Where Did All The Jobs Go?

The Michigan economy is still stuck in the mud. Another 4,600 jobs were lost last month, the unemployment rate is 7.1% (national unemployment rate is 4.5%), and the state budget deficit is $800 million, $400 million more than previously thought. And it really all can be traced back to the problems GM, Ford, and Chrysler are having. The Big 3 continue to lose market share, so they produce fewer cars. And with higher gas prices, consumers are buying smaller, more fuel-efficient cars, which are primarily made by foreign imports. Cutbacks in production lead to cuts in employment, and over the last 2 years, there have been big cuts in employment. Employment cuts mean people's incomes are lower, which lowers their tax expenses, which has contributed to the state's budget deficit. If the budget deficit continues to grow, spending on schools and hospitals will be cut. Lower incomes lead to lower consumer spending, especially on big ticket items such as housing. The housing market here is great if you have the money. But for those living here who are struggling and trying to sell their home, it is rough to say the least. Housing market troubles have led to decreases in construction-related employment.

When the autos finish restructuring, the state's fortunes will turn for the better. But this summer, the United Auto Workers union will renegotiate their contract with the Big 3. Big 3 union workers, in total compensation (wages + benefits), make between $35-$40 more than their non-union counterparts who work at a Toyota, Honda, Nissan plant . That extra compensation is due to the pension plans the union workers receive, which amounts to about $1,600 of the total price of a car. It is thought by many that the union will have to give up some of their compensation, but will they after they've been receiving these benefits for so long? That's the wild card in the whole equation.

Does Michigan have to diversify its economy, yes. Will the auto industry always have a presence here, yes. That presence needs to focus more on the technological, innovative side. In a couple of weeks, I'll have the privilege of touring a state of the art auto supplier plant. This plant could've located anywhere in North America, but they chose Michigan because of the knowledge base here and the skill of the labor force.

In short, the auto plants will be just as big but will employ more technology and fewer people. Those people need to get 2-year degrees in a skilled trade so they can secure their futures because the days of high school diplomas followed by 30 years in the plant are over. And if Michigan can develop a climate that retains all of the talent attracted here by the colleges and universities present, then maybe Michigan will never have to go through a restructuring period such as this one.

While the economy struggles, the sports teams continue to do really well. Even the Lions may show some signs this year (hopefully not against Da Bears).

• Tomorrow is the pivotal Game 5 in the Stanley Cup Western Conference Finals between the Wings and Anaheim. If you want to know how important hockey is in this town, just ask the dismissed police officer who wanted to know the score of a Red Wings game in April of last year even though his wife had apparently overdosed on marijuana brownies and was lying on the floor of their house barely conscious.
• The Pistons have made it to the Eastern Conference Finals for the 5th consecutive year. (How the Red Wings are in the NHL West and the Pistons in the NBA East, I don't know.) I don't like the Pistons because they don't play hard all the time, they coast. As a fan of the game of basketball, I feel not playing hard all the time is the biggest sign of disrespect for the game. Why wouldn't you want to play hard? I don't get it.
• If the Pistons/Cavs series is anything like last year, it's going to be brutal to watch. The Pistons don't play hard and the Cavs can't shoot from the outside. If I'm Cleveland, I have to play Daniel Gibson more, the rookie from Texas. He's a very good player, just young, and he gives them a jump shooter.
• Back to hockey for a second. Game 5 of the Eastern Conference finals between Ottawa and Buffalo in which Ottawa led the series 3-1 coming in, was upstaged by prerace coverage of The Preakness. Ottawa was 1 win away from the Stanley Cup finals, but Buffalo had pushed the game to overtime, and NBC cut to their 1 hour buildup of the Preakness. Ouch. Horse racing and boxing were the only two sports more irrelevant than hockey, until today.....
• I bought a 3 DVD set of Michael Jordan's best, which includes all the personal highlight videos of him, plus 5 full length games: his 63 pointer vs. Boston, 69 pointer vs. Cleveland, double nickel vs. Phoenix in the '93 Finals, the flu game vs. Utah in the '97 finals, and Game 6 of the '98 Finals (the shot). It's been fun to watch to say the least.

Have a good rest of the weekend.