UAW Strike Impacts and What it Could Have Meant

November 14, 2023November 14, 2023 by Drawing Detroit | Leave a comment

Just over seven weeks ago United Auto Workers (UAW) members who work for Ford, General Motors (GM) and Stellantis across the US strategically went on strike. The strikes began because the UAW workers have been fighting for better wages, including a restoration of cost of living pay raises, improved pension plans and additional benefits. As is noted later in this post, inflation continues to occur in Michigan, and throughout the country, and for example, 36 percent of Detroit residents earn a living wage, according to a University of Michigan Economic Outlook report.

As the number of UAW facilities on strike expanded over the last six weeks so did the states where the facilities are housed. Not only has Michigan been impacted by the strikes but also California, Colorado, Kentucky, Illinois, Indiana, Kansas, Georgia, Tennessee, Florida, New York, Kansas, Massachusetts, Minnesota, Missouri, Ohio, Oregon, Texas, Virginia, West Virginia, Pennsylvania, Nevada, North Carolina and Wisconsin. With all of the Big Three having UAW employees on strike, this marks the first time this has occurred since at least 1960 during a contract negotiation year.

Now, while tentative agreements between the UAW and Ford, GM and Stellantis are moving toward ratification impacts from the strike, and the new ratified contracts, are sure to be felt. According to CBS Detroit, UAW employees of the Big Three will experience wage increases of 25 percent over the life of the contracts, along with items such as the restoration of cost-of-living allowances, the elimination of some wage tiers, increased 401K contributions and more. As these new tentative contracts make their way toward becoming reality for thousands of Big Three employees (voting and ratification still needs to occur), other automotive companies appear to be eyeing, and responding, to the changes too. According to the Detroit Free Press, Toyota recently announced they would be boosting wages by 9 percent and reducing the time it takes for workers to get to top wage; this will become effective Jan. 1.

With increased wages and improved wages coming down the pipeline soon for UAW employees, which should also have a positive affect on the overall economy, it should also be noted the financial impact the UAW strike has had. According to the Anderson Economic Group, LLC., the costs of the UAW strike reached $10.4 billion in its sixth week, with wage losses of Original Equipment Manufacturers workers being $650 million, losses to the Big 3 Manufacturers being estimated at $4.3 billion, lost wages and earnings to supplier companies and workers being estimated at $3.3 billion and loses to dealers, customers, and ancillary auto industry workers being estimated at $2 billion. With contracts still needing to be ratified, plants needing to reopen and several other housekeeping matters needing to occur, it is also projected that losses will continue for at least another short while.

Michigan, which is home to the highest number of UAW employees, was predicted to experience personal income loss for over 66,000 people if UAW workers at the Ford, GM and Stellantis all striked. This prediction scenario was published in an Analysis of the Economic and Fiscal Impacts of Potential UAW Strike Scenarios by the University of Michigan right before the strike. While not every UAW plant went on strike these early projections do show a more drilled down look at the impacts of UAW strikes. For example, the analysis estimated personal income loss by for Ford UAW employees for a one- or two-week strike could have resulted in a total employment loss of 28,000 jobs statewide (including the 22,000 striking workers). The total personal income loss for this period could have been $50 million by the second week. Following two weeks of strikes it was projected Ford the suppliers would also begin to feel the impact of the strike (which they did), and a month after striking, the University of Michigan projected 54,000 people could have been unemployed as a result of the Ford UAW strike in the state, with a cumulative personal income loss of $150 million. Now, if the strike were to push to 8 weeks that unemployment number could grow to 105,000 total job losses in Michigan, along with a cumulative personal income loss of $610 million, according to the University of Michigan. For strikes longer than eight weeks, the total job loss for Michigan would likely remain at 105,000, but personal income losses would continue to accumulate.

This report, which was published before the strike, also hypothesized that a strike could also bring on a loss in tax revenue. According to the University of Michigan, a one-week strike could result in a loss of $1.8 million in state tax revenue. That number grows to $10.9 million for a four-week strike and $41.2 million for an eight-week strike.

While the above example sheds light on the impact a Ford UAW strike could have/had on the Michigan economy, similar effects were projected to occur with GM and Stellantis UAW workers strike too. According to the University of Michigan’s report, a one- or two-week strike at GM was projected to produce a total employment loss of 25,000 jobs (including the 20,000 striking workers), with a total personal income loss of $40 million by the second week and a $1.6 million loss in state revenue. If all UAW Stellantis employees went on strike, it was projected a one- or two-week strike could have produced a statewide total employment loss of 31,000 jobs (including the 25,000 striking workers), with a total personal income loss of $50 million by the second week. Additionally, a one-week UAW Stellantis strike could have resulted in a loss of $1.9 million in state tax revenue, according to the University of Michigan report.

As noted, the above information is all based on simulation and speculation of all UAW workers at all three companies being on strike in unison. On Sept. 15 UAW union members were instructed to go on strike, but at targeted auto plants, and not all of them. Since then, as we know, the number of plants on strike has grown, but not every plant went on strike from day one.

As mentioned early, one of the items negotiated into the UAW contracts was cost of living increases, which are based on the rate of inflation. The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021, 2022 and 2023 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2023. Currently in 2023, the region’s prices were up 0.2 percent in the month of August. The highlights for the change include:

•Overall, food prices declined 0.1 percent for the month of August. Prices for food at home fell 0.2 percent, while prices for food away from home (restaurant, cafeteria, and vending purchases) increased 0.2 percent for the same period.

•The energy index increased by 3.4 percent over the month, due almost entirely to an increased price in gasoline (6.7 percent). However, natural gas prices declined (0.5 percent, as did prices for electricity (0.1 percent).

•Rent (+0.4 percent) and medical care (+1 percent) and apparel (+2 percent) also contributed to the increase in the month-to-month CPI increase.

When examining the second chart, which shows how prices changed on a year-to-year basis, we see how prices remain higher than this time in 2019, 2020 and 2021 but not higher than 2022.

In August of 2023 the CPI was reported to be 3.4 percent above what it was the year prior. Contributing factors to the continued increase in the CPI include

•Food prices increasing 3.4 percent over the last year, with away from home food prices increasing 5.4 percent

•The cost of electricity decreased by 6.6 percent, with the 28.6 percent decline in the price of natural gas playing a large role in the overall decline

•Owners’ equivalent rent of residences increasing 6.9 percent and rent of primary residence increasing 7 percent

•Recreation prices increasing 4.3 percent

With cost of living continuing to increase and wages and benefits often not keeping up and increased desires for improved work life balances other workers in Michigan and beyond are also striking. In Michigan, 3,700 casino workers went a strike just over a month ago, demanding increased wages, reduced work loads and job security. In Portland, Oregon more than 3,500 members of the Portland Association of Teachers went on strike for similar reasons. This strike has shut down the 81 schools in the Portland School District.

According to an August 2023 Gallup Poll report, labor unions continue to enjoy high support in the U.S., with 67% of Americans approving of them. This is down slightly from its 2022 approval rating of 71 percent but significantly up from its 2009 approval rating low of 48 percent.

Additionally, Gallop reports, and recent events solidify that Americans have become more likely than a to want unions’ influence to improve their work lives and that they benefit various aspects of business and the economy.

In Michigan, actions by the legislature show that Unions are gaining back strength. Legislation on its way to be signed by the Governor repeals the 2023 Right-to-Work law that essentially allowed union employees to opt out of payment.

Detroit’s Residential and Business Vacancies Decline

September 10, 2023September 10, 2023 by Drawing Detroit | Leave a comment

In December of 2020 the US Postal Service reported 74,313 total vacant properties in the City of Detroit, equivalent to a 19 percent vacancy rate. This rate is the lowest report rated since 2015, as can be seen in the first chart below. Additionally in 2020 the Postal Service reported 317,272 occupied addresses.

According to the first map below, while the overall vacancy rate in December of 2020 was 19 percent, there were several areas in the City with much higher rates. The highest rates were near I-96 and Gratiot Avenue in the City of Detroit, with the highest overall rate for a Census Tract being 52.3 percent in the Morningside/Chandler Park area. Conversely, vacancies remained the lowest in the Downtown Detroit area and Green Acres/Pembroke/Bagley areas. High vacancy rates in the City ranged from 31-52.3 percent and low vacancy rates ranged from 1.9 to 9.3 percent. Between September and December of 2020 the vacancy rate decreased by 0.3 percent. Additionally, the vacancy rate had an annual 2 percent decrease plus a 2.8 percent decrease over a five-year time period. The second map below shows the long-term trends; all but seven Census Tracts experienced a decrease in vacancy or little to no change between 2019 and 2020. The Chandler Park area had the highest increase in vacancy rates between December 2019 and 2020 at 3.5 percent.

The USPS provides aggregate vacancy and no-stat counts (see explanation below) of residential and business addresses that are collected by postal workers and submitted to on a quarterly basis the Department of Housing and Urban Development. While occupancy status is recorded, USPS does not capture any information about the nature of the vacancy or the address itself, other than whether it is a residential or business address. To the USPS, the address is either occupied and requires mail service or is vacant and does not. An address is deemed vacant if it did not collect mail for 90 days or longer. In addition to occupied and vacant addresses there are also “no stat” addresses. A “no stat” address is called that if it is under construction and not yet occupied or is in an urban area and identified by a carrier as not likely to be active for some time.

As noted, overall vacancy rates in the City of Detroit have been declining, and this also true at both the residential and business levels. Residential vacancy rates in September of 2015 were 22.6 percent, which was equivalent to 81,666 residential vacancies. By December of 2020 that number of vacancies decreased to 19.3 percent, or 67,442 total vacancies.

For business vacancies in December 2020 there was a total of 6,871 vacant businesses out of 28,438 total businesses in the City. This was equivalent to 24.2 percent. In September of 2015 the vacancy rate was 24.6 percent for a total of 7,337 vacant businesses out of 29,885.

Examining both charts below we see that there has been a steadier decline in residential vacancy rates than business vacancy rates. Between 2015 and 2019 business vacancies were actually climbing, and reached a high of 28 percent in December of 2018. Then, through the pandemic declined substantially, though it is not clear why.

According to the USPS there was 27,878 “no stat” addresses reported in Detroit in December of 2020, an increase of 3,884 from the year prior.

Metro-Detroit Economic Indicators: Home Prices Dropping, Personal Debt Increasing

January 30, 2023January 30, 2023 by Drawing Detroit | Leave a comment

Unemployment rates for both the State of Michigan and the City of Detroit hit record lows in the second quarter of 2022.

In December of 2022 the unemployment rate for the State of Michigan was 4.3, which is inline with the State’s unemployment rate since March of 2022. In that time frame the unemployment rate for the state has only slightly fluctuated between 4.4 and 4.1 percent. For the City of Detroit, the unemployment rate for November of 2022 (December data was not yet available) was 6.4 percent.

The unemployment rate for Detroit has been regularly declining since May of 2022 when the rate was reported at 10.5 percent. In November of 2021, the unemployment rate for Detroit spike to 8.4 percent, down from the 10 percent the previous month.

The chart below provides a more detailed look at unemployment rates throughout Southeast Michigan, both currently and a year ago. According to the data, Monroe and Washtenaw counties both had higher unemployment rates in November of 2022 than in November of 2021. For Monroe County there was only a 0.1 percent increase in the unemployment rate, with it being reported at 3.9 percent in 2021 and 4 percent in 2022. For Washtenaw County there was a 0.3 percent increase between November of 2021 and 2022. In 2022 Washtenaw County had the third highest unemployment rate in the region, falling only behind Monroe and Wayne counties. The unemployment rate for Wayne County in November of 2022 was 3.7 percent, which was the below the 5.7 percent unemployment rate the county reported in

Livingston County continued to have the lowest unemployment rate in the region at 2.1 percent in November of 2022, followed by Oakland County with an unemployment rate of 2.3 percent.

The charts below show the percent changes in the Consumer Price Index (CPI) on a month-to-month basis and a year-to-year basis for each month in years 2019, 2020, 2021 and 2022 in the Midwest Region. The CPI is a measure that examines the weighted average of prices of consumer goods and services, such as transportation, food, energy, housing and medical care. It is calculated by taking price changes for each item in the predetermined group of goods and averaging them.

The first chart below highlights how the CPI changed on a month-to-month basis between 2019 and 2022. Currently in 2022, the region’s prices were down 0.5 percent in the month of December. The highlights for the change include:

•Food prices increased 0.3 percent for the month of December. Prices for food at home (groceries) and away from home (restaurants) both increased 0.3 percent.
•The energy index decreased 7.2 percent in December largely due to a 15.9 percent decrease in gasoline; prices for natural gas service increased 2.8 percent though and electricity increase 1.5 percent
•There were decreases in the cost for used cars and trucks (-2.4 percent), apparel (-1.8 percent), public transportation, and medical care (-0.3 percent).

When examining the second chart, which shows how prices changed on a year-to-year basis, we see how prices remain higher than 2019 and 2020 but that there was a decline in the CPI for the month of December between 2021 and 2022.

In December of 2022 the CPI was reported to be 6 percent above what it was the year prior. Contributing factors to the continued increase in the CPI include

•Food prices increasing 11.4 percent over the last year, with at home food prices increasing 13 percent
•Energy prices increasing 5.3 percent over the last year, with the largest contributor being natural gas (16 percent price increase)
•Rent prices increasing 7 percent
•Recreation prices increasing 6.8 percent
•The cost of used cars and trucks decreasing 9.1 percent.

While home prices in Metro-Detroit continue to increase from one month to the next, the rate at which they are increasing is beginning to taper off. According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $168,790 in October of 2022, a decrease of $450 for the average price of a home in September of 2022. This is the first there has been a decrease in the average home price in Metro Detroit since August of 2019. At that time home prices decreased $129,220 to $127,290. Since then though, the average price of a home continued to increase until October of 2022.

While the month-to-month trend of prices increasing broke, a look at data from year’s prior is a reminder just how much the average price of a home has increased. Between October of 2022 and 2021 the average price increased $9,200 and between October of 2022 and 2014 the price increased $70,570.

Debt for Michigan residents continues to grow, according to recent reports from the Federal Reserve Bank of New York. According to the data, the Michigan Per Capita Debt Balance came in at $44,370 at the end of the third quarter of 2022; this is an increase from the $44,130 Michigan Per Capita Debt Balance at the end of the second quarter in 2022 and from the $41,200 debt a year prior. Overall, the Michigan Per Capita Debt Balance increase 7.69 percent between September of 2022 and September of 2021.

According to WalletHub, $86 billion in new credit card debt was incurred in 2021 in the US. A recent CNBC article noted how household debt has increased at its fastest pace in 15 years, a trend that is further demonstrated in the chart below. Reasons for the fast-paced increase in debt include inflation and rising interest rates.

Inflation Puts Strain on Food Banks, Families in Southeastern Michigan

September 19, 2022September 19, 2022 by Drawing Detroit | Leave a comment

Rising inflation is hitting people all over the metropolitan area. For example, food banks are experiencing increased use, according to local media outlets. In the Metro-Detroit area major food banks include Gleaners Community Bank and Forgotten Harvest; these organizations not only supply food to those in need via their mobile food pantries and sponsored distribution events; they also provide food to soup kitchens, other organizations’ food pantries and other programs. According to MichiganRadio.org, in March of 2022 Gleaners Community Food Bank had about 13,000 visits to its mobile food pantries; the average number of visits in the six months prior to that was about 9,000. Feeding America West Michigan experienced a 34 percent increase in visits between February and March of 2022, according to the April 2022 Michigan Radio. A recent Model D article states that the Capuchin Soup Kitchen experienced a 25 percent increase in visits in the last year. Additionally, the same Model D Media article reports that Forgotten Harvest recorded a 30 percent increase month-to-month between April, May and June of this year. According to the article, Forgotten Harvest served 16,000 individuals in the month of June— 10,400 more than in the same month last year.

The charts below show just what inflation means to the average person. For example, in the first chart below, according to the Bureau of Labor Statistics, the cost of meat, poultry, fish and eggs has increased by 8.4 percent in the Metro-Detroit area between July of 2021 and July of 2022. Dairy has increased by about 20 percent in that time frame and cereal and bakery goods have increased by about 19.3 percent. As we know, not only are food prices increasing but so is the cost of housing, utilities and gas. Gasoline has experienced the largest consumer price index increase in the last year at 63.9 percent.

Another way to view inflation is to understand how the value of a dollar, or $100, has changed. The chart below uses $100 in June of 2000 as a reference point to show inflation over the last 22 years. So, for example, $171.46 today would be the same as $100 in June of 2000. In other words, the purchasing power of the dollar has continually decreased, except between 2008 and 2009. Between 2020 and 2022 the purchasing power of the dollar has had the largest decrease since 2000. Between 2020 and 2022 there was a $21.52 difference in the power of the dollar. What you could buy for $149.74 in 2020 increased to $171.46. And again, these dollar figures are comparable to what $100 would be worth in 2000.

The data and anecdotal stories show just how inflation, coupled with supply chain issues, are impacting families throughout Michigan, Metro-Detroit and beyond. Seeing the writing on the wall, the Food Bank Council of Michigan received a $50 million one-time allocation in the 2022-23 State Budget to support ensuring families across Michigan could access food. These funds will increase infrastructure to better serve Michigan’s northern counties and Upper Peninsula through decreasing transportation expenses. The funding will also be used to conduct a Hunger Study, providing data to align federal, state and commodity programs to meet residents’ needs. According to the Food Bank Council, it is paying 40 percent more to keep up with food pantry demands across the state.
Additional allocations to food banks will certainly help with the increased use in food pantries, but the State Budget funding was a one-time allocation and the duration of the increased use in food pantries is unknown. The state, and federal government, though are working toward food security through other avenues as well. For example, about 1.3 million people from about 700,000 households in Michigan receive federal Supplemental Nutrition Assistance Program (SNAP) benefits through the state’s Food Assistance Program. Since the COVID pandemic began, all household have received the maximum benefits allowed for their size, and this practice continues. Following the May 2021 SNAP benefit amount increase, households of the following sizes are receiving the corresponding max benefit amount:
•
·One Person: $250
·Two Persons: $459
·Three Persons: $658
·Four Persons: $835
·Five Persons: $992
·Six Persons: $1,190
·Seven Persons: $1,316
·Eight Persons: $1,504
In August, households receiving SNAP benefits had an additional $95 added to their Bridge card to help further combat the affect inflation is having on food costs. How long this will last is unknown as federal approval of the increased SNAP benefits is necessary every month.
Schools are also working to create greater food security for students but either adopting a universal free lunch policy for all students, or at least sending free and reduced lunch applications to all households in the district. According to the Kids Count Data Center, 715,000 of Michigan public K-12 students qualified for free or reduced lunches’ income bracket in 2021. During that time though, all students—nationwide—received free lunches as part of a federal program implemented in the height of the COVID pandemic. This school year though, that policy does not exist and Michigan does not have a universal school lunch policy. Detroit Public Schools implemented one though, as have some others throughout the story. For the many districts that do not have such a policy, free and reduced lunch applications are being sent to all homes so eligible students can receive the service. For reduced meals, breakfast is $0.30 and lunch is $0.40. Income eligibility information can be found here.

We know that food banks are meeting, and serving, just some of the thousands upon thousands of individuals being impacted by the affects of inflation. However, long-term assistance to such food banks remains unknown, as direct long-term funding from state entities isn’t certain, and with economic concerns growing, donations may decrease. Food pantries serve a vital role in our community, as do programs such as SNAP and the Free and Reduced School Lunch Program. Food insecurity is an issue hundreds of thousands Americans face daily and long-term strategies to create food security need stronger framework and better funding.

To find a food bank in Michigan click here.

Housing Prices Begin to Stabilize, CPI Takes A Dip in Metro-Detroit

September 13, 2022September 13, 2022 by Drawing Detroit | Leave a comment

Michigan’s unemployment continues to decrease, for the tenth straight month, and the labor force in the state continues to grow. This year is looking much rosier than in 2020 when great uncertainty riddled the state, and the country. With job recovery following the peak of the pandemic, and an increase in revenues from the sales and use tax and federal funding the state is predicting about a $5 million surplus. While such a surplus can viewed as a sign of improved economic times, we must also recognize inflation is on the rise, and uncertainty still looms with COVID and the war in Ukraine. Recognizing that inflation is hitting the homes of most, if not all, Gov. Gretchen Whitmer was proposed sending $500 to working Michigan families in attempt to help ease the strain on our pockets. The Republic led majority legislature is discussing a $2.5 billion plan that would cut taxes. What will happen remains unknown, especially as the project surplus is just an estimate.

But the data below does tell that story that Michigan’s economy is on the rise while the costs of goods and services is also on the rise.

The chart below provides a more detailed look at how unemployment rates are currently, compared to year ago, at the local level. Across all seven counties in Southeastern Michigan unemployment rates were lower in July of 2022 as compared to July of 2021. Wayne County experienced the largest decrease in that year, with the unemployment rate decreasing by 4.9 percent. While Wayne County had the highest unemployment rate in the region in July of 2021 (9.6%), it did not have the highest rate in July of 2022. Rather, Monroe County currently had the highest unemployment rate in the region in July of 2022 at 5.4 percent. Livingston County continued to have the lowest unemployment rate in the region at 2.2 percent.

While home prices in Metro-Detroit continue to increase from one month to the next, the rate at which they are increasing is beginning to taper off. According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold was $172,560 in July of 2022; this was a mere $170 higher than the average family dwelling price in June. While the month-to-month increase has slowed down, a look at data from year’s prior is a reminder just how much the average price of a home has increased. Between July of 2022 and 2021 the average price increased $19,960 and between July of 2022 and 2014 the price increased $75,220.

Recreational Marijuana Brings in Additional Revenue for Michigan Communities

April 25, 2022April 25, 2022 by Drawing Detroit | Leave a comment

In 2021 more than $1.1 billion was reported in adult-use marijuana sales in the State of Michigan, and of that more than $42.2 million is being disbursed to municipalities and counties, $49.3 million is being sent to the School Aid Fund for K-12 education and another $49.3 million is being sent to the Michigan Transportation Fund. These revenue sales occurred in the 374 dispensaries licensed in the State of Michigan, which are spread out across 53 counties. In total, there was $172 million available for distribution from the fund set up by the Michigan Regulation and Taxation Marijuana Act, and more than $111 million was collected from the 10% adult-use marijuana excise tax.

Of the funds earned through the excise tax, $20 million is to be provided annually to one or more clinical trials that research the efficacy of marihuana in treating the medical conditions of United States armed services veterans and preventing veteran suicide. Once these funds are dispersed, and administration of the regulation department is paid for, the unexpended balances must be allocated as follows: •15% to municipalities in which a marihuana retail store or a marihuana microbusiness is located, allocated in proportion to the number of marihuana retail stores and marihuana microbusinesses within the municipality;

•15% to counties in which a marihuana retail store or a marihuana microbusiness is located, allocated in proportion to the number of marihuana retail stores and marihuana microbusinesses within the county; •35% to the school aid fund to be used for K-12 education;

•35% to the Michigan transportation fund to be used for the repair and maintenance of roads and bridges.

For 2021, each eligible municipality and county will receive more than $56,400 for every licensed retail store and microbusiness located within its jurisdiction.

In the seven county region for Southeastern Michigan, five of the seven counties have licensed marijuana retail stores and/or microbusinesses, with Washtenaw County having the highest number of licenses at 32. Since Washtenaw County has the highest number of licenses it is also receiving the most amount of tax revenue. Washtenaw County, as the entity itself, will be receive about $1.8 million, according to the Michigan Department of Treasury. Wayne County will receive about $960,000, and Monroe County will receive the lowest amount at about $56,500. Monroe County has one licensed marijuana business and Wayne County has 17.

As noted, Washtenaw County has the highest number of licenses and will receive the highest amount of revenue payments, this is because Ann Arbor alone has 25 licensed marijuana retail stores and/or microbusinesses. Ann Arbor, according to the Department of Treasury, will receive about $1.4 million in revenue payments because of these businesses and the distribution formula set by the Michigan Regulation and Taxation Marijuana Act.

At the city/township/village level, River Rouge in Wayne County has the second highest number of licenses in the region at 7. River Rouge is set to receive about $395,000 in revenue funds through the tax.

While municipalities across the state are earning additional revenues through the marijuana excise tax from recreational sales, up until recently Detroit was one notable community that did not. However, in April of 2022 the Detroit City Council approved medicinal marijuana to be sold within the city limits through the adoption of a recreational ordinance.

Gap Between Wages and Housing Affordability Grows in Southeastern Michigan

August 5, 2021August 5, 2021 by Drawing Detroit | Leave a comment

The eviction moratorium in place by the Centers for Disease Control ended July 30, and while programs funded through COVID Emergency Rental Assistance program are in place there is a deeper issue to be examined: affordable housing and a national living wage. According to data from the National Low Income Housing Coalition even if there weren’t a pandemic, the ability to obtain affordable housing and the ability to earn an hourly rate to afford housing continues to grow farther apart. In Michigan, according to the report, the average worker needs to earn $18.55 to afford a two-bedroom rental home at fair market value.

The average rule of thumb is that those who rent should spend about 30 percent of their income on their rental unit. In 2019, according to the American Community Survey, the average resident living in Wayne and Monroe counties was already living above that. According to the Census Bureau, the average percentage of gross income spent on rent in Wayne County was 32 percent and in Monroe County it was 30.7 percent. Macomb, St. Clair and Washtenaw counties were all at the 30 percent threshold (29.3%, 29.7% and 29.8%, respectively). Oakland County had the lowest percentage of gross median income spent on rent at 26.8 percent.

Further expanding on the gap between wages and access to housing, the National Low Income Housing Coalition released additional data drilling deeper into the hourly rate an individual would need to make in each county to afford a two-bedroom rental home (at fair market value) and what the current estimated hourly wage rate is for rent.

Washtenaw County has the highest housing wage rate in Southeastern Michigan at $24.31; this is the hourly amount an individual would need to make to afford a two-bedroom rental there. However, the current estimated hourly renter wage in Washtenaw County is $16.92; that is a $7.39 wage gap between current wage conditions and what is needed for local affordable housing security.

Livingston County has the largest gap between the average estimated renter wage and the hourly wage needed to secure a two-bedroom home at fair market value; that gap is $8.51. The current hourly renter wage in Livingston County is $12.26 and the amount needed to secure a two-bedroom home is $20.77.

Monroe County has lowest hourly wage needed to secure a two-bedroom home at $17.29 and the current estimated average hourly renter wage is $12.18, meaning there is a $5.11 gap.

The smallest gap between the hourly wage needed to secure a two-bedroom home and the current estimated average hourly renter wage is in Oakland County; that gap is $1.39. In Oakland County the average estimated current hourly renter wage is $18.78 and the hourly wage needed for a two-bedroom rental home is $20.17.

As the data shows, each county in Southeastern Michigan (and throughout the state), has a gap between the wages individuals earn and what it costs to obtain a home on the rental market. This gap means that many need to work more than 40 hours a week, sometimes closer to two full-time jobs.

In order to bridge this gap many changes need to occur; the two glaring ones would be additional affordable housing options added to the market and an increase in the minimum wage. The minimum wage in Michigan is $9.45, and it was not increased to $9.87 in 2021 because the average unemployment rate for 2020 was more than 8.5 percent. However, there have been pushes both nationally and state-wide to increase the minimum wage to $15 an hour—but that has yet to widely come to fruition. In 2019 though Oakland County did adopt a $15 an hour minimum wage for County employees and Oak Park recently did the same for City employees. As businesses continue to try to attract and retain employees we are also seeing increases in the wages they are offering. However, while individual business and local governments implement living wages policies nothing is guaranteed without broader policies.

What Can Detroit Can Do for Its Citizens: Their View

March 30, 2021March 30, 2021 by Drawing Detroit | Leave a comment

The Wayne State University Center for Urban Studies worked with MDP Black Caucus to develop the 2021 Detroit Resident Survey. This survey, based upon a random sample of Detroit residents found that the top area of improvement citizens want is community and neighborhood improvement/blight reduction. The second most frequently sought improvement was a reduction in crime together with an increase in community safety. Overall, there were 18 general areas that survey respondents said the City of Detroit can do to help them and their household. The 621 respondents to the survey made 437 suggestions on how the City can be improved.

As noted, the most common suggestion on what Detroit can do for citizens is to improve its community and neighborhoods and remove blight. Thirteen percent of respondents, or 55 citizens, made this suggestion. Eleven percent of respondents, or 46 citizens, suggested reducing crime and increasing community safety.

Blight and neighborhood improvements have long been a concern in the City of Detroit and while work has been done over the last several years, clearly residents still have concerns–as do community leaders. Between 2014 and 2020 more than 15,000 homes in the City of Detroit were knocked down with $265 million in federal funding. There are about 22,000 vacant properties left in the City that need to be addressed; the recent passage of Detroit’s Proposal N states the $250 million bond will allow an additional 8,000 to be razed and 6,000 to be secured.

On behalf of the Gilbert Family Foundation and Rocket Community Foundation, Dan and Jennifer Gilbert pledged $500 million over the next 10 years toward improving the Detroit community. The first $15 million will go toward paying the property taxes of 20,000 low income homeowners in the City. How the remainder of the donation will be spent has yet to be determined, but it could go toward things like digital equity, home repairs, housing access and employment. It is agreed upon though that with the funding must come a long-term strategy.

A reduction in blight can also improve community safety, according to a study by Wayne State University criminologists Matthew Larson and Charles Klahm IV. Larson and Klahm looked at Detroit crime data in areas where nearly 9,400 blighted homes were demolished between 2010 to 2014. According to their study they found that such blight demolitions reduced violent and property crimes. The study found that for about every three demolitions block-groups experienced about a 1 percent reduction in crime.

With a host of suggestions on how the City of Detroit can improve life for its residents it should not be a surprise than on a scale of 1-10 2021 Detroit Resident Survey respondents ranked their satisfaction with City leadership at a 5.75. Respondents rated their satisfaction with Wayne County leadership at a 5.62, at 6.9 with the State of Michigan’s leadership and 5.35 with the leadership at the federal level.

Tomorrow, we will further dig into the concerns of Detroit citizens, highlighting specific household and community concerns.

Ten Things Joe Biden and Kamala Harris Should Do for Detroit

January 11, 2021January 13, 2021 by Drawing Detroit | Leave a comment

There are two reasons Detroit should have a special place in President-elect Joe Biden’s heart. First, because Detroit needs real help–now. And second is because Detroit is one of the key places that brought his victory. Detroiters voted in massive numbers for him and Vice President-elect Kamala Harris, and Democrats will need Detroit voters to win again. As the saying goes, you need to dance with the ones who brung you.

Here, then, are ten agenda items Biden and Harris should prioritize—giving back to a City that helped bring them into office.

1.Make plenty of vaccine doses available. Unemployment linked to COVID-19 closures have hit the poor and those in service jobs far harder than other industries. Unemployment numbers are more than double in Detroit than in Michigan. More vaccines mean it’s safer to go back to work, and Detroiters need that work and the accompanying income now. That will improve many other things mentioned here, including reducing violence.

2. Reduce the violence. We’ve seen major increases in murders and shootings. On surveys through the years, Detroiters have consistently said public safety is at the top of their agenda, but that does not translate to a desire for heavy duty police enforcement across the board. Rather than defund the police, Biden should talk about demilitarizing the police and making them responsive to the true needs of the community. Detroit citizens want tough action against the repeated violent offenders, but they want first time offenders and others diverted out of stigmatizing court process into community service, education and job training programs. For example, police regularly stop hundreds of people and arrest them for carrying illegal weapons. We need to divert these citizens into training programs that teach them about the risks of violence. We need to use conflict deflectors and de-escalators to reduce violence. Increased participation in youth sports and utilization of open community centers will also help deter violence. While many of these outlets have been closed and cancelled due to COVID restrictions, we must find ways to continue to offer such opportunities.

3. Reduce domestic violence. Domestic violence, already high in Detroit, has increased under COVID-19, and the enforcement of parole violations for domestic violence offenders by Michigan Department of Corrections has declined.

Detroit has far fewer shelter beds than surrounding communities for survivors of domestic violence (DV) or intimate partner violence (IPV). This needs to be corrected immediately. Beyond that, survivors need to have far more access to advocates who can help them navigate the complex legal and support systems that do exist. They need more financial help to pay for things like moving to safe locations and serving Personal Protection Orders that are intended to help shield survivors from further violence.

4. Increase jobs for youth. Detroit youth have extraordinary unemployment levels, well above the already high adult unemployment levels. This is a crisis, especially because we know that this will affect their lifetime earnings and connection to the workforce. Such high levels have led to challenges to democracy itself in other times and countries.

We need broad, youth employment programs funded by the federal government and operated by non-profits that do real work to help improve Detroit. These jobs must create job ladders for youth so they have a future in which to invest.

5.Increase support for youth to go to college, apprenticeships, and training at community colleges. Many youth have no real way to pay for college.

We need to increase Pell Grants very substantially so youth who want higher education can get it without having a lifetime of debt, as so many do now. Apprenticeships and training in the skilled trades also often lead to good jobs with benefits and high wages—sometimes higher than college-educated jobs. These opportunities also need more funding so the youth have access to an even wider range of skills and jobs.

6.Fully fund special education. In Michigan, charter schools are implemented in a manner where they generally recruit higher performing students from the public schools, leaving the public schools with fewer higher performing students—who tend to cost less to educate. In major urban areas, charter schools proliferate and the public schools end up with a disproportionate share of special education students, which the charter schools avoid. These students cost more to educate. Because special education is not fully funded by the federal government, the costs are off loaded onto urban school districts in Michigan. These costs drive urban school districts into debt and decline. None of this makes it onto the debate stage, but this is the crucial work that needs to be completed to help Detroit and other cities like it. More federal funding is needed for special education students.

7.Invest massively in home repair. Detroit’s housing is crumbling with 63% of the housing units having at least one major health hazard. Lead paint, lack of heat, flooding, asbestos, Volatile Organic Compounds (VOCs), structural hazards, fire hazards—these are all present across the range of homes in Detroit both for homeowners and renters.

Detroiters don’t have the money to pay for all these repairs, and Community Development Block Grant dollars continue to decrease. Money for repairs of existing homes is needed to make them safe and to protect existing residents from disease, injuries and break-ins. This will also protect them from gentrification.

8.Protect homeowners from foreclosure. This is a perennial issue in Detroit that turns into a crisis with every recession. In the Great Recession, many thousands of homes were wrenched from homeowners. Now foreclosures are high again.

Short term cash and longer term re-writing of mortgage agreements are critical to short circuiting this endless cycle of foreclosures that has already made Detroit a majority renter city. This too will protect existing homeowners from gentrification.

9.Invest heavily in weatherization. One the highest costs that Detroiters face are their utility bills, both for renters and homeowners. Leaky old houses mean huge heating bills that often take up a large part of the budgets of low and moderate income households. In neighborhoods like Southwest Detroit, where industry and traffic pollute the air, this weatherization should also include air filters to clear the air that people breathe most of the time (Americans typically spend 80% of their time in their homes).

The Obama Administration initiated a large weatherization program but the budget for that got nixed by the GOP in Congress. Now is the time to move forward with this both for the sake of everyday Detroiters and the sake of the planet.

10.Build Community Solar. Unlike many cities, Detroit has lots of open space that could be used for solar energy production. DTE, our local utility, mainly produces electricity from coal, which hurts the planet and the lungs of Detroiters. And, Michigan produces none of this coal. Another way to help Detroiters reduce their utility cost is use some of the massive amount of vacant land in the city for building community solar installations. With investment from the federal government, these could be owned by Community Development Corporations or others who could sell the solar power at cost to homeowners nearby. Investing in these small-scale production facilities would produce installer jobs for Detroiters, increase reliance on alternative sources of electricity, cut costs for citizens and make appropriate use of vacant land.

COVID’S Economic Impacts Continue in Michigan and Beyond

January 4, 2021January 4, 2021 by Drawing Detroit | Leave a comment

Twenty-twenty may be a wrap but the COVID-19 pandemic continues on and the economic impacts continue to be felt, nationally and locally. According to the Michigan Department of Health and Human Services, on Jan. 2, 2021 there were 497,127 confirmed COVID-19 cases; that is 8,983 new confirmed cases since Dec. 29, 2020 (the State did not release data over the New Year’s holiday). According to the five-day rolling average (shown in the chart below) there were 489,096 confirmed COVID cases in Michigan on Dec. 31, 2020. New case numbers continue to remain in the thousands, and while the vaccine is in its first phase of distribution, we still have a ways to go until the affects of this virus—physically, economically, socially and mentally—are no longer felt.

In November of 2020 the unemployment rates for the State of Michigan and for the City of Detroit increased after general declines between July and October. The State of Michigan reported an unemployment rate of 6.3 in November, a higher rate than what was reported in October, which was 5.7—the lowest rate reported since the pandemic began. While the November unemployment rate was still lower than what was reported between April and September of 2020, it was still an increase from October and likely a reflection of the stronger COVID-19 restrictions imposed by the State and growing caution from citizens as the confirmed case numbers began to rapidly increase.

For the City of Detroit, the unemployment rate for November of 2020 was 18.7, which is higher than the October rate of 15.4. While Detroit’s unemployment numbers remain much higher than what they were a year ago and above the State’s, the city is following the same trend as the State. Furthermore, the November unemployment data shows how the unemployment gap between the State and Detroit continues to grow wider as the case numbers increase.

A direct reflection of the unemployment data above is the number of small business closures. According to the Southeastern Michigan Council of Governments (SEMCOG), 33 percent of small businesses in Metro-Detroit closed as of Dec. 30, 2020. While this lower than the May 12, 2020 local small business closure percentage of 54 it is still far above the 3 percent closure rate on April 1, 2020—less than a month after COVID hit Michigan.

The data on the percentage of small business closures is determined through the Opportunity Insights Economic Tracker. This source uses credit card transaction data from 500,000 small businesses and estimates closures from the number of small businesses not having at least one transaction in the previous three days. The data covers industries such as healthcare services, leisure and hospitality, and retail and transportation.

Michigan’s economy continues to rely heavily on the auto industry and between February and March of 2020 auto sales for cars, trucks and light weight vehicles were cut in half. Since then, the number of auto sales has slowly, yet steadily, grown—but not to pre-pandemic levels. In November of 2020 auto sales for: light weight vehicles was 15.5 million, compared to 16.9 million the year prior; light truck sales was 11.8 million compared to 12.6 million in November of 2019; car sales was 3.8 million, compared to 4.4 million the year prior. All three types of vehicles have experienced a decline, with light weight vehicles experiencing the largest decline when comparing 2019 sales to present sales.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2020. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how in March of 2020 consumption of nondurable goods increased while consumption of durable goods and services decreased. Following the initial panic of the COVID-19 pandemic, consumption expenditures of nondurable goods decreased in April, 2020 and have since somewhat leveled off. In November of 2020 $3167 billion in nondurable goods was consumed and in November, 2019 $3017 billion in nondurable goods was consumed. Overall, there has been an increase in consumption expenditures of nondurable goods since last year. For durable goods, $1813 billion was consumed in November of 2020 and in November of 2019 $2032 billion was consumed; this shows an overall decrease.

Services have been the hardest hit in terms of expenditure consumption. In November of 2020 $8014 billion in services was consumed and in November of 2019 $8589 billion was consumed.

In addition to COVID impacts on employment rates and consumption of goods and services, it has also impacted the sale prices of homes. However, the pandemic seems to have had the opposite effect—home prices have continued to increase.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $135,760 in September of 2020; this was $164 higher than the average family dwelling price in August. The September 2020 price was an increase of $8,290 from September of 2019.

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Category Archives: Economy