Michigan unemployment rate tops 22%, worse than Great Recession

Keith Laing
The Detroit News

Michigan's unemployment rate reached 22.7% in April, the state said Tuesday, after more than one million Michiganians filed for unemployment last month.

The jobless numbers from Michigan — far worse than those posted during the Great Recession — contributed to an overall joblessness rate of 14.7% for the nation as stay-at-home orders and business closures caused by the coronavirus pandemic pounded the U.S. economy and claimed more than 5,000 lives in Michigan. 

More: Feds report more than 54K new unemployment claims filed in Mich. last week

"We are going through an unprecedented crisis, unlike anything we’ve seen in our lifetime,” Gov. Gretchen Whitmer said in a statement. “This virus has devastated families across the state and put hardworking Michiganders out of a job for months. I will continue working around the clock to ensure everyone who qualifies for unemployment benefits receives them during this time."

The Michigan Department of Technology, Management and Budget said that the number of unemployment claims across the state reached an all-time high of 1,048,000 in April. The previous peak was 725,000 in June 2009.

The 22.7% unemployment rate is the highest rate since at least 1976. That's as far back as comparable estimates go, the state said, likely making the current jobless rate an all-time high in the post-war era. The previous high rate over this period was 16.5 percent in December 1982.

A Business Closed sign is displayed on the front door with business for sale signs out front of the Wintergarden Tavern on Gratiot in Chesterfield Twp., Friday afternoon, May 8, 2020.

Yet the April unemployment rate is expected to be a high-water mark for Michigan because General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV began calling employees back to work on Monday, one week after auto suppliers and other manufacturers restarted their operation. GM said it recalled roughly 13,000 U.S. hourly employees this week, while FCA said it brought back some 12,000 U.S. employees. Ford declined to comment on the number of workers recalled. 

Michigan's 22% unemployment figure is the worst the state has experienced in at least eight decades, said Charles Ballard, an economics professor at Michigan State University: "This is higher unemployment than we have had at any point since the Great Depression, that's for sure. It was 14% in the wake of the Great Recession a decade ago. It got to somewhere in the 16% range in the very deep recession of the 1980s." 

Unemployment reached as high as 34% in the 1930s during the Great Depression, higher than a national peak of 24.9% in 1933. The unemployment figures reported by the state, Ballard added, are "probably" an understatement. 

"There were people who were working in March who were not working in April who didn't get counted because they referred to themselves as 'employed but absent from work,'" he said. "There's reason to believe Michigan may have been hit particularly hard. The outbreak in southeast Michigan was pretty bad, and the result of that has been pretty serious lock downs." 

Ballard expressed optimism that the Wolverine State may be able to turn a corner soon with stay-at-home orders beginning to be lifted in at least some parts of the state and with autoworkers returning to their jobs. But he said it will likely be an arduous road back for the state's economy.

"I'm cautiously optimistic it won't be as bad when we get the next round of reports with things beginning to open up," he said. "There's a glimmer of hope that we may hit the bottom soon. That's not the same as saying we'll have a quick rebound. But I don't think it will get much worse."

Patrick Anderson, president of East Lansing-based Anderson Economic Group, called the record-high Michigan unemployment rate confirmation that the combination of the coronavirus pandemic and government shut downs have wrecked havoc on the state and national economies. 

"This is a devastating share of the state’s workforce to be idled," he said. "It is without parallel in modern economic history. We foresaw this even in March, when we projected 1.4 million Michigan citizens could lose income in April. Unfortunately, that scenario is now a reality.

"Some of this is a penalty of the severe restrictions placed on travel and commerce; some of it was the unavoidable consequence of a severe epidemic," Anderson continued. "The epidemic alone caused a recession; the combination of the epidemic and two months of a statewide shutdown have given us the first Depression in my lifetime."

Anderson warned that the record-high unemployment levels will be felt across multiple sectors, saying: "The cost of this will be severe. I anticipate the larger manufacturers, tech companies, and colleges will climb their way out of this, but many restaurants, small businesses, and nonprofits will not be able to make it.

"Although state governments and schools have been largely insulated thus far, there is no way to avoid the crushing loss of tax revenue that began in March and will continue at least into June." 

Anderson predicted the true jobless number in Michigan is likely to be higher than the number of unemployment claims that so far have been reported. He cited the fact that unemployment claims typically do not measure small business owners unable to pay themselves because of lost income. 

"Many of those that have filed for unemployment are getting $600 per week supplements now from the federal government," Anderson said. "However, small business owners — who often pay themselves out of what is left each month after they make payroll — and many contractors and gig workers are really getting hurt."