Clint Eastwood’s compelling halftime in America commercial has generated a lot of buzz. Regardless of one’s political views about the precedent set by government bailouts of America’s largest corporations, the ad reminds us that we want cities like Detroit to recover. Ironically the Eastwood commercial was produced in Los Angeles, where the problems of joblessness and depressed real estate values are comparable to Detroit’s.
Today on morning on Morning Joe Steve Rattner, MSNBC economics analyst and former Obama Administration car czar, presented a defense of the automaker bailouts that he helped design. Steve Rattner’s charts purport to show that the bailouts saved Detroit. Rattner focused on the unemployment rate rather than job creation or the size of the labor force. Labor economists know that Detroit’s unemployment rate can fall if enough people either stop searching for work or leave town. It appears that a shrinking labor force is a big part of Rattner’s story of a Motor City Miracle.
First here is the key chart presented by Rattner that caught my eye:
Here is a chart that I wish Rattner had presented:
Employment in Michigan and Detroit has grown at about the same rate as the rest of the U.S. over the past two years. A noticeable difference between Michigan and the rest of the U.S. is that the labor force is shrinking in the Detroit metro area and in Michigan. Whether this is because jobless workers have given up looking for work, older workers have retired, or people have left the state would require further study.
Detroit is healing, but not in a way that is noticeably different than the rest of the country. Steve Rattner wants to give credit to the automaker bailout for the large decline in Detroit’s unemployment rate over the past two years. At the same time, he would not conclude that the bailout caused Detroit’s labor force to shrink faster than elsewhere in the U.S. It is still unclear what precedent the Federal government has set by intervening in the auto industry rather than just letting large corporations file for bankruptcy. It is also unclear, at this point, how many jobs were “saved” in Michigan and Detroit by this policy.