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Wednesday, December 1,2010

Road trippin' to recovery

A look about mid-Michigan on the road to economic recovery

by Andy Balaskovitz

 


 

The road trip in search of economic recovery in Lansing began at a 145-yearold downtown retail store whose owner says it is having the best year in recent memory.

My journey went south, literally and figuratively, when I reached the unemployment office on Cedar Street. Little surprise, the drab, gray office in south Lansing kept a steady flow of 15 out-of-work employees either filing for or extending their unemployment benefits.


Yet economic experts say we’re climbing our way to recovery in mid-Michigan, albeit slowly. The sharp knife of economic downturn is still dropping, though it’s duller and falling slowly, he said.


The yin and yang of economic recovery


First, there is the Kositchek’s clothing store in downtown Lansing.


“There is a marked difference (in sales) from 12 months ago,” David Kositchek said. “This (2010) is one of our best years in history — at least recent history.”


While Kositchek, who runs the upscale family business, said the store “caters to a wide range of ages,” the people are coming back. His four tailors are “staying extremely busy.”


“The young professionals are coming back and buying quite strongly,” Kositchek said, owing some credit to Cooley Law School’s ability to attract students from throughout the nation.


“I grew up here on the avenue, and I have seen the wave,” he said.


While the crowd demographic is a bit younger — perhaps less family-oriented — and downtown is hardly the retail hub of Lansing, “Today there is an energy very similar to what I remember in the late 70s,” Kositchek said.


But the unemployment office in south Lansing tells a different story. It was 1:15 on Wednesday afternoon, the day before Thanksgiving. As you walk into the office, the furniture and carpet are a mixture of dull, gray tones. The first thing you do is take a numbered ticket and wait in line.


Two workers spent five to 10 minutes with each applicant. Daniel Nordman of Fowlerville was No. 44.


“Are we in a recovery? Does it feel like one?” I asked Nordman.


“Boy, I sure don’t think so,” he said shaking his head and smiling.


Nordman was laid off in March 2009 and has collected unemployment benefits ever since. He worked in Lansing and Howell since 1997 as an automobile technician. He is 29, owns his home in Fowlerville and is looking to extend his unemployment benefits until Jan. 1. He had to come down in person because the phone lines were busy. He is waiting for all these announcements of new jobs to materialize.


“We are getting jobs, yeah, but it seems like we’re losing them faster. It’s like we’re taking one step forward and two steps back,” he said.


Thanksgiving was the next day, followed by the annual herd of holiday shoppers on Black Friday.


“It’s definitely more painful during the holiday season,” Nordman said. “Day-to-day, it’s a struggle — luckily I have my parents that help me out from time to time.”


At this point, Nordman said he is looking for a job that is “acceptable” by Jan. 1. Unemployment surely doesn’t pay like his auto jobs did, he said.


When I tell Nordman that economic experts who study these trends say some of the underlying indicators of a healthy economy are steadying, he nods his head in understanding, and then shakes his head while looking at the floor.


“I’m an indicator too,” he said. “But at least I own my house.”


My road trip continued to the Lansing Mall, three days after the American shopping behemoth Black Friday.


What of that irony of turning on the television to find holiday shopping advertisements that promise wallet-saving deals during tough economic times? Whom are they targeting? The guy at the unemployment line or the successful professionals buying new threads from Kositchek’s?


Izzy Penfield, who works at a jewelry kiosk at the Lansing Mall, said either way it’s “soul-sucking.” The 14 hours she worked during Black Friday brought fewer customers than what she has noticed in her three years working at the mall.


“As I see it, we’re not really recovering,” she said. “Everyone (retailers) had their awesome sales, but Black Friday wasn’t as bad as any other year.”


In this case, bad means busy.


“I think it’s soul-sucking to convince people to stay awake all night to shop,” Penfield said. “A 55-inch TV is not going to save your life.”


Indicators and patience


So, is the recession over? Are we in a recovery in mid-Michigan?


“Yes, we are. But it’s not nearly as fast as almost anyone would like,” Charles Ballard, a Michigan State University economics professor, said. Ballard recently authored the book, “Michigan’s Economic Future: A New Look,” which is a follow-up to his 2006 release, “Michigan’s Economic Future.”


He said it’s easy to sit back and say, “Gosh, the recession isn’t over because it’s not all better yet.”


But, Ballard said, the definition of recovery is that you have stopped losing ground economically, not necessarily making up the lost ground.


“It looks like the economy bottomed out a year and a few months ago. It’s been inching up, and that’s why so far it’s not a very strong recovery,” he said.


Everyone is quick to look at unemployment numbers as an economic indicator, but Ballard said those figures tend to “lag behind” other growth indicators. The 9.9 percent unemployment rate for Ingham, Eaton and Clinton counties is a few percentage points better than a year ago.


East Lansing and Lansing are unique and “big sources of employment.” That includes MSU and Lansing being a capital city (despite a shrinking number of state employees). And then there’s General Motors Co.


Granted, GM historically had a greater presence in Lansing, but that’s due to a falling market share and advancements in manufacturing technology, Ballard said. At the same time, 600 new jobs are on the way.


Growth in the health care sector is a fourth significant job creator, Ballard said, but that real employment growth “comes from the smaller operations.”


A second economic indicator is the status of home foreclosures.


While Ingham County Treasurer Eric Schertzing said the 250 tax foreclosures for 2010 in Ingham County was a “sharp increase” from 2009, 2011 is expected to taper off.


“We have had a huge wet blanket of foreclosures covering us for five years. Next year won’t be as heavy of a blanket,” said Schertzing, who is also chairman of the Ingham Co. Land Bank. The Land Bank buys foreclosed properties, invests in sprucing them up and hopes to in turn sell them.


“In 2012, I don’t think there is a blanket to put on there. The light is beginning to appear at the end of the tunnel,” he said.


“Compared to historical situations, it’s going to be a slow recovery.”


Another elected official playing a role in economic recovery is Lansing Mayor Virg Bernero, whom economist Ballard credits with “holding things together at a very difficult time,” Ballard said.


Bernero’s economic policy of attracting businesses with tax incentives (you may have heard him say, “Rolling out the red carpet instead of the red tape”) could be effective by making Lansing attractive for potential businesses, but Ballard pointed out the inability to track promised jobs from those incentives. He also said that if more people are coming to Lansing without an accompanying raise in tax revenue, it could potentially mean less money for road construction.


Road construction and education funding are two musts to achieve any significant recovery, Ballard said.


Bernero, on the other hand, is steadfast about his policies.


“These companies wouldn’t be here if it weren’t for our aggressive efforts,” Bernero said, citing the likes of Demmer Corp., the Accident Fund Insurance Co. of America, Niowave, Neogen and Symmetry Medical. “Success begets success.”


Bernero said he wishes he didn’t have to offer tax incentive plans for prospective businesses — that would mean Lansing is an inherently good place to start up.


“The reality is that we are competing on a global basis,” Bernero said. “For us not to offer these (incentives) would be an unconditional surrender in a global economy where people are armed to the teeth. I am unwilling to lay down my economic tools and simply hope for the best.”


Schertzing and Bernero are optimistic about the “conversation” that’s been brewing in Lansing over the past few years, as they have seen it.


“The younger folks have turned around the conversation about Lansing as a city and a region,” Schertzing said. “That has taken years and thousands of people to do. And that image doesn’t go south quickly.”


Bernero agrees: “There is a palpable excitement in the air in Lansing.”


However, Bernero recognizes the excitement doesn’t often spill over to the unemployment line or into foreclosed houses.


“All politics is local,” Bernero said. “There is no question that if you’re in the unemployment line there is no economic recovery for you. I’m not saying it’s all peaches and cream.”


But that is what drives Bernero.


“You saw me weigh in on (Pat Gillespie’s) Market Place project,” he said referring to the fiery comments directed at half of the City Council who voted to block tax incentives for Gillespie.


“That means jobs. I get a little impatient with anyone or anything that’s going to stop Lansing’s progress, because I am cognizant of those struggling.”

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