Muskegon’s diversifying jobs, downtown growth paves way for strong economy, but companies must address lagging wages, GVSU economist says

Grand Valley State University economist Paul Isely. Photo courtesy of the Muskegon Lakeshore Chamber of Commerce

A diversifying economic landscape and growing downtown in the city of Muskegon translated to a strong economy for Muskegon County in 2019, though companies need to look at increasing their wages in order to retain and attract workers in the future, economist Paul Isely told a group of hundreds of local business leaders Friday morning.

“We’re in a really good position here in Muskegon County,” Isely, the associate dean of undergraduate programs at Grand Valley State University’s Seidman College of Business, said to the crowd gathered for the Muskegon Lakeshore Chamber of Commerce’s annual “Muskegon County Economic Forecast” breakfast at the Delta Hotels by Marriott in downtown Muskegon on Friday, Jan. 24.

“You continue to cut your own path that’s different from what we see across the rest of West Michigan, “ Isely said, referring to Muskegon County.

In 2019, Muskegon outperformed the rest of West Michigan in terms of the number of hours worked in all private sector jobs, but it continued to fall behind on wage growth compared to Kent and Ottawa Counties—which companies will need to address in order to attract and retain workers in a pool of employees that will continue to shrink as the number of retirees grows and the number of younger workers decreases, the economist said.

The number of hours worked in all private sector jobs in Muskegon grew at about four times the rate of the United States—which is “thanks to the strength of your diversifying economy,” Isely said. 

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Since 2014, there has been a growth in leisure, construction and healthcare jobs in Muskegon County—specifically, an addition of 1,200 jobs in the  leisure industry (which includes jobs in restaurants, hotels, events planning, and more), 800 jobs in construction, and 600 jobs in health and education, according to the U.S. Bureau of Labor and Statistics (BLS). Plus, in that same timeframe, 800 jobs were added in manufacturing.

“What you’re really seeing there is the resurgence of downtown—when you walk through downtown now compared to five years ago, there are more places to go eat, more places to go shopping, more things to do,” Isely said.

Local business leaders at Friday’s Chamber event also emphasized this economic growth. Julie Sustaita, the manager of The Lakes Mall in Norton Shores, for example, said that they are focusing on growing the indoor facility—which, over the past year, has become home to a number of locally-owned business, including DC Closet, Corine’s Cakes and Catering, FreshWater Boba Tea, Spin City Records, and others.

“Today, indoor centers are coming back in a new and exciting way,” Sustaita said.

Hundreds of people attended Friday’s breakfast. Photo courtesy of the Muskegon Lakeshore Chamber of Commerce.

Renae Hesselink, the vice president of sustainability at Nichols—a company headquartered in Norton Shores that is one of the largest independently owned paper, packaging and sanitary supply distributors in the Great Lakes region—said they’ve experienced significant growth, including adding jobs in Norton Shores and purchasing a competitor, DawnChem, in Cleveland, Ohio.

“We look forward to what 2020 will bring,” Hesselink said. 

Heidi Griswold, of the Norton Shores-headquartered Manpower, which works to place job seekers in careers, noted her company had “a super busy year” in 2019.

“We had over 1,000 candidates placed in long-term careers, which is very amazing,” she said.

While the growth is significant, Muskegon County companies must address the wages they’re paying their employees, Isely emphasized. By mid-year of 2019, Kent and Ottawa Counties were experiencing an 8 percent increase in wage growth—more than double what Muskegon County saw at that time, the economist said.

“But their wage growth is slowing down and yours has picked up as you’ve reached the end of the year,” Isely said.  “…On average across all your industries, you run 10 to 15 percent behind on wages. On average, you’re less competitive for those workers; that is working out right now for you because people prefer not to drive.”

Tamica Fox, left, of ADAC Automotive, and Ryan Bryker, of Rehmann emcee the Muskegon Lakeshore Chamber of Commerce’s “Economic Forecast” breakfast Friday morning. Photo courtesy of the Muskegon Lakeshore Chamber of Commerce.

Muskegon’s workforce is overwhelmingly choosing to remain close to home for their jobs—and, if they do leave, they’re going to places along the Lakeshore, not to Grand Rapids.

“The top 25 zip codes people [living in Muskegon County] go to work in does not include a single zip code in Kent County,” Isely said. “There’s a myth everyone’s running down 96 to work. No, they’re going up and down 31. They’re going down to the Grand Haven area, they’re definitely going to Holland, they’re going up the Lakeshore, and they’re definitely staying put in Muskegon.”

About 16,000 workers leave the county every day to go to work outside of Muskegon, Isely said. 

“That’s about 16,000 workers leaving the county that you might be able to keep here if you have enough jobs here, have jobs that meet their skill sets, and are paying them enough,” he said.

As we enter 2020, a slight recession is likely—but it won’t be anything like the Great Recession  of 2008, which resulted in the United States’ labor market hemorrhaging 8.4 million jobs.

“As we look at the possibility of a recession coming up, we’re looking at something like 2001—nothing like what you saw in 2008,” Isely said. “Right now, economists are scared to use the word ‘recession’ because everybody’s mind goes to the last one we had. But a light recession is very different from the one we had in 2008.”

[Left to right] Muskegon Area First President Jim Edmonson, GVSU economist Paul Isely, and Muskegon Lakeshore Chamber of Commerce President Cindy Larsen. Photo courtesy of the Muskegon Lakeshore Chamber of Commerce
While the last recession overwhelmingly affected financial and manufacturing jobs—and most of those jobs were, Isely explained, held mainly by men—the upcoming recession will hit what are known as “transactional jobs,” which are, the economist noted, filled more by women.

Artificial intelligence “can now handle transactions, so if you’re in transactional jobs, it’s time to start training,” Isely said. “Call up [Muskegon Community College], call up Baker, and do something to move up the value chain. If you don’t, you’re going to be in trouble.”

As companies brace for a recession, businesses are feeling more pessimistic than optimistic about 2020—but not direly, Isely said. 

“We’re seeing a manufacturing slowdown [nationally], which is starting to bleed into the rest of the economy, but Musekgon has bucked that trend,” he said.

Facing a potential economic slowdown, business owners are not preparing to add many, or any, jobs to their workforce. Isely oversaw a survey sent to about 1,000 organizations throughout Kent, Ottawa, Muskegon, and Allegan counties in late 2019, and, based on the 250 responses received, he’s predicting that corporate confidence “crested” in 2019 and will likely slightly sink in 2020 in West Michigan.

According to that survey, 80 percent of the respondents expect 0 to 1 percent growth in new workers in 2020.

“Our corporate leaders believe it’s going to be a little slower in 2020 than in 2019,” Isely said. “They’re seeing slower growth, and they’re a little more nervous than they were last year. If you like 2019, 2020 is going to be a little bit less than that.”

U.S. Rep. Bill Huizenga addresses Isely. Photo courtesy of the Muskegon Lakeshore Chamber of Commerce

At the end of Isely’s presentation, he fielded questions from the audience, including U.S. Rep. Bill Huizenga (R-Zeeland). The congressman, whose district includes Muskegon, asked Isely what he believes a trade pact between the United States, Mexico and Canadathe United States-Mexico-Canada Agreement (USMCA), which would replace the North American Free Trade Agreement—means for West Michigan.

“What we’re seeing right now as we’ve talked to firms is cautious optimism,” Isely said, noting that its impact on Michigan could be more significant than much of the rest of the U.S. because “of our exposure to automotive.”

“It has a smaller effect on agriculture, a bigger effect on automotive,” Isely said. “…The trade deal is reaching an end and removing that uncertainty will be a huge bonus.”

Trump is expected to sign the trade deal this coming Wednesday at the White House. Canada still needs to ratify the agreement, which must happen in order for it to go into effect.

When asked by an audience member what the rise of electric cars will mean for West Michigan’s Computer Numerical Control (CNC) industry, Isely said “it’s going to be disruptive.”

“The parts you need are completely different [than what is currently manufactured here], and you need fewer of them, so there will be winners and losers,” Isely said. “West Michigan does a lot of transmissions, so we’re very susceptible that contracting as we move into an [electric vehicle] era.”

“I don’t know who will be the winners and who will be the losers, but I do know if you’re not innovative in the next five to 10 years, it’s going to be a very scary place to be,” Isely said.

To see the slides Isely provided during his presentation on Friday, please click here.

Story by Anna Gustafson, the publisher and editor of Muskegon Times. Connect with Anna by emailing MuskegonTimes@gmail.com or on FacebookTwitter and Instagram.

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