The latest Washtenaw County Economic Outlook from the University of Michigan’s Research Seminar in Quantitative Economics (RSQE) offers a steady, measured view of the local economy. The forecast does not point to rapid growth, but it does point to something equally important: resilience.
RSQE projects continued job growth in Washtenaw County over the next three years, although at a modest pace. Payroll employment is expected to grow slowly through 2028, with the county recovering to its pre-pandemic employment level by the end of 2026 and exceeding that level by 2028. The unemployment rate is also expected to edge down over the forecast period, remaining below the statewide rate.
The numbers are important, but the bigger story is what they tell us about how Washtenaw County’s economy has changed and where it may be headed next.
Washtenaw County’s economy has changed significantly over the past two decades. In the early 2000s, the county was more heavily shaped by manufacturing and other traditional blue-collar industries. Those sectors remain important, especially because they support high wage jobs, strengthen local supply chains, and help connect Washtenaw County companies to customers and markets beyond the region.
According to RSQE, blue collar industries fell from nearly 29 percent of Washtenaw County’s GDP in 2001 to about 17 percent in 2024. At the same time, private higher education service industries, a category RSQE uses to describe knowledge based sectors such as information, finance, professional and technical services, and private education and health services, grew from about 36 percent to nearly 45 percent of GDP, while government also increased its share.
Locally, those categories are reflected in the region’s strengths in R&D, life sciences, advanced automotive, software, AI, health innovation, and university industry collaboration, sectors and stories highlighted in SPARK’s Stories of Innovation guide. Together, private higher education services and government now make up roughly 70 percent of the county’s GDP.
That shift is also visible in the employment data. Since 2001, manufacturing employment in Washtenaw County has declined by more than half. At the same time, the county has seen major gains in government, health care and social assistance, education, professional and technical services, transportation and warehousing, wholesale trade, hospitality, arts, recreation, and other services.
Washtenaw County has moved from an economy more heavily dependent on traditional manufacturing to one that is more diverse, mixed, and knowledge based.
Progress like this is encouraging, but it should not be mistaken for a reason to slow down investment in the region’s economic future. Washtenaw County’s resilience reflects years of intentional partnership and support for business growth, innovation, entrepreneurship, talent development, research commercialization, and site readiness. Continued strategic investment will be essential to build on this momentum, support further diversification, and ensure the county remains competitive in the years ahead.
Since Ann Arbor SPARK was founded in 2005, the region has worked intentionally to connect companies to the assets that make this place competitive. Today, Washtenaw County’s economy is anchored by major institutions, world class research, a highly educated workforce, growing health care and technology sectors, advanced mobility, life sciences, professional services, small businesses, and entrepreneurs.
That diversity is one reason the county has been able to withstand major disruptions, including the Great Recession and the COVID-19 pandemic. RSQE notes that Washtenaw’s highly educated workforce, institutional anchors, and concentration in knowledge-based industries provide important buffers against local and national economic risks.
Resilience does not mean the work is done.
The forecast makes clear that Washtenaw County is still facing real headwinds. Job growth is expected to remain modest. Some of the sectors that help drive the county’s strength, including research, health care, higher education, and government, face a tougher funding environment. Professional, scientific, and technical services, one of the region’s most important innovation economy sectors, has also seen slower employment growth in recent years.
The wage picture deserves particular attention.
Washtenaw County continues to have strong average wages compared with Michigan overall, and RSQE expects real wages to keep growing through 2028. That is good news. But the longer-term trend is more complicated. RSQE notes that Washtenaw’s cost of living adjusted wage growth has lagged the nation since 2019. The county’s historical wage advantage has also reversed, moving from roughly 6 percent above the national average in the early 2000s to 2.6 percent below the national average in 2024.
Economic growth cannot be measured only by the number of jobs created.
A strong regional economy also needs wage growth, career mobility, and opportunity that allows residents to build financially sustainable lives here. Wage growth affects talent attraction and retention, housing affordability, consumer spending, entrepreneurship, and the ability of companies to grow in meaningful ways.
Washtenaw County’s next phase of growth must focus on both resilience and competitiveness.
As part of our mission, we will continue supporting industries with strong wage potential, including advanced manufacturing, mobility, life sciences, technology, health care innovation, and research-driven commercialization.
We will also continue to support small businesses and entrepreneurs, engage the right partners to strengthen local workforce pipelines, and help more residents connect to high quality career pathways.
Our progress is worth recognizing. The next challenge is making sure that this stronger economic foundation translates into broader opportunity, stronger wage growth, and long-term prosperity for the people and communities that make Washtenaw County competitive.
Want more insights like this? Contact Melissa Sheldon, Director of Research, at melissa@annarborusa.org.
