I just has a truly frightening experience. During a conversation about the auto industry one of my colleagues who researches the auto industry told me that according to his calculations, the GM shutdown is going to send 250,000 off the job in Ohio.
This includes only the multiplier effect at auto suppliers, not any macro economic effect. For example, job losses at retail stores resulting from drops in spending are not included, nor are any further drops from other problems.
As it stands now Ohio unemployment stands at 9.7%.
Overall, the Ohio labor force stands at 5.95 million.
Currently, 578,000 are out of work, up from 409,000 in October of 2008.
Adding another 250,000 to those out of work, bumps the total number of unemployed to 838,000.
Divide this number by the labor force, and you get an unemployment rate of 13.9%, a 44% increase over the present rate.
Assuming a 22 to 1 multiplier off of GM employment, that means that Indiana would see unemployment increase by 112,000, and Michigan by 1,089,000.
In Indiana the labor force is 3.22 million. Unemployment currently stands at 10%.
323,000 are currently out of work. If the numbers about GM are right, that will increase to 435,000. Leaving an unemployment rate of 13.5%.
Michigan is much worse. The labor force is 4.84 million. Unemployment is currently at 12.6%.
609,000 are currently out of work, that will increase to 1,698,000. Leaving an eye-popping unemployment rate of 35.1%
Now this is hopefully going to be a limited situation with the GM layoffs, but the shock of those May unemployment numbers coming out at the end of June will undoubtedly not have a favorable impact on the rest of the country.
And this all assumes that an extended swine flu scare doesn't have a negative economic impact. Nor does it account for macroeconomic issues, or any job losses at dealerships.