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Mar. 19, 2007
Copyright © Las Vegas Review-Journal


MIGRATION TO NEVADA: What's cooking in Michigan?

State's struggling economy contributes to influx of workers to Nevada

By JENNIFER ROBISON
REVIEW-JOURNAL

When managers at Le Cordon Bleu College of Culinary Arts in Las Vegas started tracking Internet inquiries from potential students after the school opened in 2003, they found the standard contingent of Western and Southwestern states among the top sources for prospects.

But one far-flung state showed up in the numbers as an unusually high generator of queries.

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"We started doing some research on where our leads were coming from, and Michigan kept popping up again and again," said John Hayet, the school's vice president of marketing and admissions.

So 2 1/2 years ago, Le Cordon Bleu began advertising in Michigan markets, including Detroit, Flint, Lansing and Kalamazoo. Today, the school's ads run 3 1/2 weeks out of every month, Hayet said. Thanks in part to the marketing initiative, Michigan is No. 3, after California and Utah, in the share of leads and students at Le Cordon Bleu in Las Vegas. Fifteen percent of the school's 675 local students hail from Michigan.

The transplanted students have plenty of neighbors from home joining them in Las Vegas.

Clark County drivers turned in 2,417 Michigan drivers licenses to the Nevada Department of Motor Vehicles in 2006, up from 2,281 licenses in 2005, said Kevin Malone, a public information officer with the department. Michiganders handed over 418 drivers licenses in January and February, compared with 331 licenses in the same two months of 2006. The state ranks No. 9 in drivers licenses surrendered to Nevada.

Observers say Michigan's dismal economy is behind the transcontinental migration.

"The economy of Michigan is probably the worst it's been in a long, long time," said Dick Blouse, president and chief executive officer of the Detroit Regional Chamber. "There is a structural issue in the automotive industry in that there are excessive legacy costs (pay and health care for retirees) with the domestic car builders versus the foreign car builders. Those costs are pushing the cost of automobiles up, and (carmakers) are looking for any way they can to make cuts."

That includes slashing jobs. Michigan's manufacturing sector lost 218,000 positions between 2000 and 2005, a study from the Brookings Institution, an independent research and policy institute found.

At 6.9 percent, Michigan has the nation's highest unemployment rate. The state shed 66,700 jobs from January 2006 to January 2007, including 23,900 jobs from December to January alone, according to the federal Bureau of Labor Statistics. Michigan was the only state to post a "statistically significant decrease in employment" in 2006, the bureau noted. The state's jobless rate has hovered above 6 percent since 2002, reaching a peak of 7.1 percent in 2003. Michigan would have to add 100,000 to 150,000 jobs to reach February's national unemployment rate of 4.5 percent, said Charles Ballard, a professor of economics at Michigan State University.

"We rode manufacturing in general and the auto industry in particular to tremendous prosperity in the '50s and '60s," Ballard said. "But if you're heavily dependent on a narrow sector of the economy, it's great when that sector is doing fine and a problem when it's not. You can watch it go up, but when it comes down it can hurt."

Job cuts among primary employers are also affecting the rest of the Michigan economy, as laid-off workers have less money to spend on consumer goods, Ballard said.

It's a cascade of events Hayet said he's learning about from his students.

"Any time a plant closes, 1,000 people might be laid off, but the ripple effects reach more like 3,000 or 4,000 people," Hayet said. "There are suppliers, vendors, subcontractors and so on. There's a huge impact. What we're hearing from our students is that for every job there, hundreds of applicants will apply. It's very difficult to get training or any kind of new opportunity."

Prospects are brighter for Commercial Contracting Corp. of Auburn Hills, Mich. The company continues to do solid construction business in the Michigan industrial sector, building power plants and upgrading auto-manufacturing factories when product lines change, said Eric Janness, a project manager for the company.

Yet Commercial Contracting couldn't resist the lure of Southern Nevada's economy, which grew its job base by 3.8 percent from January 2006 to January 2007, numbers from the Nevada Department of Employment, Training & Rehabilitation show.

"There is a little bit of concern with the Michigan economy," said Janness, who has relocated with about 10 other employees from Michigan to Commercial Contracting's Las Vegas satellite office. "We're trying to diversify our client base and keep our business strong for the future. In order to do that, we need to grow our company, and we found Las Vegas had opportunities for us to do that."

Toole's Contracting Group, a minority-owned sister company of Commercial Contracting, is also opening a Las Vegas branch. Toole's, which should have its Nevada contracting license by the end of the month, specializes in drywall and painting work for the hospitality sector.

"They're coming here (to Las Vegas) for the growth, too," Janness said.

In Le Cordon Bleu's experience, most of the people who have left Michigan for Las Vegas come from the manufacturing and service sectors. Many of them have also held entry-level posts in the culinary industry.

Michigan's economy is diverse, Ballard said, so it's difficult to make sweeping assessments of the skill sets and experience levels of workers leaving the state. But he noted that Michigan counties with largely white-collar job bases are faring better economically than their manufacturing-heavy counterparts. The unemployment rate in Washtenaw County, where Ann Arbor and the University of Michigan are located, is 4.4 percent, for example, while joblessness in manufacturing-centered Genesee County is nearly 8 percent.

"My guess, because Las Vegas is so dominated by hospitality and related industries, is that those who are migrating there are probably people at the lower end of the skill distribution," Ballard said. "Las Vegas isn't necessarily a center for high-tech industry, so you're probably not getting (auto) engineers."

But Janness said auto manufacturing is a sophisticated industry in which laborers require higher-order abilities.

"If companies in Las Vegas are looking for good labor, Michigan would be an excellent place to look," Janness said. "Michigan has very skilled, very intelligent individuals who are in need of work."

Hayet agreed that tapping into Michigan for workers can be fruitful for Las Vegas businesses.

"These are people who already have life skills under their belt," he said. "They just need retraining. They make excellent employees. This is a life change for them. They're establishing roots here. Once they make that choice to move and get on a bus or a plane, they don't turn around."



HIGHEST UNEMPLOYMENT

States with the highest unemployment rates (the U.S. unemployment rate is 4.5 percent):

State, Rate

Michigan, 6.9%

Alaska, 6.4%

South Carolina, 6.4%

Mississippi, 6.2%

District of Columbia, 6.1%

Kentucky, 5.6%

Massachusetts, 5.3%

Ohio, 5.3%

Oregon, 5.2%

SOURCE: Bureau of Labor Statistics

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