Report: Michigan held down by low income, education

LANSING — Michigan is struggling to achieve economic prosperity during a boom time for the auto industry. Among the reasons: low per-capita income and fewer than a third of its residents hold bachelor’s degrees, according to new research released today.

The state that gave birth to cars now ranks in the bottom half nationally on those two measures, according to the study conducted by University of Michigan economist Donald Grimes and Lou Glazer, president of Ann Arbor-based think tank, Michigan Future, Inc.

The researchers found that Michigan shed workers and wages by 2 percent since 2007, the start of the last economic downturn, despite growth of roughly 1 percent nationally in both areas. Detroit was hit harder, because the city disproportionately was affected by the auto industry’s woes. In Grand Rapids, meanwhile, wages are spectacularly low for a region of its size.

What the trends mean for Michigan, Glazer said, is that the state no longer can rely on high-paying, low-skilled manufacturing jobs — the jobs that built its middle class starting with Henry Ford’s promise of a $5 daily wage a century ago — if it wants to prosper.

Rather, he said, Michigan needs to put more of its residents to work, concentrate more people with four-year degrees in its cities and speed up the transition to a knowledge-based service economy — all traits of more prosperous states.

“This is something that basically has never happened in Michigan,” said Glazer, whose Michigan Future think tank studies talent and the transition to an information economy. “What we’re basically saying is, the formula that worked for Michigan in the 20th century … does not work in the 21st century.”

A slow slide

That shift has been going on for several years, partly because the auto industry had inflated Michigan’s per-capita income relative to the rest of the country even though the state had a lower percentage of college graduates.

When the auto sector collapsed during the recession, it took income levels with it. In 2000, Michigan had the 18th-best per-capita income in the U.S.; in 2013, the state had fallen to 37th, according to state data and the Michigan Future report. That same year, Michigan ranked 33rd for the share of adults with a bachelor’s degree.

Glazer and Grimes analyzed economic and education data from 2007 to 2014 and compared Michigan with national averages and with other states. They did a similar analysis for the metropolitan regions in Detroit and Grand Rapids, comparing both regions with other U.S. metros with at least 1 million people.

They found the only sector nationally to add jobs and raise wages was high-education services, which include finance, health care and social services.

Other sectors they studied include low-education services, which includes lower-paying jobs in such fields as retail and tourism; low-education goods, often low-skilled manufacturing jobs; and high-education goods, a sector with the fewest employees and includes oil and gas extraction and aerospace, chemical and computer manufacturing.

The only way a state today can land on top 10 lists for employment, wages or income is either to have a wealth of energy resources, like Alaska and North Dakota, or have a high concentration of adults with bachelor’s degrees, Glazer said.

The trends don’t necessarily indicate causation, merely correlation. But places that perform well by those measures place less of an emphasis on making things, Glazer said.

Growing attention to income

The idea that Michigan should aim to be a top 10 economy state has other researchers’ attention.
Business Leaders for Michigan, the state’s business roundtable, released a study this month showing that Michigan continues to languish in the bottom half of states when it comes to income metrics.

In 2014, Michigan ranked 34th in per-capita GDP and 36th in per-capita personal income and had the fifth-worst unemployment rate in the nation, ranking 46th, according to BLM’s study.

But signs of optimism are emerging: The state’s per-capita personal income growth rate ranked 10th, while its per-capita GDP growth rate was third-fastest in the country, according to the study.
In the report released today, Grimes and Glazer found:

  • Detroit is doing better in high-education service fields than places like Milwaukee and Pittsburgh, former manufacturing-heavy cities now transitioning to knowledge economies.
    That could be because metro Detroit has a greater concentration of knowledge jobs in the auto industry, from engineering to design, Glazer said. Metro Detroit had an average wage of $68,222 in high-education services in 2014, compared with $62,480 in Milwaukee and $65,988 in Pittsburgh.
  • Wages are low in Grand Rapids. The region had an overall average wage of $43,801 in 2014, compared with $54,168 in Detroit, $56,337 in Minneapolis and $69,427 in Boston. The Grand Rapids area ranked 49th of 52 U.S. metropolitan areas with a population of at least 1 million, and last when factoring for knowledge-based jobs’ share of total wages, data show.
  • The good news: Michigan is adding jobs at a faster rate than the nation, and the state has better college attainment rates among younger people — ages 25-34 — than across the population as a whole. Yet, Glazer said, “no question, it’s still low.”

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Comments

KG-1
Sat, 11/21/2015 - 4:43pm
The idea that higher education is the cure-all to the economy is nothing but a sad joke. Example #1. Example #2. If this can happen in one segment of our economy, you can be assured that other segments will soon follow.
Duane
Sun, 11/22/2015 - 3:53pm
When you spend your money, do you look for best value? Do you look for the products/services that are improved or do you keep spending on unchanged models? Your examples ignore the reason we as a culture have succeed, imagination, creativity, improvement. I don't know why the decisions in your examples were made, all I can sense is based on my experience. I worked for a global employer, our marketplace was the globe, though even before that the founder created a culture of innovation/invention/change. We knew that even for those working on the operation floor we had to keep looking to improve, it was a culture of change so we were always changing. The reality is that America has a culture of change much stronger than almost anywhere else in the world, when we become too comfortable with the status quo were are giving up our ability to influence our situations. As I understand it there was an upheaval at Disney not too many years ago when the theme parks were still using old technology [they were using analog for ticketing rather than digital, the electronic wristbands]. There was much resistance by the staff at the time to change, I wonder if your example was fallout from that upheaval and change to accomodate new technology that gives the park goers a better experience.
KG-1
Sat, 11/28/2015 - 10:07am
And looking for he best value is the underlying problem here. I'm going to date myself here, but the best way I can describe the problem with your line of reasoning is to compare it to an old electronics chain where they would "Give me 5# of coffee if they couldn't beat my best deal". Oh sure, they would advertise a lot of great prices on the products that they were selling, but more often than not, whenever you went in to purchase said item, they would often tell me that they "just sold the last item before I came into the store" or would refuse to match another offer because even though the pictures of the item were identical, the model was one number higher than what was in their ad. So, what does this have to do with education? It has to do with the fact that what was being sold as a value to entice customers (students) to come to their store (place of higher learning), what people got after the fact was not what they originally wanted (a degree associated with a stable, well-paying career). And much like that defunct electronics chain, I see many institutions of higher learning going the same route due to their inability to offer programs that not only deliver what they offer, but do so without putting student in insurmountable debt before they even graduate.
Duane
Sun, 11/29/2015 - 5:20pm
KG-1 Your scenario sounds like a 'bait and switch', you go for what they advertise and you accept what they offer. It seems there still is a choice, if you don't like what they offer [not your desired value] you buy or don't buy. If you don't buy you keep looking and talking about what you are willing to buy. In a 'free market' someone will decide to offer if not what you want possibly something very close at a price you will accept. Another factor to consider in your school scenario is the selection of educational options. If the cost is high for a given institution and that is a critical factor, and repayment of cost is critical then you have the choice of 'degree' programs. A person can decide on which will provide the greatest income to mitigate the cost burden. Does one invest in a Political Science degree or a Petroleum Engineering degree? It comes down to what you decide is value. What concerns me is that there is no discussion about how, when, and where a person learns to determine value of something such as education. Also, it wonder how many learn the investment in time and effort post-secondary learning will take and what it will provide, and even what the work ethic will be for them to succeed or even maintain a job.
KG-1
Mon, 11/30/2015 - 10:39am
And that is literally the problem that we have here with colleges and universities. These are still literally kids being taken into what these college recruiters are "promising" in order to bring in students so that their faculty remains gainfully employed in their field of instruction that wouldn't get them a job anywhere outside of academia for a fraction of what they are making "teaching". I have already had this discussion with several family members and friends over the years who were looking at various programs prior to graduating h.s., so I can speak with some experience on this. Leave it at some time spent at local colleges (for a lot less $$$) made significant changes in more than one career path. If these institutions (the big players, now) were required to be upfront with all of the details within a particular career path (i.e. employability outside of academia, pay & benefits, working conditions, etc.), it would utterly decimate the ranks within liberal arts colleges everywhere due to the fact that there would be no students signing up for their courses. Until that happens (which I'm of the school of thought that it inevitably will once higher education finally collapses on its own bureaucratic weight), we are stuck with the status quo (along with the massive debt and dashed dreams that go with it).
Duane
Mon, 11/30/2015 - 4:15pm
KG-1, Why wait for a collapse, why not start by creating alist of things we think could be important to students and their families for deciding on what they should consider for post-secondary learning? I am doubtful anyone in a positions to help in this planning has taken the time to do this and probably do know how to approach it. Once a list is established then building content for each item becomes much simpler. Also identifying the means to get this into the students and their families hands becomes do able.
Matt
Sun, 11/22/2015 - 10:10am
I understand the limitations and editing of an article on this website, but what was the point of this? Get more bachelor’s degrees? What are the employers we to be attracting to employ the bachelor degrees we need to create? And how are we going to do this? Is it thought that if we create a film school in Escanaba and produce thousands of film degreed students, it will become a movie making Mecca? What are the jobs he thinks are going to be in demand, (aside from the dubiousness of such predictions)? What are the actual job/positions that employers currently have unfilled? What is he proposing that students study in order to fill these and any other opening he thinks will be there? What if they (the students) won't pursue these degrees? Second you can't get a more meaningless data point than comparing average wages in one area to average wages in another, there's way more going on than just throwing numbers out there, as though these numbers are end all be all, instead it's just a waste of electricity. A big incomplete!
didIsaythat
Sun, 11/22/2015 - 2:08pm
"Business Leaders for Michigan, the state’s business roundtable, released a study this month showing that Michigan continues to languish in the bottom half of states when it comes to income metrics." And how competitive with other states are these so called "business leaders of Michigan" in the wages they are paying?
Mon, 11/23/2015 - 8:15am
It is very appropriate to recognize the problem that Michigan is falling quite rapidly behind other states in the educational attainment of its young citizens and in the earnings and incomes of adults. It will not be easy to alter the current very discouraging trends. There appear to be positive developments in the city of Detroit as Dan Gilbert and those in the New Economic Initiative for Southeast Michigan seek to make Detroit as center for innovative information technologies as applied to vehicles. But Michigan needs much more than one high tech center in the metro Detroit area.
Kathy
Mon, 11/23/2015 - 8:29am
The message about education is so important but it is not being heard in the rural areas of Michigan. We have areas like Grand Rapids, Novi, West Bloomfield, and Okemos who excel in education but are not rewarded for it. It almost feels like they are punished for excelling. The areas like much of northern Michigan, Battle Creek, Kalamazoo (despite the Promise), are not getting the message. My personal opinion is that we need an advertising campaign stressing the importance of education and another educating youth on the dangers of alcohol, as that it is way to popular in rural areas. (Check school attendance on the first day of hunting season and you will understand.) The governor has sunk far too much money into community college programs and not enough into K-12 education and 4 year programs. He has robbed K-12 to pay for community college upgrades. We need more courses in technology and fewer community college enrichment programs.
Mike M.
Mon, 11/23/2015 - 12:34pm
Unfortunately this is true. In Alpena alone the outgoing president slashed 1/3 of vocational programs and tried to sell off a thriving concrete technology program. K-12 seems more interested in prepping for MEAP, etc. and still has a 20% drop out rate.
Mon, 11/23/2015 - 8:48am
Low unemployment by itself is not a good measure of prosperity. There is no silver bullet, and certainly not a $1.2 billion tax shift in favor of business. Michigan must invest in its people and communities through any number of different initiatives that will increase education rates, health, safety, and the overall quality of life in our state.
Connie
Mon, 11/23/2015 - 8:50am
It seems to me that our tax cutting for business is only lining their pockets. So much for trickle-down. Employees get a trickle of the profits. College grads are not going to stay here and work for slave wages when they can go somewhere else and actually earn a living wage. Wake up and smell the roses.
Duane
Tue, 11/24/2015 - 9:30am
Connie, Given the choice would you like to see all the private employers leave the state taking all their jobs with them, or have more of those private companies with all the jobs they will create? You seem to think it is really bad for employers not to pay high taxes. What you think of the employers that pay no taxes? I believe all government agencies from local through federal, the not-for-profit agencies, public education, and such employers pay no taxes, what do think should be done about them?
Lance Ubricke-H...
Mon, 11/23/2015 - 9:00am
Welcome to MIC-ISSIPPI !
Robert Kleine
Tue, 11/24/2015 - 2:07pm
Employers did not leave the state in the 1990s when business taxes were much higher. The unemployment rate was below 4 percent. Also business tax cuts were paid for by raising taxes on individuals mainly seniors and low income families and cutting spending on education. This is no way to stimulate the economy.
Mon, 11/23/2015 - 9:08am
Michigan is an agricultural state. Michigan apples may cost $4.00 per pound. Colorado, Washington, Alaska etc. are producing & selling medical grade cannabis at $4,000 per pound. Hemp seeds are a super food. Other hemp industries apart from seeds and CBD oil include hempcrete, fuel & fiber. #PureMichiganCannabis & #PureMichiganHemp. Seems like a no brainer to the young college grads who can't wait to graduate and head to States that are developing these thriving industries. Another hemp related industry: As much as we don't want to admit it (who knows why?) Henry Ford's 'plastic hemp car' from 1941 was a "smashing" success. https://www.youtube.com/watch?v=srgE6Tzi3Lg
Rich
Mon, 11/23/2015 - 9:11am
Where is the personal responsibility to improve oneself? When it was time for me to go to college, I sold my soul to the military in order to get funds to get a BS in engineering, then studied hard and passed the test to go on and get a funded MS in engineering. I know many, many others that did the same thing, maybe not the military but some other avenue. We didn't have remedial classes, and didn't need them at the time because it was everyone's responsibility to improve themself. It seems today that the thought is that some outside source is required to educate our youth.
didIsaythat
Tue, 11/24/2015 - 2:58pm
I think the lack of effort in trying to improve oneself can be linked to a cynical attitude toward the economy in general, so many young people have grown up with nothing but a struggling economy and seeing their own parents and friends lose their jobs despite years of loyalty to the company. They are looking for the easy way to something better but do not want to make a big effort if it is just going to be an unstable future economically.
Mon, 11/23/2015 - 10:59am
Another post by Bridge Magazine where the comments are more astute than the commentary presented by the article's author.
Mon, 11/23/2015 - 11:47am
Mr. Glazer has been lambasting Michigan's "low brow" for decades. The everyone needs a four-year degree mantra has resulted in a shortfall of the hands on technical talent this state now needs to grow and prosper. We build things in Michigan...real things...someday that will be cool again!
Rpt
Mon, 11/23/2015 - 11:52am
If the political class in Michigan really cared about wages, they wouldn't be targeting unions. We all know that unions were the key element that created good wages in Michigan. Targeting unions indicates they are creating a drive to the bottom.
Duane
Tue, 11/24/2015 - 9:38am
Rpt, It seems we are in a global economy and businesses are competing globally. What does a union do or offer that helps an employer be more competitive?
Jim
Mon, 11/23/2015 - 11:54am
The reason why Michigan has a low percentage of college graduates is that they have all left the state for employment elsewhere. While the authors note that this is a correlation, and not a causation factor, the bulk of the article says otherwise (all we have to do is create more graduates and load them in cities, and magic will happen!). Our concentration needs to be on building on whatever natural economic magnets we have (high tech automation is not a bad place to start) and DO NOT disparage the technical skills that are not only essential to this economy, but are extremely well paying to boot (eg tool and die workers-if you can find them- at mid $90,000 year. And, with the Chinese yuan finally catching up to reality, thus is indeed a future in manufacturing.
sue
Mon, 11/23/2015 - 12:02pm
Seems a lot of "shooting the messenger" here. It's a report on statistics gleaned from Michigan facts.Our younger family members left because they saw no chances to get ahead. The under educated because just muscle was only getting them minimum wage and the well educated because they found no jobs so they took the chance to go elsewhere. From what they tell us, the states they settled in ( Minnesota and Florida) are giving good wages, opportunities and they don't think Michigan will give them the same. A report like this is a tool for all of us. How long and difficult will it be to fix roads and infrastructure that has been neglected and taken for granted. Will we keep politicians in who just run on tax cuts? How can one of the most revolutionary things America ever did Public Education available to all, survive cuts and the demonizing of teachers. Public health cuts, do you eat in restaurants? That's who checks that sanitary conditions are maintained. Among other things. The Flint water scandal. Like it or not, quality of life and opportunities attract and keep people here. Tax revenues shrink as the younger leave, our average age goes up, population growth continues down services still need to be provided. The economists and statisticians are giving us facts and not emotional arguments. When you vote remember these things. If you contact your reps in Lansing, you've got data. BTW our state ranked at the bottom in a study done on transparency in government/elected officials etc.
Mark
Mon, 11/23/2015 - 3:00pm
One thing missing in this BS article is that our public universities are doing VERY WELL Financially, always have and always will. They are a cash cow machine.
Barbara Ongstad
Mon, 11/23/2015 - 4:44pm
The consensus is that everyone must have a college degree. No one wants illegal immigrants. What I am waiting for is the answer to the question "Which college graduates are going to scrub toilets, haul the garbage, wash the dishes, etc.?". There are plenty of jobs which cannot be done by part-time high school students which do not require a degree. Quite frankly I think those who value intelligence should go to college and work in the more challenging fields versus the 17 year old who does not think that learning anything is as important as what is the newest Top 40 song.
R.L.
Mon, 11/23/2015 - 5:59pm
With our governor what do you expect. Cut funding for everything that involves education. Oh I for got we have the Lotto. Get rid of the unions, right to work, at will employment. Shall I go on. Wake up state govt. R.L.
Charles Richards
Mon, 11/23/2015 - 6:51pm
The whole tenor of this article, the assumptions on which it is based, is wrong. It is all prescriptive, top down rather than evolutionary bottom up. The article says, "Rather, he said, Michigan needs to put more of its residents to work, concentrate more people with four-year degrees in its cities and speed up the transition to a knowledge-based service economy — all traits of more prosperous states." So, we should just adopt a policy of "putting more people to work"? How simple. Why didn't that occur to us before? And we should "concentrate more people with four-year degrees in its cities." Just how are we to go about that? Give college educated people tax breaks if they agree to live in urban areas? And how are we to "speed up the transition to a knowledge-based service economy"? Mr. Glazer has previously recommended that we invest more in higher education. Why? Forty percent of our college graduates leave the state. The number of college graduates is not a binding constraint on Michigan's economy. Even if it was, the required graduates would migrate to Michigan. And he has not considered the possibility that there is a limited number of Michigan residents capable of benefitting from a college education. What are they to do? Governor Snyder is wise to emphasize post secondary vocational training for those people. Yes, that violates the liberal assumption that ability is equally distributed, but so be it. The article's title: "Report: Michigan held down by low income, education" is a tautology. Yes, we are poor because we have a low income. The answer is for Michigan's residents to contribute more value to the national and global economy. Michigan's economy is a growing, changing, ever evolving entity that is not waiting on instructions from Professor Grimes and Mr. Glazer. Those two gentlemen are victims of an affliction that many highly intelligent, highly educated people are subject to: the illusion that, beyond certain basic institutions that have evolved through trial and error, they can prescribe policies that will yield superior results. Can they offer examples of past recommendations that, when implemented, have been validated by events?
Mike
Tue, 11/24/2015 - 2:37pm
I am always disappointed in the responses to articles that attempt to position Michigan residents and businesses for success by increasing the level of education. I am not sure if it is primarily envy, denial, ignorance or ? Clearly, the old days are gone, high paying low skill jobs have disappeared. They were once very common in the auto industry but they are not as prevalent as they were by any stretch of the imagination. The article does not say that everyone has to have a degree but it is likely they need a skill, often obtained via secondary education. That can be a bachelors degree, training as an electrician or plumber, what have you. The attitudes often expressed in response to proposals like this continue to fuel the problem. Stop being proud of being ignorant
Lisa
Fri, 11/27/2015 - 9:08pm
I am well educated but ill because of the environmental toxins in my town because it allows the continued burning of garbage. There are a lot more problems to Michigan than the education issue. We are surrounded by the Great Lakes, yet our Governor has not taken an interest in trying to end the toxins that are harming the people of this state from womb to tomb (an early tomb). Many of my friends left my home town and the state for better employment options.