“That doesn’t bode well for the talent in the state, or the workforce in the state, and it leaves an aging population that’s going to create talent issues.”
He continued: “The implications are huge.”
Michigan is the 12th oldest state in the US, averaging 40.1 years. About a quarter of the state is older than 60. In a 2023 survey, more than a quarter of Michigan’s young adults said they expected to move out of the state.
Gov. Gretchen Whitmer created a growth office in 2024 to stem the losses, but the initiative went unfunded in this year’s state budget.
Meanwhile, Michigan’s economy, the economists wrote, “has hit a growth pause this fall.”
The federal government shutdown paused some economic data, but even without performance metrics for recent months “the story was confusing.” Uncertainty over tariffs and job counts made it difficult to get a read on the economy, even as jobs losses seemed to stack up.
In Michigan, the state officially recorded 24,100 new payroll jobs from the end of 2024 to August 2025, well ahead of expectations — but they’re expected to be revised downward. Another count of employed state residents declined by 18,700 over that time.
Looking ahead, the US is expected to gain jobs and maintain unemployment at about 4.5%, the economists said, following a bumpy 2025. National productivity should grow at an average 2.4% through the year, they added.
In comparison, they forecast 2,000 Michigan job losses in 2026, while the unemployment rate reaches 5.6%.
That’s the tepid outlook for the state when the national economic movement would normally support Michigan’s growth: Federal tax cuts, lower interest rates and policy support for the auto industry.
Instead, “the state will continue to face challenges in finding enough workers,” the economists said, blaming the aging population, along with reduced immigration.
The unremarkable look ahead for Michigan follows another report this week that suggested the state’s slide in educational outcomes and prosperity will require “laser focus” for a turnaround.
“Michigan in a New Era,” a roadmap for the next governor from Business Leaders for Michigan, found that while the nation has grown, Michigan:
- Ranks 50th in household income growth over the past 25 years
- Shows flat growth in high-wage professional jobs over 20 years, while they’ve grown 35% nationally
- Fell from 16th to 44th in fourth grade reading over 30 years
- Posts one of the highest chronic school absenteeism rates in the nation.
The business leaders report hones in on Michigan’s potential to overcome what Jeff Donofrio, the group’s CEO, called “decades of slow growth, industrial disruption, talent outmigration and inconsistent policies” that have left the state playing catch-up as other states increase prosperity.
Indeed, the U-M economists targeted data that showed Michigan’s economic slide compared to the rest of the country.
Among the changes, the economists found, were manufacturing job declines that erased the sector’s and behind-the-curve growth in high-wage professional jobs.
But underlying all of it was the fact that Michigan residents are aging out of the workforce.
“If you don’t get an increase in the workforce, you can’t get growth. And if you don’t add jobs, you’re going to be limited in income gains,” Grimes said in 2023 when the CRC released a study of challenges facing the state.
“The average family will have less wealth (comparatively) than the nation,” he said. “It’s going to be really hard to fix that problem.”
The outlook for Michigan’s economy “may seem underwhelming,” U-M’s economists said, “but these sorts of projections are likely to become the norm in the years to come unless there are fundamental changes to demographic trends.”
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