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Bridge Michigan
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Michigan needs more college grads to attract good jobs

Bridge: Michigan lost a higher percentage of jobs in the recession than other states, and Michigan is projected to gain fewer jobs than 48 states in the next decade. What’s going on here?

The state’s goal may be more and better jobs, but these projections say that Michigan is highly likely to experience another decade of fewer jobs and the new jobs that are generated will be predominantly lower-wage jobs.

One might ask, “How can that be in a state that has done so much to lower business costs?” The evidence across the country is, rather than the (places with the) lowest business costs, the places which are creating more and better jobs have two characteristics in common: a high proportion of adults with a four-year degree and a high proportion of their jobs and wages are concentrated in the knowledge-based sectors of the economy. Michigan ranks in the mid-thirties in each. (The only exceptions are the few states with oil- and natural gas-driven economies.)

These projections are predominantly based on Michigan’s current demographics (slow growth and aging faster than the country) and our current industrial structure (concentrated in slow growth and low-pay industries). If the state doesn’t change this we, almost certainly, will continue to grow slower than the country in both jobs and personal income.

In the projections, many of the fastest-growing jobs are in fields that pay very little. That seems like a recipe for disaster.

It certainly is a recipe for being one of the poorer states in the country. For most of the 20th century, Michigan was one of the most prosperous states. As late as 2000 we were still in the top twenty in per-capita income – ranking 18th. No more! We have fallen to 35th and are now 13% below the national average.

Our 20th century success was built on being the place that invented the American mass middle class – largely high-wage factory jobs. Those jobs are gone and not coming back. Largely because of globalization and technology.

The data are clear: the 21st century mass middle class are professionals and managers – largely working in knowledge-based services. And the asset that matters most to those employers is human capital/talent. Michigan is in the mid-thirties in college attainment. If that doesn’t change we are going to continue to struggle in generating new high-wage jobs.

Bridge: If these projections hold, Michigan will continue to have a majority of jobs that do not require a college education. Is that normal for states, or is Michigan falling behind?

Without having the data for the other states it’s hard to provide a good answer to the question. But it is likely that the difference between Michigan and the type of new jobs being generating across the country is not in the number of low education attainment jobs. The demand for more low-skill/low-wage workers seems to be a national. What distinguishes Michigan from the rest of the country is the slow growth in high education attainment/higher wage jobs.

In our last report, (research consultant) Don Grimes and I found that in knowledge-based services between 1990 and 2011 employment grew by 55 percent nationally but only 30 percent in Michigan. And employment earnings (wages and benefits) in those sectors grew 52 percent nationally compared to 32 percent in Michigan. This is almost certainly the reason  Michigan is projected to have slower job growth for the next decade in high education attainment jobs.

Bridge: Looking at these numbers, do you have any advice for young people who will be entering the workforce in the next decade?

Figure out what you enjoy doing/are passionate about. And build a career around that. Occupational projections for more than a few years are hard to get right, particularly when globalization and technology are constantly destroying occupations, as machines do more and more of the work that humans used to, and changing which jobs are done in America.

Get as much education as you can. The data are clear: the more education attainment – particularly a four-year degree or more – the more likely you are to have a job and the more you will earn. The payoff for higher education attainment is large and growing. It is almost certain that trend will continue to grow.

Prepare for a career, not a job. In a world of constant and largely unpredictable change the individuals who do best economically will be those with broad skills which allow them to constantly adjust to a changing labor market; to recognize and take advantage of the opportunities of the day. Having narrow skills for the hot job of today increasingly has shorter and shorter value.

Bridge: Do you see any silver lining in this forecast?

In the short term, no. There is nothing good about being near the bottom in employment growth and having a predominance of what new jobs are being generating being low wage. Over the longer term, maybe yes.

But only if this is a wake-up call that we need to change. These projections are based on an assumption that current reality will hold constant for the next decade. We can change current reality. And if we do we can get better results.

In each of our annual reports on Michigan’s economy we have written: “Michigan has lagged in its support of the assets necessary to develop the knowledge-based economy at the needed scale.

Building that economy is going to take a long time, and it will require fundamental change. But we believe it is the only reliable path to regain high prosperity. The choice we face is, do we do what is required to build the assets needed to compete in the knowledge-based economy or do we accept being a low prosperity state?” That is the path to making these projections wrong.

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