Back in 2009, in the darkest days of the Great Recession, Federal Reserve Chair Ben Bernanke attempted to reverse the economic pessimism that gripped the nation. He pointed to what he called “green shoots,” small bits of good news around the country. To him, the green shoots showed that the economy was turning around, the economic winter was ending, and spring was around the corner. Bernanke was right. That year, job losses slowed, then stopped, and the economy began growing again.
Today, we turn our attention to Detroit to look for evidence of green shoots in its economy. Detroit and its long period of wrenching industrial change and urban decline has long been the locus of conversation. More recently, the media has emphasized efforts to revive Detroit. The city has embarked on the construction of a downtown light rail line. Quicken Loans conspicuously moved its headquarters downtown in 2010 and has steadily expanded its footprint. In the past few months, a Niketown has opened and a Shake Shack has been announced. These are visible signifiers of progress and renewal.
At City Observatory, we judge the success of revitalization efforts based on whether they move the needle of key economic statistics. And there’s growing evidence based on our analysis of employment statistics for Wayne County (which encompasses the city) that things are changing in a positive direction in Detroit, confirming the anecdotal signs on its streets.
A core measure of economic growth is the number of jobs in the local economy. By that standard, the late 1990s and the early 2000s were an unrelenting tide of bad news for Detroit. Between 2001 and 2010, Detroit lost more than 200,000 jobs. Total payroll employment declined by 24 percent. Even though the national economy and employment expanded for most of the decade, employment in Detroit declined every year between 2001 and 2010. The Great Recession simply amplified these job losses.
During this time, the city was in dire straights, both politically and financially: Its Mayor Kwame Kilpatrick had been removed from office in a scandal, the city’s financial administration had been turned over to a state-appointed administrator, and in 2013, the city entered the nation’s largest municipal bankruptcy.
But since 2010, Detroit’s economy has turned around. Employment totals for Wayne County bottomed out at about 690,000 jobs, then started growing again. Detroit has recorded year-on-year increases in employment every year since then, and is continuing to do so in 2016. Today the city has 50,000 more jobs than it did in the depths of the recession.
There’s encouraging news, too, in the kind of growth that’s occurring. The details of Detroit employment growth point to a small rebound in the traditional manufacturing sector, as well as some much-welcomed growth in other knowledge-based sectors of the economy.
The industry detail shows that some sectors of the Detroit economy (Wayne County in particular) are now performing better than their counterpart industries nationally over the past year, March 2015-2016. For example, while manufacturing employment has slipped nationally, it’s up nearly 1 percent in Detroit over the same time period—positive news after so many years of decline. Information industries and professional and business services, two stalwarts of the knowledge economy, have both recorded faster job growth in Detroit than the country overall in the past year. And financial services employment has grown at a 7.7 percent clip, four times faster than in the nation as a whole.
Still, not everything’s rosy: Wayne County is growing more slowly (+1.4 percent) than the surrounding suburban counties (+2.7 percent) and the nation as a whole (+2.0 percent). Some of this reflects continuing, difficult adjustments. For example, government employment is down 1.0 percent in Detroit, and up about 0.5 percent nationally.
Altogether, the employment data provides hopeful signs that the Detroit economy has put its worst economic days in the rearview mirror, and is starting to build a stronger economic future. Some of this undoubtedly has to do with the national economic recovery. However, it’s important to remember that during the last national economic growth cycle (2001 to 2008), Detroit was actually losing jobs when the nation was gaining them—evidence of the region’s structural economic problems. Even though the city and region have a long way to go, they are now headed in the right direction.
About the data
Please note that for this analysis, we use federal data for Wayne County, Michigan, which is centered on Detroit and includes the adjacent cities of Dearborn and Livonia, but does not include the surrounding suburban counties that make up the balance of the Detroit metropolitan area. The Bureau of Labor Statistics, which compiles these data, doesn’t compile monthly or annual city level statistics that would let us track these changes. These data are BLS Series ID SMS26198040000000001, and are available at from the BLS website.