals do not add to totals due to rounding of annual average computations.
Presentation Review
19
Table 6
Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES
•
The projected job movements in total are distributed among twenty-eight major industry divisions in table 6, and into 235 finer industry divisions in appendix A.
•
•
20
•
The government sector is forecast to gain 67 jobs in 2016 following an estimated loss of 40 jobs in 2015. Prior to 2016, employment in the government sector had declined in every year since 2005. Government continues to add jobs at a rate of one percent per year in 2017 (430) and 2018 (443), as the sector adapts to its stringent financial challenges. By the end of our forecast period in 2018, the government sector accounts for only 6.1 percent of the jobs in the county, down from a peak of 8.3 percent in 2009 (when privatesector employment was sharply and temporarily reduced in the recession), and its lowest share since at least 1990.
The aggregate industry category of natural resources, mining, and construction gains 3,009 jobs over the next three years, almost all of them in construction as the very small natural resources and mining components add only a handful of jobs. The construction industry continues to benefit from a revival in residential construction after struggling through a long dry spell. All components of the construction industry enjoy relatively strong job growth over the next three years, with the greatest number of additional jobs (2,082) being created among specialty trade contractors such as plumbing, electrical, and HVAC contractors, as well as residential building contractors (421). Despite these substantial gains, however, the number of construction jobs in 2018 equals only 73 percent of the jobs the county had in that industry in 2000.
•
Private-sector employment grew in the range of 2.1–2.2 percent in each of 2014 and 2015, and is forecast to continue increasing in that narrow range in each of the next three years. This steady growth translates into job gains of about 14,000 to 15,000 per year, cumulating to private-sector job additions of 43,214 from 2015 to 2018.
Job growth in the manufacturing sector has been slowing, from a gain of 5,756 jobs in 2011 to only 569 in 2015. Manufacturing is forecast to continue to expand, but at a slowing pace, adding 539 jobs in 2016, 529 in 2017, and 470 in 2018. The sector accounts for only 8.5 percent of the jobs in the county by 2018, down from 16 percent in 1990 and 14 percent in 2000.
•
Leading the early stages of the recovery was transportation equipment (motor vehicle) manufacturing, which added 3,037 jobs in 2011 and 2,290 in 2012. Growth slowed to only 243 job additions by 2015. We see even smaller gains over the next three years—95 jobs in 2016, 91 in 2017, and 53 in 2018.
2016–2018 Economic Outlook for Oakland County
Table 6
Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES
•
By 2018, employment in transportation equipment manufacturing will still be 13.9 percent below 2008 levels, accounting for only 2.7 percent of the jobs in the county, down from 6 percent in 2000. While factory jobs in the auto industry are no longer leading the recovery, its white-collar component will continue to expand at muchabove-average growth rates.
•
Other components of manufacturing outside of the auto industry have grown more rapidly than autos recently, collectively adding 2,199 jobs in 2013 and 1,713 in 2014 before slowing to add only 326 jobs in 2015. Job growth over the next three years cumulates to 1,299 additions between 2015 and 2018.
•
The manufacturing industries that see the largest job gains over the forecast period are fabricated metals (473), chemicals (266), and machinery (188). In fact, some manufacturing industries are forecast to be at or near peak employment levels in 2018, including chemicals, machine shops, and metal coating and heat treating.
•
Wholesale trade sees robust job growth over the next three years, accumulating to a gain of 2,487 jobs, with the industry paying relatively high average wages ($90,109 in 2014). Within this industry division, motor vehicle and parts merchant wholesalers see very strong growth (884 jobs) from 2015 to 2018, averaging 4.9 percent per year. This industry has enjoyed strong growth over the past quarter-century, with employment tripling between 1990 and 2018.
Presentation Review
•
Retail trade, a much larger and generally lowerpaying sector than wholesale trade, adds 3,386 jobs over the next three years, an average growth rate of 1.4 percent per year. Over one-third of these gains are in motor vehicle and parts dealers, which increases by 1,493 jobs over the forecast period (4.5 percent per year). This industry, unlike most of retail, pays above-average wages ($62,623 in 2014). Other retail industries adding jobs over the forecast horizon include clothing stores (1,088 jobs) and miscellaneous store retailers (775). Food and beverage stores, department stores, and warehouse clubs and supercenters all lose jobs between 2015 and 2018. Technology, especially the Internet, is reducing the number of workers needed for retail transactions.
•
Transportation services and utilities add 1,353 jobs over the next three years. The relatively strong growth in trucking and other transportation services reflects continued expansion of manufacturing production (even as employment gains slow); a rebound in construction activity; and increased local consumer spending as real wage and job growth pick up.
•
The information sector adds only 430 jobs over the next three years (0.9 percent per year). Newspaper and book publishers lose 232 jobs between 2015 and 2018, reducing employment in this industry to less than one-half of its peak employment in 2003. More than offsetting these job losses are forecast gains of 318 jobs in the software publishing industry and 204 jobs in the data processing, hosting, and related services industry.
21
Table 6
Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES
•
The finance and insurance industry has been a weak spot in Oakland County, losing jobs between 2010 and 2014, but it finally turned around in 2015, adding 1,613 jobs. Growth continues over the forecast period, albeit at a more subdued pace, adding about 700 jobs a year and cumulating to a gain of 2,225 jobs over the three years (2.1 percent per year). Jobs in the depository credit intermediation industry, such as commercial banking, are forecast to grow at a modest 1.2 percent per year over the next three years. More rapid job growth is expected in securities and investment brokers (3 percent per year) and in insurance agencies and brokerages (3.6 percent per year).
•
Job growth in professional services over the forecast period is concentrated in testing laboratories (4,473 jobs) and engineering services (2,147). Along with company management, which adds 828 jobs over the next three years, these industries form the core of the white-collar auto industry. By 2018, these three industries will account for 8.7 percent of all employment in Oakland, compared with 7.1 percent in 2000 and only 3.4 percent in 1990—a pattern that is a mirror image of the long-term decline in employment in the blue-collar auto industry.
•
The real estate and rental and leasing industry sees strong growth over the next three years (1,323 jobs or 2.8 percent per year), as the real estate industry continues to recover. Note that most real estate agents are self-employed and thus are not included in these statistics.
•
Some other professional service industries that see relatively strong job growth over the forecast horizon are management and technical consulting services (1,207 jobs), computer systems design (1,074), and scientific research and development services (395).
•
Between 2009 and 2015, employment in professional services exploded by 30,936 jobs (5.9 percent per year). This aggregate industry category is the heart of the knowledge economy, and in Oakland County it is closely identified with the motor vehicle industry. We anticipate that this industry category will continue to grow over the next three years, albeit at a somewhat more subdued pace, cumulating to 10,419 jobs (3.1 percent per year).
•
Administrative support and waste management services gain 1,784 jobs over the next three years. Business support services (689) and office administrative services (434) see the largest job gains within this sector. Employment services, which includes temporary help services, sees very modest job gains over the next three years (361, or 0.4 percent per year), following substantial job declines in 2013 through 2015.
22
2016–2018 Economic Outlook for Oakland County
Table 6
Forecast of Jobs in Oakland County by Major Industry Division, 2016 –18 NOTES
•
Employment in private education services grew very rapidly in the 1990s and the first decade of the twenty-first century (averaging 4.8 percent per year), but employment growth since 2010 has been weak, averaging 0.6 percent per year. Growth picks up over the next three years as employment increases by 556 jobs, or 1.6 percent per year.
•
Health care and social assistance adds 6,078 jobs over the forecast period (2 percent per year). This is a substantial increase in the rate of job growth from the interval between 2012 and 2015, when employment increased by only 0.3 percent per year as efforts to reduce health care spending dominated the needs of an aging population for additional medical services. We believe that over the forecast period the needs of the aging baby boomer population will require additional health care workers despite continuing efforts to constrain health care spending. Within this industry division, the largest job gains occur in ambulatory health care services (1,938), hospitals (1,728), social assistance (1,230), and nursing and residential care facilities (1,182).
Presentation Review
•
The leisure and hospitality services category gains 6,607 jobs (3.2 percent per year) from 2015 to 2018. This is one of the most rapidly growing major industry categories, along with professional and technical services. Its growth reflects both the spending behavior of an aging population and the growing affluence of the local population. Full-service restaurants account for over one-half of those gains (3,460 jobs). Limited-service restaurants (i.e., fast-food restaurants) contribute 1,192 jobs. Over the same period, employment at local hotels and other forms of accommodation grows by 742 jobs and at fitness centers by 311 jobs.
•
The “other services” sector covers a wide variety of industries: repair services (including auto repair), personal services (such as hair salons and dry cleaners), membership organizations, and private household services. Taken together, these industries grow by 1,189 jobs over the forecast period. The largest gains are in membership organizations (519 jobs) and personal care services (430).
23
Table 7
Twenty Industries with the Greatest Job Gains in Oakland County, 2015 –18 NOTES
•
In comparing the composition of the twenty industries having the largest employment gains between the historical period from 2010 to 2015 (table 3) and the forecast period from 2015 to 2018, we find both continuing and changing patterns.
•
As in the earlier period, job gains among higherwage industries in the forecast period still dominate, and the counts come close to matching. In the forecast period, eleven of the industries have wage levels above the average for the county overall, compared with twelve in the historical period. In both periods, five of the top seven industries with the largest job gains pay above average wages.
•
The top five industries for job creation in the forecast period are in the top seven in the historical period: testing laboratories, full-service restaurants, wholesale trade in durable goods, engineering services, and specialty trade contractors.
24
•
The more advanced stages of the recovery do usher in some differences as well. Perhaps most notable is the absence of any manufacturing industries in the forecast period’s top twenty, compared with three entries in the historical period. This is a typical pattern for manufacturing as a recovery moves into its more mature stages.
•
Several industries in the professional and business services sector continue to have a prominent presence in the forecast period, including three of the top ten in the job gain rankings, but there is also more diffusion of the recovery into other industries. This includes a greater presence of industries in health care, leisure and hospitality, financial activities, and retail trade in the forecast period’s rankings than in the list for the prior five years.
•
Oakland County has been investing for years in many of the industries that are becoming increasingly prominent in the New Economy, particularly those associated with professional and business services, health services, and the technological evolution of the motor vehicle.
2016–2018 Economic Outlook for Oakland County
Table 7
Twenty Industries with the Greatest Job Gains in Oakland County, 2015 –18 Change 2015 –18
% Change 2015 –18
Average Wage 2014
44,153
6.3
$56,523
Testing laboratories
4,473
22.2
76,974
Full-service restaurants
3,460
13.9
17,834
Merchant wholesalers, durable goods
2,165
8.9
92,104
Engineering services
2,147
9.2
77,401
Specialty trade contractors
2,082
13.7
62,859
Ambulatory health care services
1,938
4.8
53,709
Hospitals
1,728
5.4
57,738
Motor vehicle and parts dealers
1,493
14.1
62,623
Social assistance
1,230
12.1
22,990
Management and technical consulting services
1,207
13.2
73,625
Limited-service restaurants
1,192
6.6
12,933
Real estate
1,187
9.6
46,488
Nursing and residential care facilities
1,182
7.8
27,324
Clothing and clothing accessory stores
1,088
13.3
19,163
Computer systems design and related services
1,074
5.2
84,150
Insurance carriers and related activities
993
6.4
80,020
Management of companies and enterprises
828
6.0
122,946
Credit intermediation and related activities
817
5.4
81,532
Miscellaneous store retailers
775
17.2
24,083
Accommodation
742
17.7
23,958
Total jobs
Presentation Review
25
Figure 8
Unemployment Rates for Oakland County and for the United States, 2010 –18
13% Forecast
11.8 11% 9.5
9.6 9%
8.9
8.3
8.0
8.1 7% 5%
6.8 7.4 5.3
6.2
Oakland United States
4.7
4.9 4.2
3% 2010
2011
2012
2013
2014
2015
2016
4.5 3.7 2017
4.3 3.3 2018
NOTES
•
The sustained job growth projected for Oakland County through 2018 is accompanied by an unemployment rate that continues to decline over the forecast period, from 4.9 percent in 2015 to 4.2 percent in 2016, and then further to 3.7 percent in 2017 and 3.3 percent in 2018.
•
Oakland’s unemployment rate was 2.2 percentage points above the U.S. rate in 2010 (11.8 percent versus 9.6 percent). The gap narrowed to six-tenths of a percentage point in 2014 (6.8 percent versus 6.2 percent).
•
The drop of 1.6 percentage points over the threeyear period brings the annual jobless rate down into rarified air, lower than it has been since 2000 when the unemployment rate was 2.6 percent, the lowest reading ever recorded in the county.
•
The county and the nation switched positions in 2015, with Oakland’s jobless rate at 4.9 percent coming in four-tenths of a percentage point below the U.S. rate of 5.3 percent.
•
The county labor force has grown at a modest pace since 2011, and we are projecting that it will grow at a more rapid pace over the forecast period, as improving job opportunities encourage more people to reenter the labor force in the hope of finding employment. If, instead, the labor force declines, or expands at a slower pace than we anticipate, then the unemployment rate would fall more rapidly with the employment gains we are projecting.
•
We are forecasting that the gap will continue to widen in the county’s favor, with Oakland’s unemployment rate falling one percentage point below the U.S. rate by 2018 (3.3 percent versus 4.3 percent).
26
2016–2018 Economic Outlook for Oakland County
Figure 9
Inflation Rate, Detroit CPI, 2014 –18
3% 2.4 2.1
2% 1%
1.1 0.7
0% –1%
–1.4 –2%
2014
2015
2016
2017
2018
NOTES
•
Local inflation is measured here by the growth rate of the Detroit Consumer Price Index (CPI). Consumer price data are compiled at the regional level; they are not available for the county in isolation.
•
Going forward, local inflation is forecast to move up to 0.7 percent in 2016 and then to pick up further to 2.1 percent in 2017 and 2.4 percent in 2018, as energy prices rise slowly.
•
Local prices increased modestly by 1.1 percent for 2014, before plummeting by 1.4 percent in 2015, a marked departure from a tenth of a percentage point increase in the U.S. CPI for that year.
•
In 2017 and 2018, local inflation runs, more or less, with the national rate.
•
The plunge in the local index reflects the sharp drop in energy prices that began in late 2014, coupled with—unlike the U.S. measure—little or no increase in core prices (that is, excluding food and energy). The weaker local price movements are pervasive and quite puzzling, and we have judged this broadly based drop to be temporary.
Presentation Review
27
Figure 10
Average Real Wage in Oakland County by Selected Industry Group, 1990 –2018 NOTES
•
•
The average real wage (in 2014 dollars) in Oakland County between 1990 and 2018 is presented here, both in total and for three broad industry categories: (1) traditional blue-collar industries such as manufacturing, construction, mining, and transportation; (2) service-providing industries that tend to employ workers with higher educational attainment, such as government, health services, professional services and corporate headquarters, wholesale trade, financial activities, and information; and (3) lower-educationalattainment service-providing industries such as retail trade, leisure and hospitality, business services such as temporary help, and repair and personal services.
•
The decline of 1.4 percent in local prices in 2015 converted a nominal wage gain of 2.6 percent into a real wage increase of 4 percent. This was the largest year-over-year increase in the county’s real wage since at least 1990, raising the real wage above its prior peak level in 1999.
•
A modest, but positive, increase in local prices in 2016 converts a nominal wage increase of 2.8 percent into a real increase of 2.1 percent. With an acceleration in inflation expected in 2017 and 2018, the growth in real wages moderates to rates of 1.1 percent and 1.0 percent, respectively.
The average inflation-adjusted wage in Oakland peaked in 1999 at $58,220, a 19.8 percent gain from 1990. Wage gains were widespread across almost all industries, with increases over those nine years of 14.7 percent in the blue-collar industries, 22.3 percent in the higher-education service industries, and 16.5 percent in the lowereducation service industries.
•
According to our forecast, the real wage will have increased for five consecutive years between 2013 and 2018, increasing by a solid 10.7 percent over that interval.
•
The real wage gains in the 2013–18 interval are distributed across all classes of workers. The greatest gains, however, accrue to the highereducational-attainment service industries (a cumulative wage increase of 11.2 percent between 2013 and 2018). The smallest gains fall to the lower-educational-attainment service industries (an increase of 7.5 percent between 2013 and 2018). Blue-collar industry wages are forecast to see a gain of 10.7 percent over that period.
•
Over the period 1999 to 2013, the average real wage in Oakland tended to decline, reaching a low of $55,350 in 2013, 4.9 percent below its peak level in 1999. The average wage in the blue-collar industries declined a little more than in the other industry categories, but almost all industries saw some decline.
•
The real wage overall grew by 2.1 percent in 2014, the blue-collar industries leading the way with a gain of 3 percent. This was largely due to strong wage growth in construction and some of the non-motor-vehicle manufacturing industries, as labor shortages in some of the skilled trades caused firms to increase pay and hours worked. The real wage increased by 2.2 percent in the higher-education service category, but by only 0.5 percent in the lower-education service group.
28
2016–2018 Economic Outlook for Oakland County
Figure 10
Average Real Wage in Oakland County by Selected Industry Group, 1990 –2018
Blue-collar industries Higher-education service industries Lower-education service industries Total
$80,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000
Forecast
’90 ’92 ’94 ’96 ’98 ’00 ’02 ’04 ’06 ’08 ’10 ’12 ’14 ’16 ’18 ’91 ’93 ’95 ’97 ’99 ’01 ’03 ’05 ’07 ’09 ’11 ’13 ’15 ’17
Presentation Review
29
Appendix A
Forecast of Jobs in Oakland County by Detailed Industry Division
TOTAL PAYROLL JOBS (Number of persons) (Annual percentage change) TOTAL GOVERNMENT Federal government Postal Service Federal government NEC State and local government Local libraries Local education and health services Elementary and secondary schools Other education and health services Local public administration State and other local government TOTAL PRIVATE GOODS-PRODUCING Natural resources and mining Agriculture, forestry, fishing, and hunting Mining, quarrying, and oil and gas extraction Construction Construction of buildings Residential Nonresidential Heavy and civil engineering construction Utility systems Land subdivision Highway, street, and bridge construction Other heavy construction Specialty trade contractors Building foundation and exterior Building equipment Building finishing Other specialty trade contractors Manufacturing Food Bakeries and tortilla manufacturing Food manufacturing NEC Textile products Wood products Paper products Printing and related support activities Chemicals Plastics and rubber products Nonmetallic mineral products Primary metals Fabricated metals Forging and stamping Architectural and structural metals Machine shops and threaded products Coating, engraving, and heat treating metals Other fabricated metals Fabricated metals NEC
30
Average Annual Wage 2014
Estimate 2015
2016
Forecast 2017
2018
705,591 (2.1) 44,516 4,694 3,623 1,071 39,822 541 22,285 20,304 1,981 12,519 4,476
719,597 (2.0) 44,582 4,725 3,676 1,049 39,857 560 22,220 20,411 1,809 12,567 4,510
734,182 (2.0) 45,012 4,762 3,725 1,037 40,250 575 22,380 20,576 1,804 12,752 4,543
749,744 (2.1) 45,455 4,804 3,774 1,029 40,651 593 22,500 20,699 1,801 12,971 4,587
$56,523 N.A 51,947 68,488 63,265 85,977 50,054 20,622 51,603 52,775 40,735 47,074 53,793
661,076 86,010 689 547 142 23,178 5,990 3,096 2,894 1,997 903 197 840 57 15,191 2,305 8,680 2,390 1,816 62,142 1,118 583 535 164 131 265 1,925 3,039 3,290 1,220 1,299 11,032 1,018 784 4,017 2,056 1,548 1,608
675,015 87,484 696 554 142 24,106 6,177 3,196 2,981 2,069 912 211 880 66 15,860 2,453 9,002 2,481 1,925 62,681 1,160 624 536 170 130 280 1,941 3,114 3,351 1,228 1,203 11,126 1,031 797 4,104 2,060 1,509 1,625
689,170 89,065 696 551 145 25,158 6,425 3,353 3,073 2,144 916 247 908 73 16,589 2,589 9,357 2,592 2,051 63,210 1,190 651 540 177 127 286 1,934 3,208 3,404 1,236 1,159 11,322 1,061 802 4,226 2,081 1,507 1,644
704,289 90,557 702 554 148 26,175 6,665 3,518 3,147 2,237 933 294 932 78 17,273 2,716 9,690 2,699 2,168 63,680 1,224 678 545 184 125 290 1,927 3,304 3,439 1,238 1,124 11,505 1,089 807 4,341 2,098 1,508 1,662
56,838 71,807 31,836 24,831 58,872 66,943 74,721 77,042 72,200 73,363 61,673 76,873 85,001 63,621 62,859 51,918 69,867 48,615 61,229 73,955 28,361 20,215 35,630 27,592 53,900 76,437 55,318 87,493 49,793 56,172 98,629 63,130 56,515 54,963 73,966 50,308 62,289 58,751
2016–2018 Economic Outlook for Oakland County
Appendix A continued
Forecast of Jobs in Oakland County by Detailed Industry Division Average Annual Wage 2014
Estimate 2015
2016
Forecast 2017
2018
Machinery Industrial machinery Commercial and service industry machinery Metalworking machinery Turbine and power transmission equipment Other general purpose machinery Machinery NEC Computer and electronic products Semiconductors and electronic components Electronic instruments Computer and electronic products NEC Electrical equipment, appliances, components Transportation equipment Motor vehicle bodies and trailers Aerospace products and parts Transportation equipment NEC Furniture and related products Miscellaneous manufacturing Medical equipment and supplies Other miscellaneous manufacturing Manufacturing NEC
11,128 763 569 5,547 536 3,378 335 2,514 1,419 775 320 1,106 19,796 1,101 1,028 17,666 448 2,709 725 1,984 959
11,150 731 604 5,479 514 3,493 329 2,559 1,452 769 339 1,103 19,891 1,223 1,011 17,657 455 2,780 728 2,052 1,040
11,229 725 610 5,506 505 3,552 331 2,547 1,437 757 353 1,094 19,982 1,320 997 17,665 453 2,798 746 2,052 1,063
11,316 719 616 5,537 496 3,615 333 2,535 1,421 746 367 1,083 20,035 1,403 983 17,649 448 2,817 766 2,051 1,088
$78,383 76,835 59,921 76,632 83,365 85,162 61,341 70,831 65,215 72,436 90,603 65,944 88,681 108,173 79,065 88,249 48,003 56,074 59,690 54,164 48,787
PRIVATE SERVICE-PROVIDING Trade, transportation, and utilities Wholesale trade Merchant wholesalers, durable goods Motor vehicles and parts Commercial equipment Office equipment Computers and software Medical equipment Commercial equipment NEC Electric goods Machinery and supply Industrial machinery Machinery and supply NEC Merchant wholesalers, durable goods NEC Merchant wholesalers, nondurable goods Paper and paper products Druggists’ goods Groceries and related products Chemicals Miscellaneous nondurable goods Merchant wholesalers, nondurable goods NEC Wholesale electronic markets, agents, brokers Retail trade Motor vehicle and parts dealers Furniture and home furnishings stores Electronics and appliance stores Building material and garden supply dealers Food and beverage stores Health and personal care stores
575,066 125,901 36,136 24,425 5,700 5,492 956 2,456 1,449 631 4,184 4,796 3,303 1,494 4,253 6,853 386 1,734 1,382 1,389 1,132 831 4,859 77,340 10,564 2,670 4,556 6,487 12,026 5,641
587,531 128,552 37,009 25,175 6,029 5,525 923 2,455 1,491 655 4,277 4,984 3,423 1,561 4,359 6,969 383 1,738 1,409 1,374 1,223 842 4,864 78,717 11,145 2,716 4,578 6,589 11,970 5,703
600,105 130,833 37,838 25,897 6,323 5,615 897 2,499 1,555 663 4,343 5,139 3,540 1,599 4,478 7,091 379 1,773 1,438 1,379 1,272 849 4,849 79,709 11,591 2,734 4,604 6,645 11,899 5,736
613,732 133,128 38,623 26,590 6,584 5,720 874 2,545 1,630 672 4,414 5,282 3,650 1,632 4,590 7,199 374 1,809 1,466 1,394 1,300 855 4,834 80,726 12,057 2,745 4,637 6,716 11,893 5,774
54,603 51,147 90,109 92,104 90,090 110,027 69,639 145,529 86,920 71,330 103,824 81,562 81,401 81,880 71,589 73,468 72,075 67,431 60,691 107,544 61,138 67,768 104,688 31,784 62,623 33,576 47,241 37,991 22,729 36,094
Presentation Review
31
Appendix A continued
Forecast of Jobs in Oakland County by Detailed Industry Division
Retail trade (continued) Gasoline stations Clothing and clothing accessories stores Sporting goods, hobby, book, and music stores General merchandise stores Department stores, except discount Discount department stores Warehouse clubs and supercenters All other general merchandise stores Miscellaneous store retailers Nonstore retailers Transportation and warehousing Truck transportation Couriers and messengers Warehousing and storage Transportation and warehousing NEC Utilities Information Publishing (except Internet) Newspaper, book, and directory publishers Software publishers Motion pictures and sound recording Motion picture and video production Motion picture and video exhibition Motion pictures and sound recording NEC Broadcasting (except Internet) Telecommunications Wireless telecommunications carriers Telecommunications NEC Data processing, hosting, and related services Information NEC Financial activities Finance and insurance Credit intermediation and related activities Depository credit intermediation Commercial banking Depository credit intermediation NEC Nondepository credit intermediation Real estate credit intermediation Nondepository credit intermediation NEC Activities related to credit intermediation Mortgage and nonmortgage loan brokers Activities related to credit intermediation NEC Securities, commodity contracts, investments Insurance carriers and related activities Insurance carriers Direct property and casualty insurers Insurance carriers NEC Insurance agencies, brokerages, and related Insurance agencies and brokerages Other insurance-related activities Finance and insurance NEC
32
Estimate 2015
2016
Forecast 2017
2018
2,095 8,167 4,078 15,479 4,083 4,231 5,917 1,248 4,496 1,081 11,026 3,645 1,873 1,375 4,132 1,400 15,168 3,853 1,599 2,254 2,079 594 1,278 207 1,449 5,227 571 4,656 2,004 556 50,664 35,083 15,135 9,183 6,421 2,762 4,713 1,928 2,784 1,240 395 845 4,438 15,449 8,187 2,362 5,825 7,262 5,146 2,116 61
2,082 8,604 4,152 15,205 3,985 4,114 5,806 1,301 4,889 1,084 11,400 3,796 1,878 1,379 4,347 1,426 15,170 3,816 1,497 2,319 2,082 616 1,273 192 1,475 5,135 568 4,567 2,074 588 51,876 35,859 15,494 9,320 6,537 2,783 4,896 2,077 2,819 1,278 428 851 4,540 15,760 8,313 2,335 5,977 7,447 5,352 2,095 65
2,099 8,940 4,201 15,044 3,961 4,028 5,715 1,340 5,129 1,086 11,844 3,982 1,881 1,362 4,619 1,442 15,368 3,877 1,431 2,446 2,107 623 1,279 205 1,503 5,114 542 4,572 2,140 627 52,979 36,545 15,724 9,425 6,658 2,766 4,996 2,171 2,825 1,303 461 843 4,683 16,074 8,442 2,320 6,122 7,633 5,536 2,096 64
2,118 9,254 4,258 14,915 3,943 3,953 5,638 1,381 5,271 1,087 12,320 4,171 1,892 1,352 4,905 1,458 15,599 3,939 1,367 2,572 2,138 631 1,290 217 1,531 5,109 515 4,593 2,207 674 54,212 37,309 15,952 9,528 6,782 2,746 5,091 2,257 2,834 1,333 496 837 4,851 16,442 8,606 2,307 6,300 7,836 5,727 2,109 64
Average Annual Wage 2014 $17,319 19,163 22,472 22,680 24,585 18,628 25,474 15,946 24,083 51,437 47,187 52,869 48,935 57,153 38,082 148,076 75,973 88,422 70,445 103,520 45,293 84,100 10,798 98,822 93,019 75,803 87,182 73,778 77,223 74,134 76,766 90,406 81,532 76,717 82,313 61,464 94,809 72,022 108,597 65,209 66,617 64,528 154,933 80,020 86,006 90,087 84,661 73,586 75,484 69,205 106,602
2016–2018 Economic Outlook for Oakland County
Appendix A continued
Forecast of Jobs in Oakland County by Detailed Industry Division Estimate 2015 Real estate and rental and leasing Real estate Lessors of real estate Offices of real estate agents and brokers Activities related to real estate Rental and leasing services Lessors of nonfinancial intangible assets Professional and business services Professional and technical services Legal services Accounting and bookkeeping services Architectural and engineering services Architectural services Engineering services Testing laboratories Engineering services NEC Specialized design services Computer systems design and related services Management and technical consulting services Scientific research and development services Advertising, PR, and related services Other professional and technical services Management of companies and enterprises Administrative support and waste management Administrative and support services Office administrative services Employment services Business support services Investigation and security services Services to buildings and dwellings Other support services Administrative and support services NEC Waste management and remediation services Private education and health services Education services Elementary and secondary schools Colleges and universities Education services NEC Health care and social assistance Ambulatory health care Offices of physicians Offices of dentists Offices of other health practitioners Outpatient care centers Medical and diagnostic laboratories Home health care services Other ambulatory health care services Hospitals Nursing and residential care facilities Nursing care facilities Residential mental health facilities
Presentation Review
15,580 12,363 5,524 1,480 5,358 2,903 314 185,730 106,982 11,727 6,379 45,416 1,287 23,426 20,187 515 2,141 20,758 9,182 1,962 4,489 4,930 13,904 64,844 63,440 3,946 29,682 7,640 5,562 12,962 2,276 1,371 1,404 108,888 11,160 3,981 2,268 4,910 97,728 40,227 14,300 6,225 5,113 2,562 1,611 9,098 1,318 32,287 15,068 4,730 2,765
2016 16,018 12,782 5,628 1,523 5,631 2,923 313 189,526 110,497 11,841 6,488 47,593 1,315 24,148 21,586 545 2,249 21,065 9,609 2,110 4,463 5,078 14,214 64,815 63,453 4,028 29,594 7,896 5,707 12,610 2,260 1,357 1,362 110,708 11,413 4,045 2,317 5,051 99,296 40,726 14,259 6,297 5,269 2,676 1,631 9,245 1,350 32,798 15,376 4,922 2,812
Forecast 2017 16,434 13,140 5,712 1,574 5,854 2,971 324 194,075 113,911 11,877 6,573 49,851 1,352 24,867 23,074 558 2,358 21,465 10,011 2,234 4,446 5,095 14,550 65,614 64,262 4,186 29,774 8,114 5,862 12,690 2,244 1,391 1,352 112,868 11,530 4,077 2,360 5,093 101,339 41,382 14,372 6,409 5,414 2,766 1,662 9,378 1,381 33,313 15,794 5,169 2,891
2018 16,903 13,550 5,797 1,649 6,103 3,019 335 198,762 117,402 11,915 6,662 52,198 1,395 25,573 24,660 570 2,498 21,832 10,389 2,357 4,427 5,123 14,732 66,628 65,275 4,380 30,044 8,329 6,005 12,859 2,230 1,429 1,353 115,522 11,716 4,154 2,421 5,141 103,806 42,164 14,552 6,549 5,571 2,869 1,697 9,516 1,411 34,015 16,249 5,432 2,975
Average Annual Wage 2014 $46,743 46,488 42,038 50,367 50,152 43,782 82,690 68,345 79,122 86,694 63,282 77,175 79,976 77,401 76,974 65,919 94,456 84,150 73,625 140,406 86,391 56,080 122,946 38,817 38,485 54,764 41,760 41,424 27,185 25,071 50,083 43,428 54,591 47,435 44,631 38,457 39,538 51,834 47,753 53,709 76,451 47,825 42,869 51,341 45,349 31,272 40,249 57,738 27,324 34,115 24,604
33
Appendix A continued
Forecast of Jobs in Oakland County by Detailed Industry Division
Nursing and residential care facilities (continued) Community care facilities for the elderly Other residential care facilities Social assistance Individual and family services Child day care services Social assistance NEC Leisure and hospitality Arts, entertainment, and recreation Spectator sports Golf courses and country clubs Fitness and recreational sports centers Arts, entertainment, and recreation NEC Accommodation and food services Accommodation Food services and drinking places Restaurants and other eating places Full-service restaurants Limited-service restaurants Cafeterias, grill buffets, and buffets Snack and nonalcoholic beverage bars Special food services Drinking places, alcoholic beverages Other services Repair and maintenance Automotive repair and maintenance Repair and maintenance NEC Personal and laundry services Personal care services Personal and laundry services NEC Membership associations and organizations Private households Private unclassified service-providing Addendum Unemployment rate
34
Average Annual Wage 2014
Estimate 2015
2016
Forecast 2017
2018
6,048 1,525 10,147 5,392 3,681 1,075 65,701 9,868 1,416 2,325 4,030 2,097 55,833 4,186 51,646 45,868 24,969 17,986 521 2,392 4,017 1,761 21,504 6,012 4,284 1,728 8,621 4,782 3,839 5,754 1,116 1,510
6,113 1,528 10,397 5,617 3,726 1,053 68,304 10,108 1,518 2,361 4,119 2,109 58,196 4,436 53,760 47,893 26,240 18,627 519 2,507 4,048 1,819 21,885 6,057 4,263 1,794 8,847 4,960 3,887 5,893 1,088 1,510
6,187 1,548 10,849 6,035 3,741 1,072 70,215 10,304 1,570 2,399 4,219 2,117 59,911 4,680 55,230 49,261 27,271 18,884 511 2,594 4,092 1,878 22,257 6,124 4,287 1,837 8,973 5,073 3,899 6,075 1,085 1,510
6,252 1,590 11,378 6,538 3,746 1,094 72,307 10,520 1,603 2,441 4,341 2,136 61,788 4,928 56,860 50,804 28,430 19,178 509 2,688 4,127 1,928 22,693 6,196 4,318 1,878 9,139 5,211 3,928 6,273 1,085 1,510
$24,968 22,497 22,990 23,243 19,886 30,241 19,007 32,387 96,805 26,237 17,277 32,277 16,682 23,958 16,102 15,803 17,834 12,933 19,508 15,731 19,392 15,931 32,754 42,553 39,778 49,383 24,305 21,443 28,158 37,893 20,048 45,079
4.9
4.2
3.7
3.3
N.A.
2016–2018 Economic Outlook for Oakland County
Appendix B
Oakland County Compared with 37 U.S. Counties of Similar Size* Indicator Values High-Income Associate’s
Median
Persons
Population
Degree
Child
Family
Aged 65
Managerial,
County
State
2015
or More
Poverty
Income**
or Older
Professional
Fairfax
VA
1,142,234
67.05%
8.65%
$105,374
60.95%
56.28%
Montgomery
MD
1,040,116
65.09%
8.24%
94,776
55.14%
56.36%
Collin
TX
914,127
60.15%
9.24%
98,745
40.32%
53.00%
Middlesex
MA
1,585,139
62.86%
9.53%
96,318
38.64%
53.91%
Nassau
NY
1,361,350
55.69%
8.75%
88,111
45.73%
43.95%
Bergen
NJ
938,506
56.74%
8.73%
83,503
42.69%
45.88%
Westchester
NY
976,396
56.57%
12.85%
86,929
42.82%
47.21%
DuPage
IL
933,736
58.61%
10.85%
87,464
39.40%
44.92%
Oakland
MI
1,242,304
55.63%
12.39%
90,159
35.31%
48.89%
Wake
NC
1,024,198
60.69%
14.59%
87,455
37.67%
47.91%
Fairfield
CT
948,053
55.38%
11.49%
87,167
42.56%
44.49%
Hennepin
MN
1,223,149
59.16%
17.45%
85,000
32.27%
48.17%
St. Louis
MO
1,003,362
54.42%
13.09%
87,856
32.17%
46.12%
Contra Costa
CA
1,126,745
48.24%
14.37%
79,142
41.47%
42.98%
Fulton
GA
1,010,562
56.75%
24.51%
79,817
31.08%
50.59%
Suffolk
NY
1,501,587
45.80%
9.76%
79,751
39.88%
37.75%
Travis
TX
1,176,558
51.54%
24.29%
78,643
38.36%
45.99%
Mecklenburg
NC
1,034,070
52.85%
20.97%
75,853
30.89%
42.82%
Allegheny
PA
1,230,459
52.93%
18.71%
76,719
23.31%
43.95%
Prince George's
MD
909,535
38.10%
13.99%
71,686
41.68%
38.11%
Honolulu
HI
998,714
46.17%
12.70%
68,662
38.06%
35.97%
Franklin
OH
1,251,722
46.87%
24.22%
71,787
27.16%
42.37%
Salt Lake
UT
1,107,314
41.53%
15.52%
73,409
28.94%
37.31%
Erie
NY
922,578
47.32%
23.46%
70,612
22.91%
38.37%
Palm Beach
FL
1,422,789
42.77%
21.93%
62,178
31.97%
35.04%
Sacramento
CA
1,501,335
39.07%
24.04%
64,801
30.53%
37.57%
Pinellas
FL
949,827
42.40%
22.03%
61,049
24.14%
37.34%
Hillsborough
FL
1,349,050
41.83%
23.21%
60,730
24.82%
37.05%
Cuyahoga
OH
1,255,921
41.95%
29.68%
67,197
21.60%
39.89%
Pima
AZ
1,010,025
39.43%
26.16%
59,245
28.29%
35.63%
Orange
FL
1,288,126
45.08%
25.53%
55,370
21.81%
35.92%
Milwaukee
WI
957,735
39.69%
32.09%
57,491
21.29%
36.46%
Shelby
TN
938,069
37.01%
35.55%
60,954
27.94%
34.27%
Duval
FL
913,010
37.66%
27.53%
59,373
22.16%
34.70%
Marion
IN
939,020
37.22%
32.33%
56,464
19.63%
33.32%
Philadelphia
PA
1,567,442
34.36%
36.90%
44,438
17.25%
36.05%
Fresno
CA
974,861
28.20%
38.87%
49,676
22.14%
27.98%
Bronx
NY
1,455,444
28.22%
43.28%
31,407
17.31%
24.80%
*All counties in the United States with a population between 900,000 and 1,600,000 in 2015. **Adjusted for the cost of living. Source: Compiled by Donald Grimes and George Fulton, University of Michigan, using data from the American Community Survey 2014. Population data are from the Census Bureau population estimates program as of April 2016.
Presentation Review
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