In Michigan, job market holds key to election

By Ruth Mantell, MarketWatch

Michigan’s workers are nursing bruises as they vote in Tuesday’s primary for the Republican presidential nomination. Still, if unemployment keeps falling, voters are likely to support the current administration in November.

"If I wanted to know one piece of information in terms of predicting an election, I would want to know the change in the unemployment rate the year before the election," said D. Roderick Kiewiet, a political scientist at the California Institute of Technology. "Whether the economy was good or bad during the first three years of an administration is of almost no consequence. Voters have very short memories."

In Michigan the seasonally adjusted unemployment rate is about 9.3% --  higher than the U.S. average, but down almost two percentage points from a year earlier, according to U.S. Labor Department data. In past two years, Michigan’s labor market has gained about 100,000 jobs. (Post continues below video player.)

Downturn started in 2000 

With the near-collapse of the auto industry and other job losses, Michigan’s downturn began years before the national Great Recession. Statewide nonfarm employment started contracting in 2000, and Michigan’s economy is still missing more than 700,000 jobs. Meanwhile, median household income in the state, inflation adjusted, fell one-fifth to about $46,000 in 2010 from almost $58,000 in 2000, according to U.S. Census Bureau data.

However, thanks in part to a federal auto bailout --  a program criticized by Republican candidates --  in the past two years Michigan’s labor market has gained about 100,000 jobs. Manufacturing remains a key industry, accounting for about 500,000 of 3.9 million jobs in the state.

"We are getting a nice recovery, but there is still a long way to go," said Donald Grimes, a University of Michigan expert on the regional economy. "We have a long way to [go to] make up the jobs we’ve lost."

Nationally, the manufacturing industry lost about 2 million jobs during the recession, and has regained about 400,000 jobs in the last two years. These are relatively good jobs -- employees earn about $980 a week, compared with an average of $800 for all private-sector employees, according to U.S. Labor Department data.

The George W. Bush and Obama administrations have intervened in the auto sector. The support is critical for areas such as Saginaw, Mich., where General Motors (GM) has made some recent investments.

“I will say that whether you give credit to George Bush or Obama, without the automotive bailout there would have been a huge disaster for us,” said Greg Branch, Saginaw’s mayor.

Locals are enthusiastic about the jobs saved and created by car companies, said Scott Whybrew, a GM plant manager in Lansing, Mich.

“In the U.S. and the state of Michigan, we’ve been through some really tough times, and it feels like we are starting to make progress toward healing. We’ve got some momentum now,” Whybrew said.

And near-term employment momentum is key to voters, experts said.

“The trend is likely to be more important than the actual number. It’s how people see the overall situation. For instance, how many are worried about losing their job? People’s opinions about their own finances are less volatile than their perceptions of the overall economy,” said Scott Rasmussen, an Asbury Park, N.J.–based pollster. “If the perception of personal finances really improves, there is no Republican who can defeat Barack Obama.”

In the last presidential election, Obama trounced his competition in Michigan, winning 57% of the vote. Back then, government data indicated that the unemployment rate in Michigan was about 8.7%, up more than a percentage point from a year earlier.

Obama still owns a commanding lead in Michigan. According to the latest polls in the state, Obama stands comfortably ahead of Republican front-runners Mitt Romney, by an average of 14 percentage points, and Rick Santorum, by almost 25 points.

Voters’ views on the economy

Jobs are a top issue for the election, but an individual’s experience can be less important than her view of the economy as a whole.

“Think about the specific situation of your life -- what happens to you is due to very idiosyncratic things,” Kiewiet said. “That’s not to say people ignore it completely, but they understand that trying to figure out if their experience is due to whether the president is doing a good or bad job is hard.”

Research indicates that Americans tend to view their own situation in personal terms, often disconnected from larger social forces and government actions, said Ted Brader, a political scientist at the University of Michigan.

“It’s also the case that Americans base their decisions heavily on partisan identities that are typically traceable back to their childhood and on broad values and feelings about groups in society, rather than on economic or policy considerations,” Brader said.

Jim Fertig lost his 40-hour-a-week accounting job in March, and recently found part-time work as a telemarketer. The 65-year-old Ohioan takes care of his adult son with multiple sclerosis. Fertig worked in health-care accounting for 39 years, and now generates leads to help colleges find prospective students. But Fertig’s job situation will not impact his vote in November, he said.

“Yes, I earn less by a lot, but I will vote for Obama in November,” Fertig said. “We were losing jobs under the Bush administration, [and] that ran over into the Obama administration. Obama is now adding jobs each month.” 

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