Vector illustration of the Oakland County green road sign on metal posts. Image credit: Thomas Pajot, iStock
Oakland County’s economy is expected to return to normal this year and has a “solidly positive outlook” for the coming years, according to economists at the University of Michigan.
Oakland, one of the state’s most populous counties and one of the nation’s most affluent, is expected to see job growth over the next three years, bringing the number of payroll jobs back to pre-existing levels in the second quarter of 2025. the pandemic is coming and will be 1.2% higher by the end of that year.
In its annual forecast of the Oakland County economy, the UM Research Seminar in Quantitative Economics forecasts job growth of 1.4% this year, 1.3% in 2024, and 1.6% in 2025. The local labor force is expected to grow faster than the number of employed residents, putting upward pressure on the unemployment rate this fall and the first half of 2024.
The positive outlook the economists give in the forecast would follow what they describe as an economic “everything” for 2022. The county’s job growth in the third quarter of last year lagged Michigan as a whole, with Oakland accounting for 82% of jobs recovered. lost at the beginning of the pandemic and the state recovered 90%. They are also concerned that the county’s population has fallen by nearly 8,000 in the 12-month period ending February 2023.
The recent data has been “puzzling,” the economists say, and could be the result of “commuting, an increase in multi-job residents, or a decline in self-employment.”
“Despite the challenges of the past year, we are optimistic that Oakland County’s economy will return to normal in 2023, with job growth relatively widespread across all sectors, even as the national economy slows,” said Gabriel Ehrlich, director of RSQE.
Overall, Oakland County has fewer lower-income residents and more higher-income residents than Michigan. Nationwide, 20% of residents live in low-income households, compared to the state’s 30%. The proportion of residents of the municipality with a higher income
households (28%) is much larger than that of the state (17%).
Still, economists say, wealth is uneven. As of 2021, the Pontiac and Waterford Township area had a median household income after adjusting for household size that was less than half the average for the Birmingham, Bloomfield Hills, and Bloomfield Township area.
They also note large income disparities by race and ethnicity: 18% of the county’s non-Hispanic and white residents lived in households classified as lower income in 2021, and 31% lived in higher income households. Those proportions were almost reversed for black and Hispanic residents.
An encouraging sign in the forecast is that wages are expected to grow faster in the lower wage sectors of the province than in the higher wage sectors over the next three years. That, they say, should reduce wage inequality somewhat.
The county’s unemployment rate is expected to average 2.7% in the first part of this year and rise to 3% by the end of the year. The economists predict that the rate will rise modestly in the first half of next year as the country enters a mild recession, which will dampen the local labor market.
The county’s unemployment rate is forecast to fall from 3.4% in mid-2024 to 2.8% by the end of 2025, compared to an expected unemployment rate of 3.9% at the end of that period. If the forecast is correct, the county’s rate would be about half a percentage point below the average right before the pandemic.
The economists say the return to pre-pandemic levels of the workforce reflects the strength of the county’s economy, though they warn that labor shortages “will be a persistent fact of life in the Southeast for the foreseeable future of Michigan.”
“We believe Oakland County’s strong overall performance in these measures suggests it is well positioned for the future, despite the current challenges facing local and state economies,” the economists say in the report. “The combination of a well-educated population, a high share of managerial and professional jobs and an attractive standard of living should provide a solid foundation for economic prosperity over our forecast period and in the years to come.”
The 38th Annual U-M Forecast of the Oakland County Economy was hosted by the county’s Department of Economic Development.
