The following article was originally published on on August 26, 2018, and written by Dustin Walsh, Senior Reporter for the publication. Click here to view the original publication of this story on

As the minimum wage debate is putting Democrats and Republicans in Lansing on the same side of the issue, albeit for very different reasons, Michigan workers are seeing wages rise. But rising costs on everything from rent to energy are cutting away at those gains, leaving some in the region worse off with a larger paycheck.

Wage growth in larger Southeast Michigan — including Genesee, Lapeer, Washtenaw, Livingston, Monroe, St. Clair, Macomb, Oakland and Wayne counties — is outpacing the national average of 2.9 percent, according to recent data published by the U.S. Bureau of Labor Statistics. The region reported wage growth of 3.4 percent not seasonally adjusted between June 2017 and June 2018, better than metropolitan Chicago, Boston, Dallas, Houston, Los Angeles, Miami, Minneapolis, New York and Philadelphia. Only metro Phoenix, San Jose, Calif., Seattle and Washington, D.C., ranked higher in wage growth over the same time period.

The labor market is finally tight enough and jobs are plentiful enough that companies are forced to pay more to find the right talent to meet their business demands. But it’s not all tied to employer competition. The region’s particularly catastrophic decline during the Great Recession is resulting in a “rising from the bottom” phenomenon where wages were so low, the return to more normal wages seems like a win, according to economists.

“I do think that the labor market is tightening. That’s happening all over the country, but it may be happening to a greater extent in the Detroit area than in some other areas,” said Charles Ballard, economist at Michigan State University. “I would say that rising from the bottom is a significant part of the story of the Michigan economy over the last eight years. The Great Recession did more damage to Michigan than to most other parts of the country, which left our economy with more slack than most. In terms of per-capita personal income, Michigan has had faster growth than the national average for most of the last eight years. Gov. (Rick) Snyder and Lt. Gov. (Brian) Calley would like to portray that as a result of their brilliant economic policies, but I think it’s more the result of a process of rebounding from the recession.”

But the actual dollars in the pockets of local workers remains meager compared to many other regions and are largely stymied by cost of living increases — up 2.9 percent not seasonally adjusted from July 2017 to July 2018, the U.S. Labor Department reported earlier this month. This totally wiped out the wage gains for the national average at 2.7 percent. Many Americans are, in fact, poorer now than they were a year ago.

For instance, wages in Wayne and Macomb counties rose only 2 percent and 2.1 percent between June 2017 and June 2018 — meaning the rising wages didn’t exceed the national average rise in the cost of living. The cost of living index was up 3.6 percent in the Detroit MSA over the same time period. So while residents in Wayne County saw $24 more dollars on average in their weekly paycheck, those gains were wiped out by the rising costs of goods, such as medical care, energy costs and mortgage and rent.

And wage growth isn’t equitable either.

The region’s wage growth, though muted by increases, is largely buoyed by Oakland and Livingston counties. Oakland County residents saw their wages increase 4.2 percent over the year, resulting in an average of $51 extra in their weekly paychecks.

Livingston, on the other hand, saw an incredible rise in wages, growing 17.4 percent between June 2017 and June 2018 adding an additional $151, on average, to weekly wages. But the Livingston County data could actually reveal that wage growth in the region is, in fact, lower than reported. BLS calculates wage growth by sampling employers and a large, high-wage employer could skew the data set for the entire county, Alex West, director of research for Ann Arbor Spark, which handles economic development for Livingston County, said in an email to Crain’s. West could not point to any new development or hiring effort that would account for that leap in wages for the county.

While the BLS dataset is accurate, it’s in contrast to what they are hearing from employers in the region. West said.

“Employers are telling us that the competitive market for talent is compelling them to stand out not by adjusting wages, but by offering training programs, workplace ‘culture’ perks, flexible schedules, etc,” she wrote.

Basically, the Livingston County data as an outlier could be artificially raising the wage growth for the entire region, meaning it’s not doing as well as the data suggests. Only time will tell whether it’s a long-term trend or a blip in the data.

And while the wage growth for the region rings of positive momentum for workers, the reliance on manufacturing poses a threat that those wages could retreat soon, said Michael Belzer, economist and associate professor at Wayne State University.

“I want to emphasize the normality of this; we’re at a late stage in the economic expansion cycle,” Belzer said. “We’re nearly ten years into the recovery, which is unheard of, and we’re operating a much more normal basis now. What we have here is a temporary bump in manufacturing employment bumping up wages.”

Experts predict U.S. car sales to reach 17.2 million units this year, but expect sales to slump in 2019 as a recession could be looming. Economists polled by the Wall Street Journal in July expect a recession to hit the U.S. in 2020. That will likely lead to layoffs and production shifts in Southeast Michigan, causing wages to once again fall.

“While it’s really good news that manufacturing is recovered and strong again, it’s important to note that it won’t be this good forever,” Belzer said. “As soon as the economy turns, and it will, those wages will go down quickly again.”

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