Detroit's economy shows 'resilience,' poised for growth, UM study says

Detroit is seeing gains in employment and wages and drops in joblessness that are expected to continue the next several years, according to a University of Michigan study released Friday.

The Detroit Economic Outlook for 2021-26 says the city "has shown resilience in the face of an unprecedented downturn" amid the COVID-19 pandemic.

"We have been encouraged by the data showing Detroit's ongoing recovery," said Gabriel Ehrlich, director of UM's Research Seminar in Quantitative Economics and lead author of the forecast. "The pandemic has created important challenges for our nation's large cities, but we expect Detroit to recover its pandemic job losses next year and continue growing from there."

The study estimates the city's unemployment rate dropped from about 22% in 2020 to 10% last year. Ehrlich and his colleagues think the rate for 2021 will be revised upward but project the jobless rate will drop below 10% this spring. 

They forecast the rate to 8.7% in 2023 — below the pre-pandemic level — and stay near that level through 2026.

Much of the employment gains will come from blue-collar jobs such as construction and manufacturing, while service industry jobs will return roughly to pre-pandemic levels by 2026, the report predicts.

The average wage rate in the city rose 9.4% in 2020 amid service job layoffs but fell 2.2% in 2021 as lower-wage workers returned, the study estimates. It predicts Detroit's average wage rate will rise 4.1% in 2022, 3.6% in 2023 and about 3% annually from 2024-26 — faster growth than Michigan overall.

"Our forecast envisions more Detroit residents working, and more Detroit residents who are willing and able to work in 2026 than there were before the pandemic," the researchers wrote.