Cash Can’t Be King in Face of Michigan’s ‘Massive’ Job Loss

Mitch Bean, senior economic correspondent for the Michigan Information & Research Service, said Michigan businesses are not doing much hiring.

“…. We know firms are already sitting on records amount of cash, balance sheets are flush, and profits per worker are at or near record levels – but firms are not doing much hiring,” Bean said in a MIRS article. “The problem is that aggregate demand is not increasing enough so many firms are not hiring.”

But James Hohman, assistant director of fiscal policy of the Mackinac Center for Public Policy, says that isn’t the whole story.

“This is not a problem with job creation,” Hohman said. “It’s a problem with job loss.”

For example, Hohman pointed to the Bureau of Labor Statistics on job growth in Michigan the past two years.

In the first quarter of 2009, during the height of Michigan’s economic woes, Michigan created 165,000 jobs but lost 285,000. In the second quarter of 2009, the state added 207,000 jobs but lost 304,000 jobs. During those two quarters, Michigan had a net loss of 217,000 jobs.

Hohman points out, however, that in the second, third and fourth quarters of 2010 Michigan added 221,000, 217,000 and 207,000 jobs, respectively, compared to 588,000 jobs lost in those three quarters for a net gain of 57,000 jobs.

“People are hiring again, absolutely,” Hohman said. “That’s a massive amount of job creation. It is not that businesses are holding onto cash. It is businesses are struggling.”