Michigan’s economy is broken. And neither party is offering real solutions.
EDITOR’S NOTE: This is the first of three columns by Glazer on the policy changes he believes the state needs to pursue to nurture a thriving economy.
Over the last decade and a half––no matter who was in control in Lansing and Washington––Michigan has moved from being a high-prosperity to a low-prosperity state. From 2000––the last time the Detroit Three was surging––through 2015 Michigan tumbled from two percent below the national average in per capita income to 11 percent below. More worrisome, the state dropped from one percent below the national average to 16 percent below in wages and benefits per capita.
The Michigan Association of United Ways found that 40 percent of Michigan households do not have sufficient income to pay for the necessities: housing, child care, food, health care and transportation. Its report makes clear that this is an all Michigan problem, in every county, among all races and all ages.
The preeminent challenge of our times is figuring out how to reverse what is being called the Great Decoupling. Where even when the economy is growing––as it has been in Michigan since the end of the Great Recession––only those at the top are benefiting from that growth.
To meet this challenge requires the transformation of state economic policy. It’s time to turn away from the failed ideas both parties have offered Michiganders for far too long about how we can turn the clock back and make the old economy work again. In its place we need new ideas from both parties on how we can position all Michiganders for economic success in an economy being constantly altered by smarter and smarter machines taking over work traditionally done by humans.
It should now be clear that having a growing economy, or a low unemployment rate, or being business friendly––all of which have been the goals of state policymakers now and in the past––does not lead to an economy that benefits all. Michigan policymakers need a new mission statement that drives their actions.
Michigan Future Inc.––the think tank I lead––through its first state policy agenda,offers our ideas on what a 21st-Century state economic strategy can and should look like.
It starts by proposing a new goal of state economic policy: a rising household income for all Michiganders. Michigan should become, once again, a place with a broad middle class, where wages and benefits allow one to pay the bills, save for retirement and the kids’ education and pass on a better opportunity to the next generation.
The key to accomplishing that is to have an economy aligned with the reality that good-paying, 40-year careers of today and tomorrow have changed forever. In the 21st Century:
• Work is increasingly unstable. Smarter and smarter machines are accelerating the creative destruction of jobs, occupations and even industries.
• Work is increasingly contingent. Far more of us are working for ourselves, where we are responsible for our employment, salary and benefits.
• And a large proportion of jobs are not high-skill, and therefore will not be high paid. The high-paid, low-education-attainment jobs that were the backbone of Michigan’s mass 20th-Century middle class are gone forever.
What we desperately need is for both parties to acknowledge this reality. There is no way back to the prosperous Michigan economy of the 20th Century. We must get to work on ideas on how to have a prosperous economy—with a broad middle class—in the context of these new realities.
Yes this is scary. All of us would prefer the old, more stable economy. But that is not a choice we have available to us. Both trying to make the old economy work again and leaving it up to each of us to fend for ourselves in this radical transformation is almost certainly a recipe to make us worse off.
What we need are politicians from across the political spectrum advancing ideas as big and disruptive as those that, in the words of U.S. Sen. Ben Sasse (R-Neb.), “spawned progressivism in American politics that transformed both the Democratic and Republican parties under Teddy Roosevelt and Woodrow Wilson”.
That policy response, by both parties, was essential in helping Americans thrive in the transition from an agrarian to an industrial economy. We need the same kind of bold policy transformation to help us thrive in the transition from an industrial to a knowledge-based economy.
In my next post we will look at Michigan Future’s ideas for how state policy can create a path to good-paying careers for all Michiganders.
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