Full Employment in Ann Arbor's Future

Story first reported from Detroit Free Press

Full employment -- when everybody who wants a job can find one in a reasonable time -- is something you'd expect to see in places such as North Dakota and Texas, not Michigan.

Ann Arbor is getting closer to this economic nirvana. Help-wanted signs have popped up in the windows of some of its crowded restaurants and bars, and the area's online jobs portal for high-skilled workers has nearly 900 job listings yet to be filled. In late June, the Web security firm Barracuda Networks announced plans to create 184 jobs in Ann Arbor for software engineers and other technical workers during the next three years.

With the lowest jobless rate in the state, 6.2% in June, the college town has rebounded from the loss of 2,100 Pfizer jobs and the demise of Borders' corporate headquarters. With a vibrant downtown, a Big Ten university and cultural activities such as this month's art fair, Ann Arbor is leading Michigan's economic recovery.

Ann Arbor is the new job growth center of the greater Detroit region, said Richard Florida, an economist at the University of Toronto's Rotman School of Management and author of the best-seller "The Rise of the Creative Class."

He said Ann Arbor resembles Austin, Texas, in the 1990s and Boulder, Colo., in the early 2000s. It tied for fourth place on his list of the top 20 creative metro areas in the country, behind only Boulder, San Francisco and Boston.

Stores and restaurants are full, and it all looks and feels affluent, said Donald Grimes, the co-author of a Washtenaw County economic outlook report and a senior research specialist at the University of Michigan's Institute for Research on Labor, Employment and the Economy.

It took Tyler Mettie just two weeks to land a part-time job after he stepped up his search efforts. On July 16, the 20-year-old Washtenaw Community College student started washing dishes at Tios, a Mexican café on East Liberty Street.

Ann Arbor's jobless rate plunged to a recent low of 5% in April. Along with the rest of the state, this rate has since increased because many people who previously had stayed out of the job market now are looking for work.

Economists say that Ann Arbor's rate of full employment is likely in the 4% range. For the country as a whole, full employment -- also known as the natural unemployment rate -- was 6% in late 2011, according to the Congressional Budget Office. In June, the U.S. jobless rate stood at 8.2%.

Full employment is the jobless rate that if you dip below it would spark inflation, said Heidi Shierholz, an economist at the Economic Policy Institute. It can never be 0% because there are always people changing jobs.

The labor market, however, can vary widely from one metropolitan area to the next. Just 33 miles to the east of Ann Arbor, the Detroit metro area has a jobless rate of 10.2%, the highest in the state.

What accounts for the difference? "The work force in Ann Arbor is far better educated than the work force in Detroit and the suburbs," Grimes said.

Donna Doleman, vice president of marketing, communications and talent at Ann Arbor SPARK, the area's economic development organization, said the Ann Arbor job market is thriving because it is diversified, with industries such as health care, software, life sciences and automotive research and development.

So far this year, employers have posted 1,737 jobs on SPARK's online jobs portal ( www.annarborusa.org/talent/jobs ), and 850 of these positions have been filled.

All of this is a turnaround from five years ago, when the pharmaceutical giant Pfizer announced plans to shutter its massive Ann Arbor research campus, a loss that Ann Arbor Mayor John Hieftje describes as similar to the closing of an auto plant.

A third of the 2,100 laid-off Pfizer workers wound up staying in Ann Arbor, and in recent years the University of Michigan has stepped up its efforts to transfer its technology to local businesses. The area is now home to dozens of start-up firms.

The tighter labor market means employers such as Terumo Cardiovascular Systems and ProQuest have had to become more proactive to find the talent they need.

Terumo, which makes heart-lung machines and other medical devices, has 35 positions to fill and has hired almost 200 workers during the last 18 months. To find experienced medical device workers, the company has participated in Michigan Economic Development Corp. recruiting events in Boston and northern California.

Like other companies, Terumo gets a flood of résumés when it posts any entry-level positions that require only a high school education. But for technical positions, DeLuca said they are happy to get 3 to 10 applications.

ProQuest, a research products firm, held its first-ever job fair at its Ann Arbor headquarters in mid-June to fill 20 information technology positions, including Java software developers and Oracle developers. The job fair drew 50 people, with the company choosing to do further interviews with 16 of them. So far, ProQuest has hired three people from this group, but it still has about 40 positions to fill in Ann Arbor..

High-skilled workers aren't the only ones in demand. Tios is struggling to find delivery drivers, who earn $6 an hour plus delivery charges and tips.

To be sure, Ann Arbor's jobless rate is still high enough that many people are searching for work for months, not weeks. Keely Ann Kaleski, 53, has been sending out résumés and going to job fairs and networking events since late May. The former software implementation and training manager now is targeting smaller companies and increasing her networking efforts.

The last time Kaleski had looked for work was in 2005, and back then it only took her a month to find a new job. "Everything is just taking a lot longer," the Ann Arbor resident said.

But Kaleski may not have to wait much longer to get hired. Economists expect the jobless rate in the Ann Arbor area will continue to decline. After all, before the recession, the area's annual unemployment rate hovered in the 4% range.

Grimes predicts that Ann Arbor will get to full employment, because universities tend to be very stable employers.

More Details: Ann Arbor's largest employers as of January 2012 for the metro area.

1. University of Michigan

2. University of Michigan Medical Center

3. Trinity Health

4. Ann Arbor Public Schools

5. ACH Saline (auto supplier)

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