Howes: Reopening Michigan business requires balancing adaptation, risk
The great reopening of the Michigan economy is creaking to life this week — in auto and supplier plants, in the Upper Peninsula and some counties of the northern lower.
But not before the state is expected Wednesday to notch an unemployment rate as high as 22%, according to University of Michigan estimates, nearly 10 points higher than the misery recorded during the bankruptcy-marred Great Recession a decade ago.
The good news is that Michigan's jobless rate, a direct consequence of efforts to blunt the spike in COVID-19 infections, may already have reached its high point. Thousands in the manufacturing sector this week are beginning their phased return to work and leaving the state’s swollen unemployment rolls.
The bad news is the remaining carnage still awaiting a restart of other sectors in other regions will not quell the raging debate over the length and depth of the eight-week lockdown ordered by Gov. Gretchen Whitmer, despite opposition from Republicans in the Legislature and sharp personal criticism leveled at her by the president of the United States.
"We may look back and say this was the week that Michigan realized it had to adapt, stopped panicking and started working," says Patrick Anderson, CEO of the East Lansing-based Anderson Economic Group. The firm has been closely tracking the pandemic and its effect on state economies, issuing repeated warnings of the wallop the shutdown would deliver to state and local economies as well as public budgets.
"You can't throw a million people out of work and not know they're not going to pay income tax, that business will not pay income tax," he adds, "and that gas tax revenue was going to pancake — the technical term for going close to zero."
They're right. And in a state where looming multi-billion dollar deficits mean one of two things — cutting spending or raising taxes — the pain of losing family, friends or neighbors to the virus will be exacerbated by reduced public spending and increased taxes if efforts to secure federal help (in a presidential election year) fail.
The battle against a virus the world is seeing for the first time has always been about balance — the public health imperatives to shield the vulnerable and to minimize infection rates balanced against the steep economic costs that multiply the longer shutdown orders remain in effect.
For weeks now, the caricatured debate too often aired at gubernatorial press conferences from Lansing and Columbus to Atlanta and Tallahassee (and in the White House press room) presented a choice between lives and jobs, between those who only care about lives and those who only care about money.
But as evidence mounts that the coronavirus nightmare is not the common cold, not influenza and not gonna just disappear, the real choice is between adapting and risk — doing the former to manage the latter because even the most economically deluded should be able to understand shutdowns that don't give way to adaptation are roads to nowhere.
The reopeners, armed with health and safety protocols to manage their respective restarts, are beginning to win the argument. Not by what they're saying as the economic costs of shutdown mount, but by what they're doing in outdoor work, construction, manufacturing and soon small business in places like a pro-business Detroit touted by Mayor Mike Duggan.
The "Detroit Means Business" effort is designed to help small business, the lifeblood of downtown's reinvention, successfully navigate a restart. From cleaning procedures, screening and testing employees to the use of such personal protective equipment, or PPE, as gloves and masks, the program aims to retain the small businesses that provide jobs, occupy storefronts and contribute to the city's stressed tax base.
Michigan's credit rating is stronger than during the Great Recession, and its cash hoard is larger. A Detroit restructured in bankruptcy carries less debt, provides more services at lower cost and tightly manages its cash. And its bellwether automakers are leaner, better capitalized and helping to lead efforts to get Michigan manufacturing rolling again.
The state's far better equipped than a decade ago to weather the brutal economic storm delivered by the COVID-19 pandemic. Leaders in Lansing and the business community face an unprecedented challenge none have seen before — don't blow it.
Daniel Howes’ column runs most Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN. Or listen to his Saturday podcasts at detroitnews.com or on Michigan Radio, 91.7 FM.