The tech sector shines as West Michigan’s economy recovers from the pandemic downturn

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 over the next several years.

This is among the conclusions released today The Right Place Inc.‘s first-ever report on the state of the region.

Though job growth has lagged in the eight-county region, West Michigan has added 23,000 people to the workforce since a period in 2020 when many businesses were shut down by state orders. The region lost 22,500 people from the workforce in the midst of the 2020 recession.

“Over the last few quarters, we’ve seen an increase and return in the workforce,” said Randy Thelen, President and CEO of The Right Place, during the Organization for Economic Development’s annual outlook event in Grand Rapids today. “It’s the kind of recovery that you don’t see in the rest of the country.”

The region’s workforce has also “got smarter than it used to be”, with a 12 per cent increase in the number of people with college degrees in four years. Across the region, 35 percent of the working population now has a bachelor’s degree or higher, according to The Right Place report.

Higher employment and literacy rates mean there’s “more blue-collar and skilled workers in West Michigan than we’ve seen in a while,” Thelen said.

The region’s gains are amid the pandemic, a slowing economy into 2022, stubbornly high inflation, rising interest rates, supply chain challenges and a “job market that we’re still trying to manage,” he added.

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“These are economic times like we’ve never seen,” Thelen said. “Any of those things would be an economic challenge that will really challenge us as leaders.”

The State of the Region report also shows that from 2020 through 2022, West Michigan created or preserved 3,677 jobs — or 108 percent of The Right Place’s goal — that paid $195 million in salaries. West Michigan also saw $598 million in new capital investments, or 120 percent of the Organization for Economic Development’s target.

The region’s population grew by 2.1 percent from 2019 to 2022, or about 23,500 people net. That growth rate is outstripping the national average and leading to a larger talent base that employers need, Thelen said.

“In the world of population growth, that’s a telling number,” he said.

The region currently has around 1.1 million inhabitants.

West Michigan also has a cost of living that is well below the national average, although it’s a touch higher than the state as a whole, according to the region’s state report.

Of the 550 CEOs that The Right Place employees met in the past year, 70 percent reported increasing sales and 56 percent said their company was planning to expand. More than four in ten planned to increase workers’ training.

“We have built a great region. We must continue to build a great region,” Thelen told the audience gathered at the downtown JW Marriott. “We’ve been just a little behind the curve in terms of job creation compared to the country in recent years, but we see the optimism of our company leaders, we see the potential for growth and we believe we will be ready , to come out of it stronger in the next two years.”

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employment and technology

Employment in the Grand Rapids region remains 3.8 percent below pre-pandemic levels, which is 1.8 percent statewide but better than Michigan’s 4.5 percent statewide.

Thelen said job growth was “an area where we still have work to do” despite what he called a “rather incredible rebound” from the depths of 2020.

“We usually outperform the country,” he said. “We have some room to grow. We have to find a way to come back. We need to find ways to create more opportunities for more people to enjoy a higher quality of life with a higher quality job.”

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

Tech employment grew 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 for the tech sector to comprise 10 percent of jobs in the Grand Rapids area, which would require the creation of 20,000 tech jobs over the next decade, he said.

In order for the tech sector to grow, wage scales in the region need to be improved, he said University of Michigan Economist Don Grimes. Compared to other markets in the US, tech jobs in Grand Rapids and Michigan lag behind, he said.

“Michigan pays the IT staff like crap,” he said. “For these jobs, the pay scale has to go up.”

In response, Thelen pointed to the region’s comparatively lower cost of living compared to big tech markets like San Francisco and Seattle. He added that the wage gap between West Michigan and big tech clusters is bigger, “so we need to close that gap.”

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