A new forecast from the University of Michigan suggests that while the U.S. economy is expected to grow in 2026, Michigan may experience a net loss of 2,000 jobs and a rise in unemployment to 5.6%, primarily due to demographic challenges. The state’s aging population and stagnant growth are limiting its ability to fill available positions, economists Gabe Ehrlich and Don Grimes explain in their annual economic outlook. n nMichigan ranks as the 12th oldest state nationally, with an average age of 40.1 years and over a quarter of residents aged above 60. At the same time, more than 25% of young adults surveyed in 2023 indicated plans to leave the state, exacerbating labor shortages. Despite recording 24,100 new payroll jobs between late 2024 and August 2025, another metric—employment among state residents—declined by 18,700 during the same window, signaling inconsistencies in labor market data. n nThe national picture contrasts sharply: the U.S. is projected to maintain unemployment near 4.5% and achieve average productivity growth of 2.4%, supported by federal tax reductions, lower interest rates, and industrial incentives. Yet Michigan struggles to capitalize on these trends due to insufficient workforce expansion. n n“Years of warnings about population aging and slow growth have now become reality,” the researchers stated at the 73rd Annual Economic Outlook Conference in Ann Arbor. They liken the situation to a “speed limit” on economic development, where lack of human capital restricts income gains and business expansion. Eric Lupher, head of the Citizens Research Council of Michigan, noted that 48 other states are growing faster, weakening Michigan’s competitive edge in attracting talent. n nAdditional concerns stem from declining educational performance. A separate analysis by Business Leaders for Michigan found the state ranks 50th in household income growth over the past 25 years, shows no progress in high-wage professional employment over two decades (compared to 35% national growth), and has dropped from 16th to 44th in fourth-grade reading proficiency since the 1990s. Chronic absenteeism in schools remains among the highest in the country. n nGovernor Gretchen Whitmer established a population growth office in 2024 to address these issues, but it received no funding in the latest budget. Without structural shifts in migration, birth rates, or workforce participation, the report warns that Michigan’s tepid trajectory could become the norm. n— news from Bridge Michigan
— News Original —
Report: Aging crisis to cause Michigan to lose out on economic boom
A University of Michigan report predicts the US job market should increase in 2026 n nMichigan will lose jobs while unemployment ticks higher over the same timeframe n nEconomists say it’s because the state’s aging population will leave it without enough workers to grow n nAfter years of warnings that Michigan’s aging workforce would harm its economy, the state is poised to learn what that looks like. n n“That long-term future has now arrived,” University of Michigan economists say in a forecast released today. n nMichigan is — once again — more likely to sit on the sidelines as the US gains jobs in 2026. It simply won’t have the workforce to fill new jobs, the U-M economists said. n n“We have cautioned for years that Michigan’s aging and slowly growing population would eventually put a speed limit on job creation,” they said in their annual economic forecast. n nThe outlook is part of the comprehensive state and national forecasts presented this week at the 73rd Annual Economic Outlook Conference in Ann Arbor. n nRelated: n nNext Michigan governor needs ‘laser focus’ on prosperity, biz group says n nMichigan lawmakers reject money for Gretchen Whitmer’s population growth office n nMichigan has more job openings than workers. Are retirees the answer? n nThe deep dive into Michigan economic data comes from the team who works with the state of Michigan on its own financial forecasting. It includes economists Gabe Ehrlich and Don Grimes. n nThey and others — including the Citizens Research Council of Michigan — have noted for several years that population stagnation and an aging population constricts the economy. n n“We’re not growing as a state, and 48 other states are growing faster than ours,” Eric Lupher, CEO of the Citizens Research Council, told Bridge Michigan. n n“That doesn’t bode well for the talent in the state, or the workforce in the state, and it leaves an aging population that’s going to create talent issues.” n nHe continued: “The implications are huge.” n nMichigan is the 12th oldest state in the US, averaging 40.1 years. About a quarter of the state is older than 60. In a 2023 survey, more than a quarter of Michigan’s young adults said they expected to move out of the state. n nGov. Gretchen Whitmer created a growth office in 2024 to stem the losses, but the initiative went unfunded in this year’s state budget. n nMeanwhile, Michigan’s economy, the economists wrote, “has hit a growth pause this fall.” n nThe federal government shutdown paused some economic data, but even without performance metrics for recent months “the story was confusing.” Uncertainty over tariffs and job counts made it difficult to get a read on the economy, even as jobs losses seemed to stack up. n nIn Michigan, the state officially recorded 24,100 new payroll jobs from the end of 2024 to August 2025, well ahead of expectations — but they’re expected to be revised downward. Another count of employed state residents declined by 18,700 over that time. n nLooking ahead, the US is expected to gain jobs and maintain unemployment at about 4.5%, the economists said, following a bumpy 2025. National productivity should grow at an average 2.4% through the year, they added. n nIn comparison, they forecast 2,000 Michigan job losses in 2026, while the unemployment rate reaches 5.6%. n nThat’s the tepid outlook for the state when the national economic movement would normally support Michigan’s growth: Federal tax cuts, lower interest rates and policy support for the auto industry. n nInstead, “the state will continue to face challenges in finding enough workers,” the economists said, blaming the aging population, along with reduced immigration. n nThe unremarkable look ahead for Michigan follows another report this week that suggested the state’s slide in educational outcomes and prosperity will require “laser focus” for a turnaround. n n“Michigan in a New Era,” a roadmap for the next governor from Business Leaders for Michigan, found that while the nation has grown, Michigan: n nRanks 50th in household income growth over the past 25 years n nShows flat growth in high-wage professional jobs over 20 years, while they’ve grown 35% nationally n nFell from 16th to 44th in fourth grade reading over 30 years n nPosts one of the highest chronic school absenteeism rates in the nation. n nThe business leaders report hones in on Michigan’s potential to overcome what Jeff Donofrio, the group’s CEO, called “decades of slow growth, industrial disruption, talent outmigration and inconsistent policies” that have left the state playing catch-up as other states increase prosperity. n nIndeed, the U-M economists targeted data that showed Michigan’s economic slide compared to the rest of the country. n nAmong the changes, the economists found, were manufacturing job declines that erased the sector’s and behind-the-curve growth in high-wage professional jobs. n nBut underlying all of it was the fact that Michigan residents are aging out of the workforce. n n“If you don’t get an increase in the workforce, you can’t get growth. And if you don’t add jobs, you’re going to be limited in income gains,” Grimes said in 2023 when the CRC released a study of challenges facing the state. n n“The average family will have less wealth (comparatively) than the nation,” he said. “It’s going to be really hard to fix that problem.” n nThe outlook for Michigan’s economy “may seem underwhelming,” U-M’s economists said, “but these sorts of projections are likely to become the norm in the years to come unless there are fundamental changes to demographic trends.” n nRelated n nBusiness Watch n nCovering the intersection of business and policy, and informing Michigan employers and workers on the long road back from coronavirus. n nAbout Business Watch n nSubscribe n nShare tips and questions with Bridge Business Editor Paula Gardner n nThanks to our Business Watch sponsors. n nSupport Bridge’s nonprofit civic journalism. Donate today.