Skip to main content
Bridge Michigan
Michigan’s nonpartisan, nonprofit news source

First-time donations are being matched!

There's no better time to become a Bridge Club member. Not only does your gift to our nonprofit newsroom help us grow our staff, but gifts from first-time donors will also be matched by the Herbert H. and Grace A. Dow Foundation and the Herrick Foundation.

Pay with VISA Pay with MasterCard Pay with American Express Donate Today

Michigan’s stumbling middle class

James Jacobs hands a guest to his Macomb Community College office his latest economic forecast, a puzzling six-page mix of good news and bad news.

The number of jobs in Macomb, the state’s third-most populous county, are increasing. New home construction is rising, as is industrial expansion. But more residents are also going to food pantries and receiving federal Supplemental Security Income (SSI). Median household income has fallen sharply.

Jacobs, a well-known economist in addition to being a community college president, doesn’t need bar charts and spreadsheets to know that something has happened to Michigan’s middle class. There are now two food banks on campus. The parking lots aren’t as full as they used to be because thousands of students, most with families and full-time jobs, arrive by bus because fewer now own cars.

This suburban campus and the sprawling county it serves are ground zero for Michigan’s middle-class malaise. The stock market is up. Unemployment is down. Gov. Rick Snyder lauds the “Michigan Comeback.” Yet today’s workers are part of the first generation in Michigan history who, taken as a whole, are not better off than their parents.

When adjusted for inflation, Michigan’s median household income is lower today than in 1969, when Neil Armstrong stepped on the moon and Richard Nixon was sworn in as president.

The decline is staggering: the median Michigan household makes do with the equivalent of $15,000 a year less than the median household in 1969, according to a Bridge analysis of U.S. Census data. That’s an annual loss in buying power in one generation greater than the cost of tuition at Michigan State University or a new bass boat.

“The fact that there is a loss by any measure, over such a long period, is unprecedented in our history,” said MSU economist Charles Ballard.

This seismic shift in fortune has far-reaching impact for the state and its residents, from the age of cars and the size of homes Michigan families can afford, to the state’s ability to pay for smooth roads and support top-flight public universities.

Who took our middle class?

When adjusted for 2015 dollars, the median Michigan household in 1969 earned the equivalent of $64,778. Household income fluctuated a lot over four decades, but never reached 1969’s level. In 2013, the most recent year available, the median household income was $49,418.

The median family is making do with the equivalent of $1,280 less income per month. Here’s one way to picture that difference: If today’s median income family had the buying power of their parents, they’d could lead the same lifestyle they lead today and have enough left over to make monthly mortgage payments on a $250,000 cottage Up North.

“There are a lot of people being paid a hell of a lot less money than they (would have) a generation ago,” said Larry Good, co-founder and chairperson of the Ann Arbor-based Corporation for a Skilled Workforce. For some, the change was abrupt and traceable to a single event, such as a layoff from a high-paying auto job. But for most, the change is less noticeable because it occurred over decades.

“I don’t think there’s an understanding of what has happened,” Good said. “It’s happened in a thousand cuts over a generation. People don’t notice because, unless you were laid off from an auto factory, it’s happened one increment at a time. You don’t add it up. It could be your paycheck staying the same and expenses going up. It could be your spouse going to work to pay for college tuition.”

The changes add up, Good said. “How often do you go out to dinner? Do you have an Up North cottage? How old is your car? Short-term necessity trumps long-term planning more and more often.”

In giant swaths of Michigan, household income is lower today than in 46 years ago (only 15 of the state’s 83 counties have median household incomes higher today than 1969, when adjusted for inflation).

In 17 counties, 1969 was the peak year for median household income. They include many of the state’s most populous, including Wayne, Macomb, Ingham, Saginaw and Kalamazoo.

In most other Michigan counties, median household income peaked in 1999, but has since fallen below that of 1969.

Historic income gap

Not everyone has suffered. While the state’s low- and middle-income families have been mired in economic quicksand, Michigan’s top 10 percent of earners have seen their buying power, when adjusted for inflation, rise 37 percent since 1978, according to an upcoming Michigan State University study.

The MSU study uses a different formula than Bridge’s analysis to determine income inflation, but the trends are generally the same.

In 1976, the top 10 percent of households in median income made $105,000 or more in current dollars, when adjusted for inflation. Today those families earn $144,000 or more – a 37-percent increase in buying power.

Over this same period, the income of the median Michigan family has remained flat.

“We’ve returned to the level of inequality that we had 100 years ago,” said MSU’s Ballard, co-author of the report.

That gap is growing in Jacobs’s backyard as well.

“There’s a huge gap growing between the wage rates of certain kinds of individuals,” he said. “If you’re in Macomb County and you’re working in a union plant and you’re a skilled tradesperson, and your wife is a registered nurse, the combined incomes of those people are considerably higher than somebody working on Groesbeck Highway making $11 an hour, and whose wife works part-time at Walmart.”

Falling off a financial cliff

One of the first articles Jacobs recalls writing for a newspaper was in 1970, when Census figures revealed that Macomb County was 17th in the nation in median household income, among more than 3,000 counties. Michigan is sixth among the states.

By 2013, Macomb median income had dropped to 484th in the nation, while Michigan as a whole plummeted from sixth to 30th.

The county’s median household income has been in freefall, dropping $26,880 since 1969. That’s a decline in buying power of $2,240 per month in a generation.

Jacobs can see the impact from his office window at Macomb Community College, where the number of students receiving federal financial aid jumped 80 percent between 2006 and 2013.

“Among our students, the assumption is that students are working full-time and attending school full-time,” Jacobs said. “You string together part-time low-wage jobs, and you continue to try to move upward by going to school.”

Macomb was hit hard by loss of high-paying factory jobs. Jacobs estimates that in 1969, about 60 percent of the manufacturing workforce was unionized in Macomb County; now it’s below 40 percent.
To a lesser extent, the same pattern has occurred across much of the state. Michigan’s growing economy, with unemployment down to 5.5 percent and 91,000 more jobs than a year ago, hasn’t boosted the budgets of Michigan’s middle class, who, as a whole, have less money to spend on homes, cars and college tuition than their parents.

One of the original goals of Macomb Community College was to train workers for those high-paying jobs in the auto industry, Jacobs said. Today, a production operator program at the college has a high placement rate in the auto industry, but the average pay is $14 an hour. “That’s $29,000 a year,” Jacobs said. A family of four with that income qualifies for food stamps.

“I don’t think residents understand the impact of the recession and the economic structure shift,” said Kurt Metzger, director emeritus of Data Driven Detroit and current mayor of Pleasant Ridge in Oakland County. “We realized a little too late that the new economy was built on a base of educational attainment and new skills. Our success, built on high-wage, low-education employment was gone and would not return.”

Older cars, worse roads

The generation-long middle-class malaise has repercussions beyond family budgets.

“One of the ways families have dealt with a lowering of wages, is virtually everyone in the family works,” Jacobs said. “So at the same time we’re looking at declining wages, we’re looking at changes in family life.”

Americans are keeping our cars longer (the average age of passenger cars is now a historic high of 11.4 years), dampening sales for Michigan’s auto companies, and spending less on vacation.

Ballard said he worries that if the income gap continues to grow, “there’s a potential for fraying of the social fabric.

“If you have a long enough period where large groups of people feel like they’re treading water, that’s a volatile situation,” Ballard said. “There are dangers to social cohesion if this great dis-equalization persists long enough.”

If that sounds like the gripes of the working class, consider an op-ed published in the New York Times last week by retired Young & Rubicam marketing conglomerate CEO Peter Georgescu. He wrote that the growing income gap is “creating a caste system from which it’s almost impossible to escape,” and that if not reversed, “the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes.”

At the state level, stagnated wages mean less tax revenue for state services such as road repairs and education unless taxes are increased, creating a “paralysis” in Lansing, Good said.

“We expect good roads and colleges. (But) we can’t afford the infrastructure we’re used to because the income model has changed,” Good said. “We haven’t adjusted to being a low-income state.”

Raising the middle

The solution likely starts in places like Macomb Community College, where more than 24,000 students, most of them already working full-time, low-wage, jobs, enroll in classes each year to try to climb a rung or two on the economic ladder.

Typical of those students is Sevie Harleva, a 36-year-old Troy resident working on an associate’s degree in nursing. She takes classes full-time, while working 30 hours a week as a dialysis technician and, with her husband, caring for three children.

“Sometimes I get depressed studying on a Saturday night when everybody else is out with friends,” Harleva said. “We’ve cut out pretty much everything for a couple years.

“My goal is to send my children to a good college, to sign them up for art classes and swimming if they want, to go for vacation once a year,” Harleva said. “Right now, I am unable to do that.”

Making it easier for Harleva and thousands of others to earn postsecondary degrees and certifications may be key. But figuring out what types of degrees will lift the middle is difficult.

Gov. Snyder is pushing for more skilled trade training. Snyder signed a bill in June extending a program that began in 2010 that encourages partnerships between businesses and community colleges to provide job-specific training.

“If you’re in manufacturing today and you’re on the production floor, in many cases you’re a skilled tradesperson, you’re running robotics equipment,” Snyder told Bloomberg News in April. “If you’re in agriculture today and driving a tractor that drives itself with GPS, you’re a skilled tradesperson.”

Jacobs agrees that there can be better alignment between coursework and jobs. The challenge community colleges and their students face is figuring out what skills will provide good paychecks for years to come.

As an example, Jacobs cites welding. “The biggest demand in manufacturing right now is welding,” he said. “We can offer training for welding. But among the auto manufacturers, the big trend is light-weighting – using more aluminum and composites and plastic. So the question is how many welders are going to be needed in the future, compared to how many people who will be needed who know about composites and chemistry. The auto companies don’t know, and then we don’t know. It’s a very uncertain market now, which leads to people taking risks and making decisions short-term and maybe not making the right decision.

“You don’t get a lifetime job at General Motors anymore,” Jacobs said. “The kinds of insecurities that emerge are enormous.”

Jacobs said he thinks Michigan is reaching a fork in the road, and which path it takes will have implications for the next generation.

“There’s the road taken by a lot of the southern states, where you basically shrink state services,” Jacobs said. “You privatize as much as possible, you keep taxes low.

“There’s another road that can be taken,” Jacobs said. “If people have lower incomes and they need to move around (for jobs), why wouldn’t there be more emphasis on a mass transportation system that made sense? If people need an education, why wouldn’t you have a much more seamless transition from high school to college? Why wouldn’t we make the decision that we need far more commonality among curriculum (to assure knowledge and credits transfer)?

“The facts are very clear, but the question of why those facts exist, and second, what you do about it, is very confusing,” Jacobs said. “There isn’t one easy answer.”

We're not just a news organization, we're also your neighbors

We’ve been there for you with daily Michigan COVID-19 news; reporting on the emergence of the virus, daily numbers with our tracker and dashboard, exploding unemployment, and we finally were able to report on mass vaccine distribution. We report because the news impacts all of us. Will you please donate and help us reach our goal of 15,000 members in 2021?

Pay with VISA Pay with MasterCard Pay with American Express Donate Now