GRAND RAPIDS, Mich. — The most recent jobs report showed 431,000 jobs were added across the country in March, dropping the national unemployment rate to 3.6%, the lowest in the pandemic era.
The unemployment rate has steadily declined after a historic peak at 14.8% in April 2020 when the pandemic began. With the latest report, 93% of the 22 million jobs lost during the pandemic have been created or recovered, as Dan Giedeman, an economics professor at Grand Valley State University, likes to put it.
“You know, we might say the word ‘Created,’ but it’s probably in this sense to use the word ‘Recovered,’ he said. "This is a pretty strong recovery, especially if we consider the recession we had with the Great Recession, where it took literally years and years and years before we came back to regain those jobs.”
Giedeman said it's happening so quickly because, in many cases, people are going back to the jobs they left, filling positions that were theirs to begin with. Also, a majority of those people are getting paid more.
However, Giedeman said, “even though your paychecks are bigger, when you go to the store, in terms of what economists call real wages, real wages don't go as far, but there will be recovery.”
In the last year, wages increased 5.6%, but are still well below the 7.9% inflation rate. People are still overpaying for gas at the pump, and for bread at the store.
Since that's the case, many people might think the economy is doing poorly. As Giedeman explained to his economics class, that might not actually be the case.
“You know, I asked my students, I asked him like two weeks ago, ‘Hey, is the economy doing well or is the economy doing poorly?" said Giedeman. "The general consensus was the economy's doing poorly. Then I pull up the numbers, I said, ‘Well look at you know, look at GDP growth rates, look at the unemployment rate, you know, overall, things are doing well.’ I kind of tried to explain you why are we feeling it's bad, when by many metrics is doing really well. It's because everybody experiences inflation. Not everybody says, ‘Hey, I have my job back again.”
Giedeman said it might take a couple of years for wages and inflation rates to line back up again. He said, if lawmakers fight it too hard, they could put the economy back in a recession.
“The way they're going to control inflation is by tamping back the growth of the economy," said Giedeman. "So, it's that tightrope that they're walking."
Here in Michigan, the March unemployment numbers don't get released until April 6. So, looking at the latest report, Michigan added 9,000 jobs from January to February, an increase that ranks 40th in the country.
The unemployment rate sat at 4.7% in February, which was above the national average of 3.8%.
Giedeman said he expects that number to decrease when the March data comes out, but he doesn't expect it to dip below 4%.
Giedeman said he isn't exactly sure why Michigan is behind the rest of the country.
"Some of the states did reduce their pandemic restrictions more quickly than Michigan did," said Giedeman. "I don't want to put blame on politicians or anything like that, but that could be part of it. It could be part of, two, just supply chain issues that may be affecting manufacturing in Michigan. We think about automobiles still being a very significant part of the Michigan economy. We're talking about chip shortages and things like that. So, that could potentially play a role there as well.