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Michigan Economic History


Mackinac island Michigan
Mackinac island Michigan

During the colonial period, when the area now known as Michigan had few European settlers, fur trapping and trading were the principal economic activities. As the region became more populated in the first half of the 19th century, settlers were occupied by farming and lumbering. Subsequently large-scale mining operations were started. The metals mined in the state allowed Michigan to develop a manufacturing economy by the early 20th century, and the state became a center for producing motor vehicles and associated equipment. Michigan had a labor force of 4,519,000 people in 2008. The largest share of those, 35 percent, were employed in the diverse services sector, doing such jobs as working in advertising offices or medical clinics.

Some 19 percent were employed in wholesale or retail trade; 14 percent in manufacturing; 15 percent in federal, state, or local government, including those in the military; 18 percent in finance, insurance, or real estate; 4 percent in construction; 19 percent in transportation or public utilities; 2 percent in farming, forestry, or fishing; and just 0.2 percent in mining. Although services provide the largest share of employment, the manufacturing sector produces the largest portion of the state’s income and trade. Manufacturing and construction dominate in the southern one-third of the state, while in the northern two-thirds the leading sources of income are government, services, retail trade, and small-scale manufacturing.

In 2007 some 20 percent of Michigan’s workers were unionized, compared to a national figure of 14 percent. The labor market is undergoing rapid change due to the continued automation of industrial plants, the spread of automobile production to other regions of the United States, the production of many automobiles and machine parts in other countries, and the rising importance of service-sector employment throughout the state.

The fortunes of Michigan’s key industry, the motor vehicle industry, are closely tied to general business conditions. Thus, during times of recession the state experiences high unemployment. In the 1970s the U.S. automobile industry, and with it Michigan, went through a major crisis. Beset by rising fuel prices, consumers turned away from the traditional, big American car and bought increasing numbers of fuel-efficient imported models. At the end of the 1970s U.S. manufacturers began trying to counter the trend away from American-made automobiles by introducing their own small cars. The efforts made by automobile manufacturers to improve quality and selection was showing results in the 1990s. Production and profits at the major United States automobile plants began to increase in the late 1980s and continued to grow in the 1990s, the result, in part, of a resurgence in popularity of larger vehicles and light trucks. Michigan’s automakers and other large corporations have also used their research and production skills to manufacture missiles, computers, and communications equipment.

Computer-related advances in automobile design and manufacturing have resulted in an emphasis on high technology in much of the industry in southeast Michigan. This development, along with the increasing diversification of manufacturing in general and a greater emphasis on service industries, has reduced Michigan’s economic dependence on the automobile industry. The state now derives just one-fifth of its manufacturing value directly from firms manufacturing motor vehicles. "Michigan" © Emmanuel BUCHOT, Encarta, Wikipedia

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