Auto Slump Gives Michigan the Highest Jobless Rate, 9.8%

Michigan’s unemployment rate reached 9.8% in February, the highest in the nation and a five-year high for the state, the U.S. Labor Department reported Friday.

“Employment dropped in nearly every industry across the state last month,” said F. Robert Edwards, director of the Michigan Employment Security Commission. Some of the largest declines were in manufacturing, retail trade and construction, Edwards said.

The 2.6-percentage-point jump from January’s level brought the number of jobless in the state to 450,000. A year ago, Michigan’s unemployment rate was 7.7%, with 354,000 out of work.

“Firms just aren’t hiring these days,” said David Sowerby, an economist at Manufacturer’s National Bank of Detroit. “The plight of the auto industry is clearly a rough obstacle for Michigan to face.”

Michigan’s economy is tied to the auto industry, which has been hurt by a plunge in consumer confidence set off by the recession and the Gulf War. Auto production in February was off 22% from a year ago, resulting in layoffs at the Big Three U.S. auto makers and their network of suppliers.

Sowerby said the auto slowdown has started to affect the retail, real estate and service sectors.

During the recession of the early 1980s, unemployment in Michigan peaked at 17.3% in December, 1982.

The Michigan Employment Security Commission announced Friday that because of the high level of unemployment benefit claims, the state’s extended benefits program is being put into effect for the first time since 1983.

Funded by state and federal unemployment insurance taxes, the program provides up to 13 additional weeks of benefits for those who have exhausted their state benefits and meet other qualifications. The state employment agency estimates that up to 46,000 are eligible for the program.

MICHIGAN UNEMPLOYMENT

Number unemployed Unemployment (in thousands) rate 1990 January 374 8.1% February 354 7.7 March 334 7.3 April 338 7.5 May 352 7.7 June 340 7.4 July 344 7.5 August 353 7.7 September 332 7.3 October 335 7.4 November 342 7.6 December 333 7.3 1991 January 328 7.2 February 450 9.8

Source: Michigan Employment Security Commission