The Challenge of Job Creation in the Upper Peninsula

A recent study of US employment growth between 2006 and 2023 found that rural counties have not recovered the jobs they lost during the 2007-2009 recession, while metropolitan counties regained their pre-recession employment levels more than a decade ago.

The contrasting economic fortunes of urban and rural areas are part of a long-term trend that has favored job growth in metropolitan areas over rural areas. As Harvard economist Edward Glaser argues in the Triumph of the City, cities have always served as centers of innovation, creativity, and wealth creation.

Manchester, a city in the north of England, is considered the birthplace of the Industrial Revolution, while Detroit owes its rise (and fall) to the fortunes of the automobile industry.  The transition from a manufacturing to a knowledge-based economy provides more advantages for large agglomerations as people interact, learn from each other and develop new innovations.

It is against this backdrop that this article analyzes job growth among Michigan’s counties between 2006 and 2023, and compares the Upper Peninsula’s job creation performance with other areas in the state. Jobs data are from the Bureau of Labor Statistics and refer to average annual employment numbers, while the 2013 Office of Management and Budget definitions of rural and urban counties are utilized.

The Geography of Michigan’s Job Creation 

Between 2006 and 2023 the number of jobs in the state increased by over 111,000, a 2.4 percent gain. This compares with +6.9 percent for Indiana, +3.9 percent for Wisconsin, -0.1 percent for Ohio and a national figure of +12.1 percent.

The major metropolitan areas of Detroit and Grand Rapids accounted for nearly all of the state’s employment gains (Table 1), with the largest increases occurring in the Detroit suburban counties of Oakland and Macomb. Although it should be noted that Wayne County (which is at the core of the Detroit metro area) lost over 40,000 jobs, the largest of any jurisdiction in the state.

Rural areas, and medium sized metro areas (e.g. Lansing, Kalamazoo, Flint) all lost jobs, while there was minimal gain in small metro areas (e.g. Midland, Saginaw, Bay City). In sum, Michigan’s job growth is concentrated in its largest metropolitan areas, and lags behind the nation.  

Rural Job Losses and Gains

In 2006, there were 844,240 jobs in rural Michigan; fifteen years later the total was 802,866. This 4.9 percent drop compares with a nationwide figure of -3.1%.  All UP counties are classified as rural; if they are separated from their rural counterparts ‘below the bridge,’ (Table 2) the region’s job losses (14,918) are greater in percentage terms (-11.5%) than the -3.5 percent figure for areas below the bridge. 

All UP counties had fewer jobs in 2023 than in 2006, with the largest percentage declines occurring in Ontonagon (-40%) and Alger (-25%), while the smallest drop occurred in Houghton (-1%). Houghton’s relative success, as an earlier Rural Insights article noted, is attributable in part to Michigan Tech’s efforts to spin off high tech companies from ongoing research at the University.

This strategy has created an estimated 800 local jobs and stems from decisions made years ago by Michigan Tech’s senior leadership to promote an entrepreneurial culture.

The fact that the state’s rural counties had fewer jobs in 2023 than in 2006 might suggest that they are at a disadvantage in terms of job creation. But rural counties adjacent to the Grand Rapids metro area have experienced job increases. Allegan County, in southwest Michigan, gained nearly 10,000 jobs during the study period, while to the east of Grand Rapids, Ionia County experienced a smaller increase.

Further north, Grand Traverse and Benzie counties also experienced job gains. These increases are linked to recent population growth along the shoreline of lake Michigan.

Challenges of Job Creation in the Upper Peninsula

Rural America is hampered by the fact that its traditional industries–agriculture, forestry and mining–have been shedding labor for decades. The loss of mining jobs in the Upper Peninsula is particularly notable. The White Pine copper mine in Ontonagon at its peak in the mid-1970s employed over 3,000 workers; twenty years later it closed.

Marquette County’s Empire mine closure in 2016 resulted in the loss of 400 well-paying jobs. The state’s recent willingness to provide up to $50 million for the construction of the Copperwood Mine in the western UP attests to mining’s continued appeal as a job creator, despite its well documented boom and bust cycle. 

Job creation in the Upper Peninsula is further hampered by geography. Below the bridge, rural counties close to growing metro areas have experienced job gains, but the UP is unable to benefit from any spillover effects of metropolitan growth.

Moreover, its small dispersed population covers an area larger than Massachusetts, Connecticut and Rhode Island, making any benefits from agglomeration illusory. Jobs in the knowledge sector are a source of employment growth, but they are dependent upon access to a highly skilled labor force.

And this presents a challenge for the region (Table 3). Only three counties (Houghton, Keweenaw and Marquette) have a higher percentage of adults over the age of 25 with a bachelor’s degree or higher, than the statewide figure of 31.5. In contrast, major metropolitan counties tend to exceed the state figure (e.g. Oakland County 49.5). 

Conclusions

Between 2006 and 2023 the Upper Peninsula lost nearly fifteen thousand jobs, a figure that is greater in percentage terms than other rural areas in the state and nation. Developing new sources of employment growth presents an enormous challenge for the region and rural areas in general.

Michigan Tech’s success in facilitating job creation is not a model that can be applied across the region given the UP’s dispersed population and current levels of educational attainment.

The UP’s other two universities could fulfill a similar role but it would require their adopting an entrepreneurial culture and a high level of specialization with the understanding that any job gains would occur sometime in the future and not be guaranteed.