Five years after the Great Recession, West Michigan finally is back to its pre-recession levels in payroll jobs and unemployment rates. But there’s still a long way to go in terms of talent development and retainment.
That’s according to a new report from Talent 2025, a CEO-led organization that hopes to raise the bar for West Michigan’s talent development and retainment. Talent 2025 recently released its 2015 West Michigan Talent Assessment and Outlook report, which debuted last year.
“Employers are feeling the constraints of a falling supply of talent as regional unemployment has fallen below 5 percent and demographic trends show a coming wave of retirements,” the report concludes. “The construction industry has already started to scale back output because of labor shortages, while others like energy and manufacturing foresee future labor constraints as the pending wave of retirement approaches as the economy grows.”
The report, which was created by collaboration between Talent 2025, the state of Michigan, Michigan Works!, and economic developers, educators and employers from across West Michigan, is designed as a tool to help business leaders and educators measure the area’s demand for talent, said Kevin Stotts, Talent 2025 president.
“This year’s report includes some very compelling findings,” Stotts said. “The data tells us that West Michigan has recovered to pre-recessionary levels of payroll jobs and unemployment rates. We are back on track.”
The 77-page report focused on the following topics: Population and Demographics, Identifying Commuting Patterns, Labor Force and Employment, Industry Jobs, Cluster Focus, Measuring Real-Time Demand, Occupational Outlook and Forecasting In-Demand Skills.
Stotts said this year’s report also added quantitative information from employers, which Talent 2025 gleaned by holding seven focus groups with 38 attendees from 33 companies.
The report concludes that a continued increase in jobs, a decrease in the unemployment rate and the increasing educational attainment has helped, but employers continue to struggle to find talent to fill jobs. That struggle has put restraints on the area’s growth.
Stotts said something that surprised him in the report was the extent of the talent needs among the region’s employers regardless of the industry sector, although the energy sector in particular stood out.
“In the energy sector, we knew there was need. But it wasn’t until we had the interviews with the employers in that sector that we really got an understanding of the significance of that. The energy sector is on a huge transition right now,” he said.
The report noted the area is growing in population, and that alone is helping to bring in younger talent.
“In 2014, the West Michigan population increased by 0.8 percent, marking the fifth straight year of population growth. West Michigan now has 1,558,829 residents, a 7.5 percent increase from the 2000 level of 1,450,631. The population in West Michigan has trended upward by 7.5 percent since 2000. This is significantly higher than the other 70 counties where population has dropped by 1.8 percent during that time,” report read.
“West Michigan has more residents proportionally in almost every age category from 0 to 39, illustrating a younger population than the state as a whole.”
One of the reasons things are looking up in West Michigan is the region’s positive migration draw.
“West Michigan continues to be a draw for residents throughout the state of Michigan. In 2013, West Michigan saw a net increase of almost 3,500 individuals, with about 27,200 individuals moving from elsewhere in the state,” the report read.
“Migration to and from the rest of the nation tells a slightly different story. Excluding the inflow from the rest of the state, the net migration to the other 49 states is a net loss of almost 6,000. According to employers, many new hires willing to move to Michigan have familial or marital ties to the region.”
Another key issue in the report was unemployment. According to the report, West Michigan’s unemployment rate has been consistently lower than the statewide average since 2004. West Michigan joblessness this year is more than a full percentage point lower that the state’s rate.
“Unemployment rates have improved in all West Michigan counties over the year. However, stakeholders in the region must note that while sections of the region have seen a recovery to near-full employment levels, several counties (and also several sub-county areas within larger cities) still see unemployment rates near the double digits,” the report read.
Private sector payroll jobs in West Michigan are also improving. Last year, West Michigan payroll jobs surpassed pre-recessionary levels by a little more than 30,000 jobs.
“Nearly two-thirds of total payroll jobs in West Michigan are in five industries: manufacturing, health care and social assistance, retail trade, administration and support and waste management, and accommodation and food services,” the report read.
“Compared to a 10.1 percent loss in total private sector jobs during the recession, West Michigan has surged back in this indicator, leading all other Michigan regions by adding 17.6 percent back 12.9 percent from 2009 to 2014.”
Here are some of the report’s main insights:
- Energy employers offer positions at various skill levels including customer service representatives, which require a high school diploma, through environmental engineers, which typically require a four-year degree. Many of these occupations pay high wages, with an average annual wage of $59,800 within the cluster.
- Although there has been a significant shortage of skilled talent to be found for food processors, employment within the agriculture and food processing cluster increased from 2013 to 2014, from 30,275 to 31,650 employees in West Michigan.
- While not all manufacturing employers use temporary workers, those that do have seen the protocol for hiring from staffing firms has become fairly straightforward: When a temporary worker reaches the required threshold of 480 hours, they’re almost always hired.
- Employees in the IT cluster garner the highest wages of the six clusters studied. In 2014, employees in West Michigan made more than $68,000 annually on average. This was an increase of more than $500 from the year before.
- Employers in health care are putting as much effort into talent retention as they do into attraction. One West Michigan employer stated that turnover for early-in-career talent used to be around 4 percent, but has jumped as of late to as high as 25 percent.
- As the labor market has tightened over the past several years, construction employers have seen competition for talent broaden to include manufacturers. This is at the same time that one West Michigan employer stated that it expects to ramp up general labor by 25 to 30 percent in the coming years.