Employment and Access to Good Jobs in Bad Times: The Case of Detroit

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April 2018

Michael Evangelist
U-M School of Social Work

Lucie Kalousová
U-M School of Public Health

Sarah Seelye
U-M Population Studies Center

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Introduction

The Great Recession, which extended from December 2007 through June 2009, was the worst recession to strike the United States since the Great Depression. It spurred large scale job losses, substantial increases in long-term unemployment, and greater perceived job insecurity among workers. With close ties to the auto industry and the financially troubled “Big Three” car companies, the Detroit area experienced higher rates of unemployment than the country as a whole during the economic downturn. In 2009, the unemployment rate for working-age adults in the three-county region encompassing the Detroit Metro Area averaged 15.3%, far surpassing the national average of 9.0% that year.1

While the recession propelled job loss, even those who kept their jobs were not immune from the stressful effects of the economic downturn, as evidenced by reports of job insecurity. Workers in the Detroit area experienced high rates of perceived job insecurity following the Great Recession. Those who thought they were likely to lose their jobs reported worse physical and mental health than workers who expected to stay employed.2

In addition to these employment problems amplified by the Great Recession, the share of “good jobs” in the U.S. has diminished over time and access has been limited to an increasingly select group.3 For example, “good jobs,” defined as those providing a median hourly wage, health insurance, and a retirement plan, are increasingly held by individuals with a college degree or more. While 43% of workers with a high school degree or less had a good job in 1979, by 2010 only 19% of these workers could claim such a job.4

This brief examines how trends in employment, perceived job insecurity, and “good jobs” among workers in the Detroit Metro area changed in the years following the Great Recession. We observe some reassuring signs of recovery. For example, at the height of the recession in 2009, the employment-to-population ratio for Metro Detroit was more than eight percentage points lower than the national average. During the recovery period, the percentage of the population employed increased steadily for Metro Detroit, closing approximately half of the gap with the national average (Figure 1, page 2). Furthermore, while the share of workers who had a good job remained constant at 37% (Figure 2, page 6), those who reported job insecurity fell from 17% to 8% between 2009 and 2013. At the same time, we also find that inequalities in Metro Detroit continue to persist. As we discuss below, African Americans and those with less education continue to have less access to good jobs and report considerably more job insecurity compared to their counterparts. In this brief, we examine each of these employment conditions in greater depth.

Employment-to-population ratio 2007 to 2013 (ages 18-64)

Figure 1. Employment-to-population ratio 2007 to 2013 (ages 18-64)

Our Study Design

We use the Michigan Recession and Recovery Study (MRRS), a stratified random sample of adults living in three counties of Southeast Michigan: Macomb, Oakland, and Wayne. The study first interviewed adults aged 19 to 64 in late 2009/early 2010, shortly after the official end of the recession. To reflect the demographic composition of the area, the MRRS consists primarily of non-Hispanic white and African American respondents. During the first wave of data collection in 2009, 914 respondents completed in-person interviews, for a response rate of 83%. Study participants were then followed for two additional waves in 2011 and 2013, representing a response rate of 94% and 90% respectively, for a total sample of 751 survivors by 2013. In this brief, we use data from the first and third waves of the MRRS to examine employment trends in Metro Detroit in the years following the Great Recession.

We use three measures to capture employment, perceived job security, and job quality. The first measure is the percentage of working-age respondents aged 25 to 64 who were continuously employed over three consecutive months in the first quarters of 2009 and 2013. Next, we include a measure of perceived job insecurity—the percentage of working-age respondents employed at each of the two MRRS waves who reported that it was very or fairly likely they would lose their jobs in the next 12 months. Lastly, we determine the percentage of working-age adults employed 20 or more hours a week who held a “good job” at the time of interview. Drawing on previous work, we define a good job as one that pays at least $19.40 per hour while providing access to health insurance and a retirement plan.5 The hourly wage threshold is the inflation-adjusted median hourly wage for male workers in 1979. One limitation of the health insurance and retirement plan measure is that they do not capture benefit generosity. For example, we do not know what share of health insurance costs is borne by workers or if retirement plans are defined benefit or defined contribution plans.

Percentage of working-age population employed: Quarter 1 of 2009 and 2013.

We provide summary statistics for each of the three components contributing to the overall good jobs scores and stratify each of the outcome measures by sex, race, age, educational attainment, household income, and employment in the auto industry.6 We adjusted household income for household size by dividing income by the square root of the number of children and adults living in the household. We divided respondents based on household income at each wave into equal-sized categories corresponding to high, medium, and low household incomes. We repeated this process separately for each wave in Table 1, Table 2, and Tables 3-5 because the analysis sample varies by table and the sample weights vary across waves.

Percentage of respondents who are fairly or very likely to lose their jobs.

Gains in Employment

Over the study period, the percentage of the employed working-age population in the Detroit area rose from 67% to 72%. Table 1 (page 3) highlights the inequalities in employment and employment gains over the study period. While the share of employed working-age men rose rapidly, from 69% to 80%, the share of employed women hovered around 65% and did not rise. Employment recovery was apparent across all age groups, but the largest gains were reported by people older than 55, among whom employment increased by 12 percentage points. Despite this surge, overall employment remained lower among older than younger adults. People with some college education experienced the greatest employment gains, realizing a 10 percentage point increase in the employment rate over the four-year period. We found little change among the college educated and those with a high school degree or less. College-educated workers remained the most employed educational group, with 83% employed in 2013, compared to 72% and 58% for those with some college and a high school degree or less, respectively.

There was no evidence of recovery among respondents in low-income households (earning approximately less than $25,000), as their employment rates declined from 2009 to 2013. On the other hand, respondents in middle-income households (approximately $25,000-$55,000) and high-income households (approximately greater than $55,000) realized steady employment gains across the study period.

Job Insecurity

Table 2 shows that the prevalence of job insecurity decreased from 17% to 8% between 2009 and 2013 among the employed working-age population in Metro Detroit. The decrease cut across socio-demographic characteristics but showed a stratified age pattern. While the prevalence of job insecurity among adults aged 35 to 54 decreased sharply, from 21% to 5%, it stayed nearly unchanged among younger and older workers, 14% and 10% of whom reported job insecurity in 2013, respectively. Although job insecurity decreased substantially across the study period for all household income groups, respondents in high-income households experienced much lower perceived job insecurity than the other two income groups. By 2013, only 2% of workers from high-income households reported job insecurity, while over 10% of workers from low- and medium-income households reported job insecurity.

Percentage of employed respondents with a high-wage job.

high-wage jobs

We measured a small increase in the prevalence of high-wage jobs between 2009 and 2013, from 50% to 53%. Table 3 (page 4) shows that this increase was socio-demographically patterned. Blacks, older adults, those with a high school degree or less, and college graduates had fewer high-wage jobs at the end of the study than at its onset. The prevalence of high wage jobs decreased from 35% to 31% among blacks, 54% to 52% among older adults, 32% to 27% among those with a high school degree or less, and 74% to 71% among college graduates. Over the study period, the middle-income group experienced a 6 percentage point increase in the share of respondents holding high-paying jobs, whereas there was little change for respondents in low- and high-income households.

Employer-Provided Health Insurance

The share of employees taking advantage of an employer-sponsored healthcare plan declined slightly from 72% to 70% over the study period. Table 4 shows that participation in an employer-sponsored health insurance plan varied across socio-demographic groups with particularly large differences by gender, race, income, and industry type that persisted across the study period. By 2013, workers in the middle of the age distribution were more likely to participate in employer-sponsored health insurance (72%) than younger labor market entrants (67%) or those close to retirement age (66%). However, the age gap narrowed over the study period as participation increased for the youngest and oldest workers while declining for those in the middle. Among the income categories, there were significant changes in the percentage that participated in employer-sponsored plans, with a decrease in participation for respondents in low- and middle-income households and a 9 percentage point gain for respondents in high-income households.

Employer-Provided Retirement Plan

We observed a small decrease in the share of the employed working-age population whose employer provided a retirement plan, from 73% to 70%. Table 5 (page 5) demonstrates that the decrease did not affect all groups equally. The largest decrease was found among those with a high school degree or less, from 72% to 57%. Moreover, whereas approximately 80% of respondents in middle- and high-income households had access to a plan in 2013, less than half of respondents in low-income households had access to a plan that year. But the decline in participation was not limited to the most disadvantaged. Autoworkers, a group that traditionally receives generous benefits in the Detroit area, likewise reported a decrease in retirement plan availability, from 85% to 78%.

Percentage of employed respondents participating in an employer-sponsored health insurance plan

Putting It All Together: Good Jobs

In Figure 2 (page 6), we illustrate how the prevalence of “good jobs,” that is, jobs that combined all three desirable components—high wages, availability of employer-provided health insurance, and a retirement plan – changed over time for different sociodemographic groups. Blacks, older adults, those with a high school degree or less, and autoworkers experienced a significant worsening of conditions. We found the most remarkable decrease among the older adult group, among whom the prevalence of good jobs dropped from 37% to 27%. More encouragingly, a share of young workers with a good job rose by 6 percentage points, from 25% to 31%, and conditions improved for workers in the middle-income group as the share with a good job increased from 35% to 40% over the study period.

Conclusion

At first glance, it appears that workers in the Detroit area have recovered their pre-recession employment levels and have nearly recovered with respect to some key job benefits. Close inspection of the more granular patterns hiding behind the encouraging trends, however, reveals social inequalities in who recovered that mirror those which existed before the Great Recession. While some groups of workers have recovered their sense of stability and attained high-quality jobs, the prospects for others have remained stagnant—or even worsened.

Notably, one group of Detroiters stands out as not enjoying benefits of recovery equal to the rest: workers with a high school degree or less. Although their sense of job security has greatly increased over time, their jobs provided fewer benefits at the end of the study than they did in the beginning. On every job benefit indicator we measured, workers with a high school degree or less experienced worse conditions. This retreat in job quality cannot be explained by the post-recession reappearance of the least desirable jobs that may have been eliminated during the Great Recession. Workers with a high school degree or less were overall less likely to be employed in 2013 than they were at the height of the downturn. Four years after the end of the Great Recession, this group of Detroit-area workers had lower participation in the labor force and, for those who worked, worse job conditions.

Percentage of employed respondents whose employers provide a retirement plan

Our findings reflect national trends that point to the continued decline in the availability of high-quality jobs, particularly for less-educated workers. Job growth in the years following the Great Recession was driven predominately by hiring in low-wage industries.7 During the early part of the recovery, real wages declined across occupations but the effect was most pronounced in the middle and bottom of the occupational wage distribution.8 The uneven economic recovery may have exacerbated long-term growth in labor market inequality. Previous evidence has reported that the economy has lost approximately one-third of its ability to create high-quality jobs since 1979, reducing the availability of good jobs even for college-educated workers.9 However, less-educated workers have fared the worst. With reductions in manufacturing and the growth of the service sector, substantially fewer workers with a high school degree or less are able to secure higher-paying jobs with quality benefits, as we have seen in Metro Detroit. Our results suggest that without policies aimed at improving employment opportunities, workers, and in particular less educated workers, will continue to face difficulty securing high-quality jobs that would provide recovery from the Great Recession and economic mobility for themselves and their families.

Percentage of respondents with a good job stratified by sociodemographic characteristics at each wave

Figure 2: Percentage of respondents with a good job stratified by sociodemographic characteristics at each wave

Footnotes

1 The three counties comprise Wayne, Macomb, and Oakland. We estimated the unemployment rate for adults aged 18 to 64 using the IPUMS Current Population Survey extracts (see Sarah Flood, Miriam King, Steven Ruggles, and J. Robert Warren. Integrated Public Use Microdata Series, Current Population Survey: Version 5.0. [dataset]. Minneapolis: University of Minnesota, 2017).

2 Burgard, Sarah A., Lucie Kalousova, and Kristin S. Seefeldt. 2012. “Perceived Job Insecurity and Health: The Michigan Recession and Recovery Study.” Journal of Occupational and Environmental Science. 54(9): 1101-1106.

3 Schmitt, John and Janelle Jones. 2012. “Where Have All the Good Jobs Gone?” CEPR: Center for Economic and Policy Research.

4 However, it is important to note that college-educated workers have also faired more poorly over time in their ability to secure a “good job.” Between 1979 and 2010, the percentage of college-educated employees with a “good job” fell nearly 3 percentage points. See Schmitt, John and Janelle Jones. 2012. “Where Have All the Good Jobs Gone?” CEPR: Center for Economic and Policy Research.

5 Schmitt, John and Janelle Jones. 2012. “Where Have All the Good Jobs Gone?” CEPR: Center for Economic and Policy Research.

6 The health insurance measure captures the percentage of workers enrolled in an employer-sponsored health insurance plan. It is possible that employers offered a plan, but that employees chose not to enroll (e.g., because they received coverage through a spouse).

7 Bernhardt, Annette and Michael Evangelist. 2014. “The Low-Wage Recovery: Industry Employment and Wages Four Years into the Recovery.” National Employment Law Project.

8 Bernhardt, Annette and Michael Evangelist. 2013. “The Inequality of Declining Wages During the Recovery.” National Employment Law Project.

9 Schmitt, John and Janelle Jones. 2012. “Where Have All the Good Jobs Gone?” CEPR: Center for Economic and Policy Research.

Resources

Reports

Schmitt, John and Janelle Jones. 2012. “Where Have All the Good Jobs Gone?” CEPR: Center for Economic and Policy Research.
http://cepr.net/documents/publications/good-jobs-2012-07.pdf

Bernhardt, Annette and Michael Evangelist. 2014. “The Low-Wage Recovery: Industry Employment and Wages Four Years into the Recovery.” National Employment Law Project.
http://www.nelp.org/content/uploads/2015/03/Low-Wage-Recovery-Industry-Employment-Wages-2014-Report.pdf

Bernhardt, Annette and Michael Evangelist. 2013. “The Inequality of Declining Wages During the Recovery.” National Employment Law Project.
http://www.nelp.org/content/uploads/2015/03/NELP-Fact-Sheet-Inequality-Declining-Wages.pdf

Journal Articles

Burgard, Sarah A., Lucie Kalousova, and Kristin S. Seefeldt. 2012. “Perceived Job Insecurity and Health: The Michigan Recession and Recovery Study.” Journal of Occupational and Environmental Science. 54(9): 1101-1106.