DETROIT — Michigan workers are getting squeezed between a weakening job market and rising living costs, with private-sector employment down about 22,000 jobs over the past two years and inflation-adjusted hourly wages still 2.7% below where they were seven years ago.

New federal data released Friday add to the warning signs. U.S. employers unexpectedly cut 23,000 jobs in July, while major downward revisions to May and June show the national labor market has been considerably weaker than previously reported.

Michigan’s unemployment rate was already 5% in June, the latest month for which state data are available. And an analysis of federal employment and wage data by University of Michigan economist Donald Grimes shows much of Michigan’s recent private-sector weakness is concentrated in the industry that matters most to the state’s economy: automobiles.

Michigan motor vehicle parts manufacturing employment fell by 11,000 jobs between June 2024 and June 2026, while motor vehicle assembly employment declined by another 3,100 jobs, Grimes said.

“Some of this may reflect temporary plant closures, but the weakness in our auto industry is concerning,” Grimes said.

U.S. Job Growth Slows Dramatically

The U.S. economy lost 23,000 nonfarm payroll jobs in July, according to the Labor Department’s jobs report released Friday, Aug. 7.

Perhaps even more concerning were substantial downward revisions to previous months.

The government revised May payroll growth down to 63,000 jobs and June to only 20,000, reducing previously reported job creation for those two months by a combined 103,000 jobs.

That means the United States created just 60,000 net jobs during May, June and July combined — an average of only about 20,000 jobs a month.

The unemployment rate nevertheless declined from 4.2% to 4.1%, in part because fewer Americans were participating in the labor force.

For Michigan, Friday’s report reinforces a slowdown that was already apparent before the July national numbers arrived.

Michigan Private-Sector Jobs Have Declined

Grimes, a regional economic specialist with the University of Michigan’s Research Seminar in Quantitative Economics, analyzed Michigan employment and wage data going back to 2019.

Because Michigan’s July employment numbers haven’t been released, Grimes compared June employment with the same month in previous years to avoid seasonal distortions.

His findings show an economy that has essentially stopped creating jobs.

Michigan had approximately 4.549 million jobs in June 2026, compared with 4.552 million in June 2024, a decline of about 3,000 jobs over two years.

But that relatively small overall decline masks a significant shift underneath.

Private-sector employment fell by approximately 22,000 jobs while government employment increased by roughly 19,000.

Federal government employment in Michigan declined by about 3,700 jobs during that period, Grimes said, meaning the government employment gains came from state and local governments.

Grimes said some of that employment has been supported by federal COVID-related grants that are now running out.

He expects that could create another employment headwind.

“I suspect state and local government employment in the state will begin slowly declining soon,” Grimes said.

Michigan’s Auto Industry Accounts For Much Of The Loss

The private-sector numbers become even more significant when looking at where the jobs disappeared.

Grimes said almost all of Michigan’s private-sector job losses over the past two years were concentrated in motor vehicle manufacturing.

Motor vehicle parts manufacturing employment dropped from 120,600 in June 2024 to 109,600 in June 2026 — a loss of 11,000 jobs.

Motor vehicle assembly employment declined by another 3,100 jobs over the same period.

Together, those categories lost about 14,100 Michigan jobs in two years.

That means the industry’s weakness isn’t merely a potential consequence if the national economy continues slowing.

It is already happening.

Michigan remains particularly vulnerable to changes in vehicle demand because the auto industry supports a much broader network of suppliers, engineering firms, transportation companies and other businesses throughout the state.

Michigan Workers Are Losing Purchasing Power

Employment is only one side of Michigan’s economic squeeze.

Grimes’ analysis also shows that the inflation-adjusted hourly wage for Michigan private-sector workers remains below where it was before the pandemic.

Michigan’s average real hourly wage stood at $34.94 in June 2019, according to the data analyzed by Grimes.

Real wages temporarily jumped during the 2020 COVID recession, but Grimes cautioned that wasn’t because workers suddenly received enormous raises.

Lower-paid workers were disproportionately laid off during the pandemic while higher-paid workers were more likely to remain employed, artificially pushing the average wage higher.

As the labor market normalized and inflation accelerated, real wages fell.

The average inflation-adjusted hourly wage dropped to $33.46 in June 2023 before recovering to $34.47 in June 2025.

But that recovery has reversed.

The average real hourly wage for Michigan private-sector workers fell 1.3% during the past year, to $34.01 in June 2026.

That puts the average inflation-adjusted wage 2.7% below its June 2019 level.

In other words, after seven years of nominal wage increases, the average Michigan private-sector worker’s hourly earnings still buy less than they did before the pandemic.

“So with private sector jobs — especially auto manufacturing jobs — declining over the past two years and real hourly wages substantially below where they were seven years ago, you can see why people are unhappy and concerned,” Grimes said.

Metro Detroit Families Face Higher Prices

Those declining real wages become easier to understand when looking at what Michigan households are paying for everyday necessities.

Consumer prices in the Detroit-Warren-Dearborn metropolitan area increased 4% during the 12 months ending in June, according to the Bureau of Labor Statistics.

Several essential expenses increased considerably faster.

Food prices climbed 6.4%.

Grocery prices increased 4.8%.

Meat, poultry, fish and egg prices rose 6.1%.

Fruit and vegetable prices jumped 8.5%.

Cereal and bakery product prices increased 9.6%.

Energy prices surged 20.4%, while gasoline prices were up 29.4% from a year earlier.

Those aren’t expenses households can easily eliminate.

A worker can postpone buying a television or cancel a vacation. Cutting spending on groceries, gasoline and utilities is considerably more difficult.

A Double Squeeze For Michigan Workers

The combination documented by Grimes helps explain why Michigan workers may feel worse about the economy than headline economic statistics would suggest.

Michigan’s total employment has changed little over the past two years, but private-sector employment has declined.

Automotive manufacturing has lost thousands of jobs.

And inflation-adjusted private-sector hourly wages remain below their 2019 level.

Now the national labor market is losing momentum as well.

For much of the post-pandemic period, workers benefited from employers competing aggressively for scarce employees.

If hiring continues slowing, workers could lose some of that bargaining power just as inflation again threatens household purchasing power.

That creates a double squeeze:

Finding a better-paying job becomes harder while the paycheck from an existing job doesn’t stretch as far.

Why Michigan’s Auto Weakness Matters

Friday’s national employment report contained one piece of encouraging news for Michigan: motor vehicles and parts employment increased by approximately 7,900 jobs nationally in July.

But Grimes’ Michigan analysis provides a much less reassuring longer-term picture.

Michigan has lost more than 14,000 motor vehicle parts and assembly jobs since June 2024.

And further weakness in consumer spending could make that problem worse.

Automobiles are among the largest discretionary purchases most households make. Consumers worried about job security or struggling with higher grocery, gasoline and utility bills can postpone replacing a vehicle.

That creates risks not only for Ford Motor Co., General Motors Co. and Stellantis but for Michigan’s extensive network of suppliers and other auto-dependent businesses.

Two Numbers Michigan Should Watch Next

Two upcoming reports should provide a clearer picture of whether conditions are deteriorating further.

The federal government releases the July Consumer Price Index on Aug. 12.

That will allow economists to directly compare July wage growth with July inflation and determine whether workers nationally gained or lost purchasing power.

Michigan’s July employment report will follow later in August.

That report will show whether the national slowdown evident in Friday’s jobs report has spread further into Michigan.

But Grimes’ analysis suggests Michigan doesn’t have to wait until then to identify the broader trend.

Private-sector employment has already declined. Auto manufacturing employment has weakened substantially. And the average Michigan private-sector worker’s inflation-adjusted hourly wage remains below where it was seven years ago.

For Michigan workers, the question isn’t simply whether their paycheck is getting bigger.

It’s whether that paycheck actually buys more — and whether the job providing it will still be there as the economy slows.