April 16, 2020

Michigan’s Health and Economic Situations Are Dire

Ross DeVol, Dave Shideler and Jonas Crews

New weekly unemployment insurance claims continue to moderate, but remain at levels unseen before the COVID-19 outbreak. In addition, new claims filed since March 1st are now above 20 percent of pre-outbreak employment in some states.


Michigan has been hit particularly hard, with the worst mortality rate in the country and the second-worst share of pre-outbreak employment that have filed unemployment insurance claims.





Unemployment insurance claims increased, but at a slightly slower pace, for the week ending April 11, 2020. Only 5.2 million applied for unemployment insurance last week. Though still well above the pre-coronavirus weekly claims maximum of 695,0001, fewer UI claims could suggest that layoffs and furloughs may have peaked.

However, a second wave of layoffs is occurring that could lead to delays in the economic rebound of the economy following its reopening. White-collar occupations are now facing layoffs, despite the ability to work from home. Hospitals, in an effort to focus resources on addressing COVID-19, have postponed all elective and non-life threatening procedures, a large source of revenue, which has led to layoffs of non-essential staff. Marketing and accounting services, job placement and recruiter services, and technology services are laying off staff as revenue declines and businesses either cannot afford these services or do not need the services. State and local governments, facing drastic cuts in revenue due to dramatic declines in income and sales tax collections this calendar year, must reduce their labor forces to balance budgets and protect resources for ‘critical’ services; incidentally, lawyers are also being laid off, as most courts are closed.2

States with the highest level of initial claims last week were: California, with over 660,000 claims, followed by New York (almost 396,000 claims), Georgia (over 317,000 claims), Texas (over 273,000 claims), and Pennsylvania (over 238,000 claims). While all five states rank highly (among the top 11 states) for total confirmed COVID-19 cases, our analysis over the past several weeks is finding that unemployment claims are more closely tied to the industrial composition of state’s economy rather than COVID-19 cases. (See bar chart below.) The Heartland region continues to account for roughly one-third of initial unemployment claims filed, with 1.8 million initial claims filed last week.



Only 9 states had a rise in initial claims between April 4 and April 11: Colorado, New York, Florida, Missouri, South Carolina, West Virginia, Mississippi and North Carolina. Several of these states delayed imposing social distancing measures, while others are continuing to realize the impact of shutdowns on manufacturing, retail, tourism and now professional and business services. Additionally, states like New York continue to experience difficulty processing the unprecendented volume of unemployment insurance claims. Those states seeing the greatest decline in initial claims last week were: Maine, Maryland, Arkansas, Michigan and Vermont. These declines ranged from 42 percent in Vermont to 57 percent in Maine. Of these five states, only Michigan experienced a several outbreak of COVID-19, which is discussed further below.

The chart below shows the share of total employment by state that has filed for unemployment insurance since March 1. The pattern this chart reveals is that the economies with the greatest jobs lost are not those realizing the most significant numbers of COVID-19 cases. Instead, the states with the greatest jobs lost are those that rely heavily on manufacturing and tourism-related industries. Michigan ranks second, with 22 percent of its employment filing for unemployment insurance since March 1, largely because it is the home to the American automotive industry. Because it has been hit hardest in the Heartland by both COVID-19 and job losses, we look more closely at Michigan in this post below.



In addition, the distribution of federal stimulus dollars, in the form of enhanced unemployment insurance payments and economic impact payments (EIP), began this week. These payments are designed to replace lost wages, so people can spend money on living expenses and help keep those who still have a job employed. The majority of EIP payments processed by direct deposit is supposed to occur by April 17, and the IRS will start issuing paper checks after April 24.3 However, you can go to the IRS’ Economic Impact Payments website (https://www.irs.gov/coronavirus/economic-impact-payments) and provide direct deposit information to receive your payment more quickly.

National surveys suggest that one-third of these payments might be put into savings, while an additional amount could be used to pay off debt.4 Another survey found that one-third of Americans feel like $1,200 is insufficient, as we go into the second month of the economic shutdown.5 While such actions may be wise individually, saving or paying down debt will not help Main Street businesses or save jobs.

States are beginning to discuss how to reopen their economies. New England states and California, Oregon and Washington announced commitments to work collaboratively across their regions in loosening activity restrictions and re-opening closed businesses. The general consensus is that the recovery will be gradual. Just as restaurants, retail and travel expenditures fell before activity restrictions were imposed in many places, the expectation is that consumers will not quickly return to restaurants, stores and/or travel immediately after social distancing measures are eased. Experts anticipate that safety assurances will be needed, with possible temperature checks and increased testing and monitoring.6 The recovery could be further delayed as businesses will likely wait to rehire laid off office workers, marketing and accounting firms, etc. until business growth sufficiently stabilizes to warrant these expenses.7

A Closer Look at Michigan

The Economic Situation

Michigan’s labor market and economy have been devastated by the high rate of COVID-19 cases and deaths. Detroit is the epicenter of the pandemic’s effects, with Flint close behind, due to its concentration of individuals with underlying unfavorable socio-economic characteristics, the multiple associated comorbidities of chronic diseases and one of the most adversely impacted manufacturing sectors, the auto industry. Michigan has experienced the second largest number—and highest among the 20 Heartland states—of new filings for unemployment insurance as a percent of February’s employment (22 percent). Cumulatively, 1,050,703 Michigan workers have filed since the beginning of March.

Auto Industry in Michigan

As a major state for motor vehicle production, Michigan was already impacted by coronavirus’s effect on its automotive and logistics supply chain. Many automotive parts are sourced from China and shortages were already forcing many assembly lines to limit production and contemplate closings. So COVID-19 was impacting Michigan’s economy while the pandemic was unleashed in China. Manufacturing employment in Michigan accounts for 14.2 percent of total employment (138,000 jobs) in the state, and motor vehicle and parts production is ten times as important relative to the nation. For the Detroit metro area, motor vehicle production is nearly 21 times more important than it is to the nation overall. Ford, at 48,000 employees, is Detroit’s largest employer, while General Motors is second at 37,700, and Chrysler Group is the fourth largest at 32,500.8 Ford’s outstanding bonds have been downgraded to non-investment grade, partly as a result of the coronavirus pandemic.

Auto production lines have been mothballed in the state and layoffs are underway. The restrictive stay-in-place orders issued by the Governor caused auto workers to file for unemployment insurance claims. Plummeting consumer demand is exacerbating the impacts on Michigan’s auto industry even further. Consumers are not comfortable visiting showrooms, and due to lost confidence and wages, they are unable to purchase light vehicles. Morgan Stanley is predicting that sales will plummet 9 percent in 2020.9 The automotive sector has a massive multiplier effect on the state’s economy, and state officials report a large backlog in those filing claims for unemployment insurance. It is likely that some auto purchases are merely being deferred, and once the economy reopens and confidence is restored, pent-up demand could be unleashed. However, any pent-up demand is likely to be minor.

While travel and tourism isn’t as important to Michigan as several other states, the industry has a major impact on tax revenues.10 The new Detroit airport is becoming a major hub for airline traffic and curtailed flights will exert contractionary forces.11 Depending upon when Michigan’s economy begins to reopen, real GDP could decline by up to 30 percent at an annual rate in the second quarter.
Looking ahead, new cases are not close to plateauing and Governor Gretchen Whitmer indicated that the state would remain under some of the most restrictive stay-in-place orders in the nation until new cases decline substantially. Detroit and Michigan’s economies will remain partially closed for many more weeks with devastating consequences for residents’ employment and wages.

The Health Situation

As of Wednesday, April 15, Michigan had 28,059 confirmed coronavirus cases, which was the fourth-highest among states. It also had the third-highest number of coronavirus-related deaths – 1,921. One of the most alarming statistics for Michigan is its mortality rate; 6.8 percent of Michigan coronavirus cases have resulted in death, which is the highest among states and 50 percent higher than the overall U.S. mortality rate of 4.5 percent.12 Another alarming statistic, from an equity perspective, is the percent of the Michigan coronavirus deaths where the deceased individual was black – 40 percent.13 This number is so alarming because the black population only makes up 14 percent of Michigan’s total population.14 We see nearly three times as many deaths for Michigan’s black population as we would if the deaths were distributed equally among races. Let’s take a deeper dive into the data and health economics literature to try to understand why the situation is so dire for Michigan and its black citizens.

One factor to consider is the size of Michigan’s elderly population; elderly individuals have the highest risk of developing severe symptoms with COVID-19. However, the share of Michigan’s population that is 65 and older is only slightly higher than the national share – 17.2 percent versus 16 percent.15 This may explain a bit of the elevated overall mortality rate, but certainly not all of it.

Socio-economic Influences on Health Status in Michigan

What about preexisting conditions? High rates of chronic diseases, especially obesity, diabetes, COPD, heart disease, hypertension, cancer, liver disease, kidney disease, HIV/AIDS, asthma, and other cardiovascular diseases (CVD)16, leave Detroit and other parts of the state susceptible to contracting COVID-19 and witnessing high death rates due to compromised immune systems. Michigan’s population has the 11th-highest prevalence of COPD among states, and the seventh-highest prevalence of asthma.17 A pattern of health disparity across states and places, largely racial and ethnic-based, is explained by underlying causal socio-economic characteristics. Health economics and epidemiological analysis demonstrate a geographic variation in health indicators.18 Geographic-based health inequality corresponds with the pattern exhibited in population health indicators and mirror variations in income, education, and other socio-economic factors. Smoking, alcohol abuse, poor diet, and lack of exercise tend to be more common in geographies with high rates of certain diseases.19

Obesity is a direct and indirect killer. Obesity is causally linked to at least 23 different chronic diseases and is associated with several others.20 Obesity boosts blood pressure, low-density lipoprotein (LDL) cholesterol, and triglycerides. Additionally, it reduces high-density lipoprotein (HDL) cholesterol, which ameliorates LDL cholesterol, and positions the body in a pro-inflammatory state. High-fat levels in the body are destructive as fat cells form a network mimicking the endocrine organ, releasing resistin, a hormone that heightens the liver’s production of LDL while damaging LDL reuptake—raising the likelihood of building insulin resistance and type 2 diabetes. The pancreas offsets for the insulin resistance by producing higher amounts of insulin, contributing to a higher risk of a variety of cancers. Obesity is a significant contributor to cardiovascular disease.

Socio-economic factors can explain more than one half of the variation in high rates of CVD and associated mortality rates attributable to it at the state level.21 Mortality trends display a strong linkage with income differences.22 The spread in life expectancy between the wealthiest one percent and the poorest one percent of Americans is estimated to be 14.6 years.23 Additionally, there is evidence that life expectancy at the bottom of the income distribution has a positive correlation with the proportion of college graduates, government expenditures and immigrants. The same study demonstrates that median household income, the tax rate on soda, the absence of farmer’s markets to supply fresh produce, and access to convenience stores are strong predictors of CVD rates among states.

A Dire Health Situation in Michigan’s Cities

As noted above, Michigan has a high prevalence of COPD and asthma, which are likely to worsen COVID-19 symptoms, but the prevalence of the diseases are not astronomical compared with Michigan’s COVID-19 mortality rate. Other states, like Kentucky, have similar or worse asthma and COPD prevalence, but they have a lower COVID-19 mortality rate. The geographic distribution of the disease incidence may provide some insight into this discrepancy.

Let’s take a look at the prevalence of the two lung diseases and other coronavirus-worsening conditions for 500 of the country’s largest cities. The map indicates that Detroit and Dearborn, Michigan, have among the highest prevalence of COPD in the country, and Flint, Michigan, has the highest. For asthma, Detroit has the highest prevalence in the country and it is closely followed by Flint. The same is true for kidney disease. Warren and Sterling Heights, Michigan, have the highest cancer prevalence in the country.24 For diabetes and obesity, Detroit and Flint are again near the top.25 Thus, some of the most at-risk people in the country live in the areas of Michigan with the highest population density, and thus, the greatest potential to spread the virus. Compare this to Kentucky, where the at-risk population is current and former coal miners who primarily live in rural portions of the state.

Prevalence of Diseases Believed to Worsen the Symptoms of COVID-19
Change diseases by selecting a new tab at the top of the visualization



The Detroit metropolitan area is a hot spot for COVID-19, and more troubling, experiencing one of the highest mortality rates in the nation.26 As of April 15, Wayne County, which contains the cities of Detroit and Dearborn, had a COVID-19 mortality rate of 7.0 percent, and was the location of 46 percent of Michigan’s COVID-19-related deaths.27 Wayne County’s death count, 884, was the third-highest among U.S. counties, after New York City and Nassau County, New York.28 Macomb County, which contains Warren and Sterling Heights, had a mortality rate of 8.7 percent. Outside the Detroit metro area, Genesee County, which contains Flint, had a mortality rate of 8.2 percent.29 The areas we have identified as having the greatest risk of preexisting condition-related COVID-19 deaths seem to be the ones driving Michigan’s high overall mortality rate.

Beyond the general socioeconomic factors discussed above, why is the prevalence of these preexisting conditions so high in Michigan cities? There is a two-part explanation: Michigan cities have struggled with pollution for decades, and many of their citizens have or had jobs known to cause lung damage. Regarding the first part, the Flint water crisis is now common knowledge. Then there is Detroit’s infamous 48217 zip code, the most polluted zip code in the state and one of the most polluted zip codes in the country, which is located near an oil refinery and contains or is near several manufacturing facilities.30 The Detroit-Warren-Dearborn metropolitan area, which contains Sterling Heights in addition to its namesake cities, is one of the worst metros in the country for particulate air pollution.31 Regarding lung-damaging jobs, the cities of Dearborn, Detroit, Flint, Warren and Sterling Heights all have very high levels of manufacturing jobs relative to their workforce size, while Detroit also has an unusually high number of firefighters.32, 33, 34, 35, 36 In addition, shrinking populations in the cities have led to the need to tear down and remodel old buildings containing asbestos and lead-based paint. Humans did the automotive painting for many of the decades that the automotive industry boomed in Michigan cities. Manufacturing, firefighting, tearing down and remodeling of old buildings and automotive painting are all on WebMD’s list of “Ten Risky Jobs for Your Lungs.”37

Another theory may include how African Americans in Detroit have other vulnerabilities to exposure to COVID-19. Many work in personal service industries, retail and other occupations that require them to report to work and involve frequent human interactions. Many work in the Detroit airport which exposes them to travelers. Because of poor personal financial health, they cannot remain home due to the need for immediate income.38

Michigan’s High COVID-19 Morbidity Among Blacks Explained

Why are there so many more black individuals dying than individuals of other races, relative to their population shares in Michigan? While 7.7 percent of the Michigan population lived in Detroit or Flint in 2018, 41.2 percent of Michigan’s black population lived in one of the two cities; black individuals made up the majority of the population in Michigan’s two cities with the greatest preexisting condition-related potential for COVID-19 mortality – Detroit and Flint.39 The geographic distribution of the black population is reflected in the state-level prevalence of asthma, cancer, COPD, kidney disease, and obesity, and the prevalence for each of these conditions is higher in Michigan’s black population than its white population.40

Thus, a large portion of Michigan’s black population lives in cities with pollution and workforce issues that lead to coronavirus-worsening conditions. Combine that with the fact that these same cities have very high levels of poverty that limit the ability to make healthy dietary choices and seek out medical assistance,41 and we can begin to understand why Michigan’s black citizens are dying at such an alarming rate.

Overall, Michigan seems to be suffering more than any other state in the country, due to its industrial past and present. The inability to find solutions for pollution and occupational safety seems to be yet another shortcoming that America has to watch play out during this outbreak, and this shortcoming is playing out particularly tragically for the black community.

Endnotes

  1. https://www.cnbc.com/2020/03/26/weekly-jobless-claims.html

  2. https://www.wsj.com/articles/a-second-round-of-coronavirus-layoffs-has-begun-no-one-is-safe-11586872387?mod=djemwhatsnews

  3. https://www.businessinsider.com/personal-finance/wheres-my-stimulus-check-when-payments-are-coming-2020-4

  4. https://www.cnbc.com/2020/04/14/heres-how-americans-plan-to-spend-their-coronavirus-relief-checks.html

  5. https://www.marketwatch.com/story/if-stimulus-checks-are-arriving-you-wouldnt-know-it-from-all-the-complaints-2020-04-13

  6. https://www.wsj.com/articles/u-s-coronavirus-cases-rise-as-officials-weigh-when-to-restart-the-economy-11586774781

  7. https://www.wsj.com/articles/a-second-round-of-coronavirus-layoffs-has-begun-no-one-is-safe-11586872387?mod=djemwhatsnews

  8. Singh, Abhilasha, (February, 2020), “Michigan,” Moody’s Analytics.

  9. Oosting, Jonathan, Paula Gardner, (April 9, 2020), Michigan now second in nation for jobless claims amid coronavirus pandemic, Bridge. https://www.bridgemi.com/economy/michigan-now-second-nation-jobless-claims-amid-coronavirus-pandemic

  10. Romm, Tony, (April 10, 2020), “Cities and states brace for economic ‘reckoning,’ eyeing major cuts and fearing federal coronavirus aid isn’t enough,” Washington Post. https://www.washingtonpost.com/business/2020/04/10/cities-states-coronavirus-budgets/

  11. Shideler, Dave, (March 26, 2020) “Heartland Travel Hubs Face Economic Fall-out from COVID-19,” Heartland Forward. http://heartlandforward.org/heartland-travel-hubs-face-economic-fall-out-from-covid-19

  12. https://www.kff.org/health-costs/issue-brief/state-data-and-policy-actions-to-address-coronavirus/

  13. https://www.michigan.gov/coronavirus/0,9753,7-406-98163_98173---,00.html

  14. https://www.census.gov/quickfacts/fact/table/US,MI/RHI225218#RHI225218

  15. https://www.census.gov/quickfacts/fact/table/US,MI/AGE775218#AGE775218

  16. The CDC provides a list of preexisting conditions that will increase the risk of severe COVID-19 symptoms: https://www.cdc.gov/coronavirus/2019-ncov/need-extra-precautions/groups-at-higher-risk.html

  17. https://data.cdc.gov/Chronic-Disease-Indicators/U-S-Chronic-Disease-Indicators-CDI-/g4ie-h725

  18. Sagynbekov, Ken, (October, 2017) “Gender-Based Health Disparities: A State-Level Study of the American Adult Population,” Milken Institute, pp. 42-43. https://milkeninstitute.org/sites/default/files/reports-pdf/103017-Gender-BasedHealthDisparities.pdf

  19. DeVol, Ross and Armen Bedroussian, (October, 2007) “An Unhealthy America: The Economic Burden of Chronic Disease,” Milken Institute.
    https://assets1b.milkeninstitute.org/assets/Publication/ResearchReport/PDF/chronic_disease_report.pdf

  20. Waters, Hugh and Ross DeVol, (November, 2016) “Weighing Down America: The Health and Economic Impact of Obesity,” Milken Institute. https://assets1b.milkeninstitute.org/assets/Publication/ResearchReport/PDF/Weighing-Down-America-WEB.pdf

  21. Gebreab, Samson, Sharon Davis, Jurgen Symanzik, George Mensah, Gary Gibbons and Ana Diez-Roux, (2015) “Geographic Variations in Cardiovascular Health in the United States: Contribution of State- and Individual-Level Factors,” Journal of the American Heart Association pp.1-12.

  22. Currie, Janet and Hannes Schwandt, (2016: 352) “Inequality in Mortality Decreased Among the Young While Increasing for Older Adults, 1990-2010,” Demography, pp. 708-711.

  23. Chetty, Raj, Michael Stepner, Sarah Abraham, Shelby Lin, Benjamin Scuderi, Nicholas Turner, Augustin Bergeron and David Cutler, (2016) “The Association Between Income and Life Expectancy in the United States, 2001-2014,” JAMA pp.1-17.

  24. It should be noted that there is minimal variation in cancer prevalence across cities, and that many cities have prevalences near or equal to those of Warren and Sterling Heights.

  25. https://chronicdata.cdc.gov/500-Cities/500-Cities-City-level-Data-GIS-Friendly-Format-201/dxpw-cm5u

  26. Casselman, Ben and Patricia Cohen, (April 3, 2020) “A Widening Toll on Jobs: “This Thing is Going to Come for Us All,” New York Times, https://www.nytimes.com/2020/04/02/business/economy/coronavirus-unemployment-claims.html

  27. https://chronicdata.cdc.gov/500-Cities/500-Cities-City-level-Data-GIS-Friendly-Format-201/dxpw-cm5u/data

  28. https://coronavirus.jhu.edu/map.html

  29. https://chronicdata.cdc.gov/500-Cities/500-Cities-City-level-Data-GIS-Friendly-Format-201/dxpw-cm5u/data

  30. https://www.theguardian.com/us-news/2020/jan/09/the-blackest-city-in-the-is-us-facing-an-environmental-justice-nightmare

  31. http://www.stateoftheair.org/city-rankings/most-polluted-cities.html

  32. https://datausa.io/profile/geo/detroit-mi/

  33. https://datausa.io/profile/geo/flint-mi/

  34. https://datausa.io/profile/geo/dearborn-mi/

  35. https://datausa.io/profile/geo/warren-mi

  36. https://datausa.io/profile/geo/sterling-heights-mi

  37. https://www.webmd.com/lung/features/risky-jobs-for-your-lungs#1

  38. April 11, 2020, “Covid-19 exposes America’s racial health gap,” The Economist.
    https://www.economist.com/united-states/2020/04/11/covid-19-exposes-americas-racial-health-gap

  39. https://www.census.gov/quickfacts/fact/table/MI,detroitcitymichigan,flintcitymichigan/PST045219

  40. https://data.cdc.gov/Chronic-Disease-Indicators/U-S-Chronic-Disease-Indicators-CDI-/g4ie-h725

  41. https://www.census.gov/quickfacts/fact/table/US,MI,detroitcitymichigan,flintcitymichigan/PST045219