The federal government on Wednesday corrected Michigan’s unemployment rate upward by 1.7 percentage points, above the U.S. average, citing an outlier in statistical modeling last winter — amid sharp job swings during the coronavirus pandemic.
The September jobless figure, now 6.3%, had been 4.6%. The October number, also newly released Wednesday, dipped to 6.1% — higher than the national rate of 4.6%.
The problem stems from inputs into a model for the Detroit-Warren-Dearborn metropolitan area for January, which produced “some distortions” in benchmarking factors used for Michigan, according to the U.S. Bureau of Labor Statistics. State officials said they notified the agency of the issue in May.
Michigan’s unemployment rate had dropped substantially last January, from 8.2% to 5.7%, to below the U.S. average.
Scott Powell, director of the state’s Bureau of Labor Market Information and Strategic Initiatives, said it was a “red flag” that the agency continued to notice in subsequent months.
“The Michigan estimate was lower than what was basically appropriate,” he said.
Revisions to unemployment data are not unusual, but one of this magnitude is. The U.S. government will increase the state’s monthly jobless rates for January through August at the end of the year and release them in March.
Gov. Gretchen Whitmer, a Democrat up for reelection in 2022, this year had been touting that Michigan’s unemployment was below the national average and on a steady decline since spring 2020, when she issued stay-at-home orders to control COVID-19.
The unemployment rate comes from a survey of households, which is supplemented with other information in a regression model. Due to the pandemic, the federal agency began reviewing states’ surveys monthly for unusual movements rather than yearly and, in January, adjusted the Detroit area for an outlier — a way to preserve a shift that the model otherwise would have discounted. But it did not adjust Michigan as a whole because the jobless change did not exceed reliability criteria.
“What we noticed in the first couple of months of 2021 is that the estimates we were getting from the BLS model, the published data that everyone sees, was not tracking with the raw data from the household survey,” said Bruce Weaver, an economic manager with the state Department of Technology, Management and Budget. “In May, we contacted BLS in writing and pointed that out. They started looking into it and eventually identified the specific problem that they’re adjusting for this month.”
Michigan’s overall workforce total was unchanged over October. There was a 38,000 boost in payroll jobs, however, the second-highest of 2021.