How Local Vaccine Rates Shape Michigan’s Economic Future

Until the people are well, the economy won’t be either. Here’s the advice of one expert from Alma College. 

ALMA, Mich.—Want to see your local and national economy improve? One Michigan economist boiled local recovery down to one exact science. 

“You have to get vaccinated. We have to get healthy,” said Bob Cunningham, an associate professor and chair of the business and economics department at Alma College. “The uncertainty is going to continue to be out there and people just aren’t going to spend the way they should. I mean, that’s just the nature of it.”

Cunningham believes that the economic future of the US and Michigan at the state level is uncertain, primarily because the nation has not seen how its economy will react to a pandemic. But, even with the cloud of variability that comes with uncharted territory, one thing remains certain, according to Cunningham: If you want to improve the economy, get vaccinated. 

“If you don’t like wearing a mask, if you’re an employer and you don’t like not having enough employees, get vaccinated,” Cunningham told The ‘Gander during a Zoom interview. “Make sure your customers are vaccinated. That’s the way to get through the other side of this.”

Health officials recognize that masks are one way to protect people from the spread of COVID-19, but masks still fall short of the three vaccines. Studies have shown that the vaccines are effective at keeping people from getting COVID-19, but they’ve also shown that if someone who was vaccinated did contract the virus it could prevent them from becoming seriously ill.  

An Uncertain Future

In terms of working toward an economic rebound through standard practices, the US has been doing its part. Measures taken by President Joe Biden have helped lower unemployment around the nation. Last week, the White House announced that the number of people filing claiming for unemployment had fallen to its lowest levels since the beginning of the pandemic—a nearly 60% decrease since the week Biden took office, according to numbers offered by his administration. 

The drop in unemployment numbers coincides with the creation of nearly 4.5 million jobs since January, the White House said. 

“That is encouraging news for so many American families who have found a new opportunity and a little bit of breathing room as we continue to build back from last year’s economic devastation,” Biden said in a statement last week. 

The US economy grew at a rate faster than it had in nearly 40 years, partially on the back of the president’s Build Back Better plan.

Similar trends are apparent at the local level, too. Michigan’s jobless rate edged down slightly in August to 4.7%, according to the Michigan Department of Technology, Management & Budget. Meanwhile, employment across the state increased by 14,000 and unemployment declined by 3,000. 

“Michigan’s labor market indicators displayed only minimal change in August,” Wayne Rourke, the associate director of the Bureau of Labor Market Information and Strategic Initiatives, said in a statement. “However, total employment and payroll jobs both continued to edge up over the month.”  

But will that positive trend continue going forward? That much is still unknown, Cunningham said. 

“What we’re experiencing now is—as a macroeconomy—we’ve never experienced before,” Cunningham said. “We’ve never had, at least post World War 2, we’ve never had economic activity influenced by a pandemic like we’re going through right now.”

In a technical sense, Cunningham says it’s fair to say that the US was in a recession starting around February 2020 that lasted roughly eight months. Now, he said, the US seems to be in a recovery period. He calls this a V-shaped recovery, meaning that the economy suffered an enormous contraction with a steep decline and a rapid recovery.

But anything beyond that is unpredictable because of a lack of data on how the US economy will react but also because there’s still no good handle on COVID-19 and, in particular, the Delta variant. 

“So, with the first wave of vaccinations in the late winter early spring, we were full steam ahead,” Cunningham said. “People who had been vaccinated felt like they could go out and spend money again which is what drives the US economy. Businesses were, you know, hiring back, and we heard about labor shortages, and then the Delta variant hits, and it all flips. And so the summer consumer spending numbers were not as positive as they had been.”

Cunningham noted that the Federal Reserve did what it could and the Biden administration is doing what it can, but until the virus is under wraps, issues will persist.

“Until we get more people vaccinated. we can’t say for certain how the economy is going to look,” he said. “I mean it seems some numbers tell us right now that it’s okay, but it’s hard to trust those numbers when we know that, you know, people are still living in a pretty big world of uncertainty.”

The Fallacy of Michigan’s Labor Shortage

When the COVID-19 pandemic began impacting the economic sector and businesses were put in situations where they needed to lay off employees, the response from Washington included extending unemployment benefits to those who needed them. 

Typically, unemployment insurance benefits last for a handful of months, but in many circumstances, they run out and the amount offered to the unemployed worker is a fraction of what they had previously been bringing in. But in response to the pandemic, policies from the White House extended those unemployment benefits and also made the weekly unemployment payment much more generous. 

When labor shortages spiked in spring 2021, it wasn’t due to a lack of able-bodied workers. Instead, people were opting to be more selective about where they worked and under what circumstances they spent their time. 

That this labor shortage was the result of the unemployment benefits paid out by the government is a fallacy, Cunningham said, stating that there’s enough evidence to suggest that the shortage is tied closely to the circumstances around the workplace. 

“The data tells us today, that all of those states that reduced their unemployment benefits earlier in the summer, their labor shortages did not disappear at all,” Cunningham said. “People did not go back to work. And so clearly in the sort of internal calculus of, ‘Should I go try to find work in the pandemic or not,’ uncertainty is very important to people.”

The key for changing that trend and having people return to work may be offering an improved workplace, Cunningham said. Part of that is offering more than the bottom line, he said, while another part is offering more flexibility during the pandemic. 

“They have to be sort of about a brand and a mission that is more about diversity, equity, and inclusiveness,” he said. “I hope that once we get through the other side of this pandemic, more employers start to consider that there are other reasons why people might want to work.”