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Published in Economic Development
The Right Place Inc.’s economic outlook event in downtown Grand Rapids on Dec. 8, 2022. The Right Place Inc.’s economic outlook event in downtown Grand Rapids on Dec. 8, 2022. COURTESY OF CRAIG CLARK

Tech sector shines as West Michigan economy rebounds from pandemic downturn

BY Thursday, December 08, 2022 05:10pm

GRAND RAPIDS — West Michigan recovered well from the deep economic downturn in the early months of the COVID-19 pandemic, positioning the region for economic growth in the next few years.

That’s among the conclusions issued today in The Right Place Inc.’s first-ever State of the Region report.

Although job growth lags in the eight-county region, West Michigan has grown the labor force by 23,000 people since a period in 2020 when many businesses were shut down by state orders. The region in the midst of the 2020 recession lost 22,500 people from the labor force.

“In the last several quarters, we’ve seen a spike and return of the labor force,” The Right Place President and CEO Randy Thelen said during the economic development organization’s annual outlook event today in Grand Rapids. “It’s the type of recovery you’re not seeing in the rest of the country.”

As well, the region’s labor force has “become smarter than we used to be,” with a 12-percent increase over four years in the number of people with a college degree. Across the region, 35 percent of the working population now holds a bachelor’s degree or higher, according to The Right Place report.

Increased labor force and educational attainment rates mean West Michigan has “more workers and quality workers than we’ve seen in some time,” Thelen said.

The region’s gains have come amid the pandemic, a softening economy through 2022, stubbornly high inflation, spiking interest rates, supply chain challenges, and a “labor market that we’re still trying to get our head around,” he added.

“These are economic times unlike anything we have ever seen,” Thelen said. “Any one of these things would be an economic challenge that will really challenge us as leaders.”

The State of the Region report also shows that from 2020 to 2022, West Michigan created or retained 3,677 jobs — or 108 percent of The Right Place’s goal — that paid $195 million in payroll wages. West Michigan also saw $598 million in new capital investments, or 120 percent of the economic development organization’s goal.

The region’s population grew 2.1 percent from 2019 to 2022, or a net increase of about 23,500 people. That growth rate outpaces the national average and drives a greater talent base that employers need, Thelen said.

“In the world of population growth, this is a meaningful number,” he said.

The region presently has about 1.1 million residents.

West Michigan also has a cost of living that’s well below the national average, although a shade higher than the whole state, according to the State of the Region report. 

Among the 550 CEOs that The Right Place staff met with in the last year, 70 percent reported increasing sales and 56 percent said their company planned an expansion. More than four in 10 planned to increase worker training.

“We’ve built a great region. We need to continue to build a great region,” Thelen told the audience gathered at the J.W. Marriott in downtown. “We’re behind the curve just a touch in terms of job creation over the last few years relative to the country, but we see the optimism within our business leaders, we see the potential to grow, and we think we’re going to be ready to come out stronger in the next two years.”

Employment and tech

Grand Rapids-area employment remains 3.8 percent below pre-pandemic levels, which compares to 1.8 percent nationally but better than the 4.5 percent statewide in Michigan.

Thelen said job growth “is an area where we have some work to do,” despite what he called a “pretty incredible recovery” from the depths of 2020. 

“We typically outperform the country,” he said. “We’ve got some room to grow. We’ve got to find a way to get back. We’ve got to find ways to get more opportunities for more people to enjoy a higher quality of life with a higher quality job.”

However, Grand Rapids’ tech industry stands out on employment relative to pre-pandemic numbers. 

Tech employment increased 3.9 percent from 2019 to 2022 and now totals 35,600 jobs. In the last year alone, 2,100 new tech jobs were created in the Grand Rapids area, Thelen said.

One of The Right Place’s core strategies is to have the tech sector comprise 10 percent of the jobs in the Grand Rapids area, which would require adding 20,000 tech jobs over the next decade, he said.

To grow the tech sector, pay scales in the region need to improve, said University of Michigan economist Don Grimes. Compared to other markets in the U.S, tech jobs in Grand Rapids and in Michigan lag, he said.

“Michigan pays the I.T. workers like crap,” he said. “The pay scale’s going to have to go way up for those jobs.”

In response, Thelen touted the region’s comparatively lower cost of living over large tech markets such as San Francisco and Seattle. He added that the wage gap is bigger between West Michigan and large tech clusters, “so we have to close that gap.”

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