Opinion | Why Michigan’s economic ‘good times’ aren’t that good, in 11 slides

Lou Glazer

President Trump boasts that this is the strongest American economy ever. Many Michigan political and business leaders are celebrating the strength of the state’s economy. One problem: this is the first time ever that Michigan has been a low-prosperity state with a strong domestic auto industry.

From 1929, when the federal government started calculating state economic well-being, through 2000 (the last time Michigan had a strong domestic auto industry), every year Michigan was a top 20 state in per capita income. No more!

As the slides that accompany this column depict, Michigan is 31st in per-capita income; an even lower 33rd in employment earnings (wages and employer paid benefits) per capita; 38th in the proportion of those 16 and older who work; and 31st in the proportion of those 25 and older with a four-year degree.

The gap between Michigan and top ten states is substantial on each measure: Nearly $11,000 in per capita income; nearly $7,800 in wages and employer paid benefits; 6.0 percentage  points (483,000 Michigan residents) in the employment-to-population ratio; and 6.9 percentage points (470,000 adults) in college attainment.

Yes, you read that right. If the same proportion of Michiganders worked as the 10th-ranked state, there would be nearly a half million more Michiganders working today. So not enough Michiganders working is one of the main reasons that Michigan is a low-prosperity state today. Another major reason is too many of us work in low-wage jobs.

Of the 4.21 million payroll jobs (those working for an employer) in Michigan, 2.34 million are in occupations with median wages below $37,690 (the national median wage). By contrast, only 950,000 Michigan jobs are in occupations with a median wage of $61,110 (national 75th percentile wage) or higher.

Of the jobs in occupations with median wages of $61,110 or higher, 77 percent are in occupations that require a four-year degree or more. Another 16 percent are jobs in occupations where work experience - doing well in a previous job - earns one a promotion.

So along side not enough of us working and too many of us in low-paid jobs, the third major reason Michigan is a low-prosperity state in a strong economy is low four-year degree attainment. The single best predictor of state per-capita income is the proportion of adults with a four-year degree or more. The only exceptions are states with lots of oil and natural gas like Alaska and Wyoming.

Given how often we are told by political and business leadership that one can do just as well with an Associate’s degree or occupational certificate as a four-year degree, it is worth pointing out that the data do not support that claim. There are 735,000 Michigan jobs in the highest-pay category in occupations that require a four-year degree. That compares with just 58,000 Michigan jobs in the highest-pay category in occupations that require something more than a high school degree, but not a four-year degree.

Maybe the most concerning measure of the economic well-being of Michigan households in a strong economy is the Michigan Association of United Ways report that in 2017, 43 percent of Michigan households were unable to pay for housing, child care, food, transportation, health care, a cell phone and taxes. That’s up 6 percent from 2010 when the Michigan economy was just starting to grow after the Great Recession.

How can that be? The simple answer is that - even in a strong economy - 61 percent of all jobs in Michigan paying less than $20 per hour. More exact, for lower-paid workers, wages and benefits are growing slower than the cost of paying for basic necessities.

In 2017 1.66 million Michigan households were ALICE (Asset Limited, Income Constrained, Employed) households compared to 1.57 million in 2010. There are no counties in the state with less than 30 percent ALICE households. Not only is ALICE geographically diverse, it also is prevalent across age, race and ethnicity.

What the ALICE data make clear is that this is a structural problem. We are not going to grow our way out of far too many Michigan household unable to pay for the basics. And a low unemployment rate will not drive wages, benefits and hours worked up enough to substantially dent the proportion of ALICE households.

To substantially reduce the ALICE rate we need a new economic strategy in Michigan. One that starts with making raising household income for all the state’s economic mission. Income - not employment or growth - needs to become the focus of economic policymaking.

The first step though is to end the self-congratulations among far too many of Michigan’s political and business elites who think just because the unemployment rate is low and they and corporate Michigan are doing well that the Michigan economy is a roaring success.

It isn’t.

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Comments

Kevin Grand
Tue, 04/09/2019 - 7:43am

If your end goal is to raise income, when you advocate non-market based ideas to raise them, you'll only end up making the problem even worse.

A quick run down to the nearest fast food joint with self-serve kiosks and robots flipping burgers should make why that is very self-evident.

Right now, you cannot automate everything as demonstrated by the the number of self driving cars involved in crashes.

With a large number of employees retiring and leaving the workforce, employers are going to need to offer better compensation in order to attract talent. They are wrongly balking at that idea. History however has shown this to be a viable solution as demonstrated by Henry Ford's "$5 dollar day" and his opening up of Ford Trade Schools to train his employees when he dealt with high turnover and "unskilled" applicants. He didn't cajole the government into giving more money to higher education like the business leadership of today is overly prone to do.

In the meantime, the focus here should be on allowing Michigan Workers to keep more of what they have earned.

People tend to forget that America not only survived, but grew and prospered for nearly 150-years without a direct income tax. As it did roughly about the same time here in Michigan.

As demonstrated by the deluge of articles here on The Bridge incessantly advocating for the government to "step up" and pay for someone's pet program, the end results of this philosophy should speak for themselves.

Yes, politicians will have less money to spend buying other people's votes, but if we're expected to make tough decisions relating to our own household budgets, so should they.

More money an individual's pockets will do far more for them than the latest government "feel-good" scheme.

George
Tue, 04/09/2019 - 10:34am

If you think corporations are going to act like Ford did in the past, you've missed the last 20 years of history. No way. Corporations do not give a damn about workers and only care about money, money and money. And, they make more and more money with less wages to pay. (And, republicans who change tax laws so Amazon, with $11 billion in profits for 2018, paid NO federal income taxes.) Also, read Susan's reply further down about "non-poaching agreements". Wake up.

Kevin Grand
Tue, 04/09/2019 - 6:11pm

Contrary to what you may have heard, companies not only need employees to get things done, but will be needing an ever growing number in the foreseeable future.

If they want to play chicken with their competitors (and yes, I did read Susan's comment below), someone WILL blink and pull that trigger to begin the process of poaching employees from the competition. That ALSO happened before and it WILL happen again.

I'd also recommend finding out WHY the Amazon example you've cited above actually happened. Try this for starters:

https://www.forbes.com/sites/stephaniedenning/2019/02/22/why-amazon-pays...

Matt
Tue, 04/09/2019 - 8:04am

And of course Mr. Glazer never even considers what do the wages you receive in each state actually buy you! For some reason this doesn't fit into the ongoing narrative that our government is too small and the only solution, we're to infer, is more government involvement and taxes and in our lives.
Here is where we actually sit in this even more important question. Mr. Glazer might as well be comparing Drachmas, Pounds and Pesos! And his supposed paradises aren't so great!
https://www.missourieconomy.org/indicators/cost_of_living/

Charles
Tue, 04/09/2019 - 10:28am

The biggest problem in the State is that we are not preparing students for the jobs of the future. Every high school graduate should have an idea of what they are good at, what interests them and what kind of a job would pay them a good income. And it goes without saying that colleges and universities need to do the same. Of course we need students who are motivated as well. Unless we begin to fill more of the high paying jobs that are not being filled at this time they will leave the State. We also need more support for startup businesses. All of the net new jobs in this country have come from startup businesses since 1977. The trend towards socialism which seems to be the Bridge idea will only lead to a lowered standard of living for everyone.

Matt
Tue, 04/09/2019 - 12:18pm

Charles the point is that Mr Glazers numbers give a distorted income picture. As far as preparing kids for jobs of the future, who really can saywhat these jobs are or who should be preparing who for what? Let alone who is failing in this regard. Mr. Glazer's evidence is how many BAs we have without any regard to where this preparation leads, what these jobs are and the training they require. Since you brought it up, what is particularly of interest is how many kids go to school for years and years to prepare themselves for jobs that don't and never will pay squat.

David Waymire
Tue, 04/09/2019 - 4:07pm

State price deflators are largely an indicator of housing costs. If you have lived in your house in Michigan for 20 years, it's worth about the same as it was 20 years ago. If you live in your house in California for 20 years, it's worth a lot more. It's how wealth is made...or for the last 20 years in Michigan, largely not made. The price of most food, cars, books, travel, are pretty much the same everywhere. When I buy a book on Amazon, the side doesn't say "hey, you live in Michigan, we will give you a discount."

Matt
Tue, 04/09/2019 - 4:57pm

Daivd look at the attachment, you'll find it interesting. It breaks the cost discripencies out into 6 different areas. And I've spent a good deal of time on both coasts everything is more expensive there in the west and NE. But even here this is a flawed distintion. If your PR firm and employees had to pay CA or NY prices for their homes and office would you be surprised if your billing would have to be higher to cover higher salaries and rent than if the firm were located in a lower cost of living or real estate price location? The point is that high RE costs don't stay in one discreet sector, especially something as general as shelter, they spread out making everything more expensive accross the board.

George
Tue, 04/09/2019 - 10:30am

Unfortunately, you don't correlate income with buying power. CA is very, very expensive but is, according to the Department of Commerce, the fifth largest economy in the world! (It passed the UK last year....this is a STATE.) People there get paid very, very well and you have to take that against the cost. According to your reference, the cheapest state is Ms. It is also dead last in income and poverty.

Matt
Tue, 04/09/2019 - 1:03pm

George, I'd beg to differ, you have to consider income with actual buying power in different areas. The main point in this article is comparing incomes in one state to the other and that therefore Michigan sucks! There is s reason a plumber in CA or New York City will make make more per hour than a plumber in MS or MI while at the same time the MS plumber has more and nicerstuff even while having a lower per hour wage. The owner of the plumbing business knows it when he offers his comp packages. This is the exact reason tranplant auto companies aren't moving to CA, MA or CT! Then you switch to overall size of the economy , I'd argue a totally different conversation. By the way, CA leads the nation for homelessness and people in poverty and is largely areas of extremely concentrated wealth surronded by alot of very poor people. Not a paradise.

Jeffrey Kless
Tue, 04/09/2019 - 2:04pm

Matt you are wrong as I worked in NYC and San Francisco and managed to live a good life , not on the Upper East Side although my wife was employed by a Park Avenue law firm,
and save money

Matt
Tue, 04/09/2019 - 5:01pm

That explains a lot. I didn't put the attached table together. But if you want to argue that SF or NY are easy inexpensive places to live go ahead!

Jeffrey Kless
Tue, 04/09/2019 - 1:36pm

Thanks George but you forgot to mention the low quality education, health care , 500 closed bridges...... I returned to this state after 34 years working in Anchorage to South Beach and NYC to San Francisco . I quickly realized it had turned into Mississippigan

Mark
Wed, 04/10/2019 - 5:02am

According to Kiplinger Finance published in March 2019, our area is Rated #1 in the Affordability Index.

Trifle
Tue, 04/09/2019 - 8:30am

Mr. Glazer, well done. Though you didn't intend it as a commentary on Trump's MAGA agenda, nonetheless, this shows that Trump has failed to live up to his promises to help people prosper. Unfortunately, Trump supporters won't see it: the don't read Bridge, and this kind of information isn't reported by Fox.

marco
Tue, 04/09/2019 - 6:48pm

Oh, for the Obama days, when the living was easy...!

Kristi
Tue, 04/09/2019 - 8:40am

Does the per capita income in each state take into account the cost of living?

Dave H
Tue, 04/09/2019 - 8:48am

There is a discrepancy between the B.A. or higher number. Is it 31 or 38th ranked nationally?

John B
Tue, 04/09/2019 - 8:50am

Michigan has digressed into a welfare state. Detroit & Flint, as are other east side cities, are dead. There will be no economic revitalization in Michigan, just a slow decline. Taxes will be the only real growth.

Gary
Tue, 04/09/2019 - 9:09am

Could it be that Michigan is a Democrat run state and does not have a clue on managing our resources.

Bernadette
Tue, 04/09/2019 - 10:05am

Gary,

You must have a very short memory. MI has been a "republican run" state for the last 8 years, which has taken us down this road today. Instead of pinning this on one party or the other maybe we need to begin acting like we are all Michiganders and help each other.

We need both conservative and liberal views to make the changes that are needed. Republicans are only interested in being obstructionists and barriers to Michigan moving forward. My experience is republicans think they have "THE" answer, and refuse to look at the reality of the situation. Republicans have their heads in the sand when they point out Detroit and Flint are dying. I wonder why that is? Could it be because of the lack of understanding that we are all Michiganders and as one suffers we all suffer?

Matt
Wed, 04/10/2019 - 1:24pm

Bernadette and Jim, do you folks seriously believe that anything will change the make up of an ecomony for the good in 8 years? It's much easier, i'd guess to screw one up fairly quickly than to re-build from a dislocation as we had in MI from 1990 through 2010.

Bernadette
Thu, 04/11/2019 - 9:20am

You never make sense to me Matt.

Jim
Sat, 05/25/2019 - 10:15pm

Flint and Detroit are dying because they have been run by Democrats!! Plain and simple!!

Jim
Tue, 04/09/2019 - 10:07am

You really posted that after 8 years of total republican control of the state legislature and governorship?
It appears that Right-To-Work legislation has turned Michigan into the Right-To-Work-For-Less state, as predicted.

Marty
Tue, 04/09/2019 - 11:59am

Gary,
Please remember who had ran the state the last 8 years, and still control our legislative body.

Ren Farley
Tue, 04/09/2019 - 9:13am

It is very appropriate to bring attention to the important finding that Michigan has fallen
well below the national average with regard to many measures of earnings, income and
educational attainment. Will our leaders discuss possible strategies to alter this very
discouraging trend and then implement some of them? Detroit seems to be making
progress in becoming a center for the new technologies linked to mobility. But can
a prosperous metropolitan Detroit save the state?

Bernadette
Tue, 04/09/2019 - 10:13am

Ren,

The only thing that is going to save this state is "collaboration and dialogue" between both parties. Wayne, Oakland and Macomb Counties have not worked together for decades. It has always been Macomb and Oakland on top, pushing Detroit down. This is not even 20th century behavior but 19th century behavior. It has always been about competition, instead of recognizing the importance of cooperation. I am sick and tired of the "Republican Way", that has worked to keep others down. We need both the republicans and democrats to bring the best they have to the table instead of working against each other.

Susan
Tue, 04/09/2019 - 9:19am

Right. Companies in my area have a "non-poaching agreement" where they won't hire from the other companies for fear of increasing wages. I'm sure this is common. I make the same as I did 5 years ago. All the money goes to the top 1 or 2 tiers.

Andy
Tue, 04/09/2019 - 9:29am

The impact of Jennifer lose your grandkids cleaning out the state with high taxes? The same kind Gretchen whittle away the population is proposing?

Robert Kleine
Tue, 04/09/2019 - 10:02am

Michigan and Indiana have the lowest taxes in the Great Lakes region and the lowest per capita income. Minnesota has much higher taxes and their per capita income is almost 20% higher than Michigan. We have been cutting taxes for over two decades and what do we have to show for it- poor roads, struggling cities, a declining education system, high college tuition (6th highest in nation), and an economy that works mainly for the wealthy. Lower taxes will lead to more of the same or worse.

Matt
Tue, 04/09/2019 - 6:35pm

Do you have any examples of poor states taxing themselves into wealthy states. Every high tax state I know of was in fact rich first.

Allan Blackburn
Wed, 04/10/2019 - 7:31am

Ask Kansas how near bankrupting itself by its low taxes helped to bring in corporate monies and saved the state. Oh wait! That didn't happen. See most companies want their employees to be happy and content. Makes for better workers. The way to achieve that is by investing in the public education systems so the employees have good schools to send their kids to. They also want decent roads to drive on, a good infrastructure, decent parks and recreational opportunities, etc. Ask Flint Michigan how many Fortune 500 companies have been rushing in to build their companies after the water scandal. We have turned Michigan in to a third world country where most struggle and the rich are oblivious to the struggles of the masses. It's easy to point fingers and claim people are lazy and everyone is on welfare. Not true. The unemployment rate is really low in the state and in the area where I live many people work two or more jobs just to survive. They keep the hours low enough so they don't have to offer any benefits at all, wages are low so many still qualify for public assistance of some sort, and we have mostly a service based economy. We are not going to go back to the U of M days of the Big 10, being the auto manufacturing hub of the entire country and having one of the best economies in the country by offering only a service based economy. And all of you who think that keeping more in your own little paychecks will pull us out of this mess you are sadly mistaken. Self centeredness will not shake the economic downturn of our state. We have acted just like we did with not investing in our pension system so we have a tremendous amount of underfunded pensions in our state. We have done the same with our infrastructure so that our road situation now needs something so drastic that we cannot even agree on how to proceed and so we sit around and argue instead of coming up with solutions. Our problems have turned in to mountains which look insurmountable. We do have to invest in our state if we wish to make ourselves attractive to corporations to move here. If we choose not to then we deserve the status that is shown to us in the table of the article.

Bernadette
Wed, 04/10/2019 - 11:47am

Well said, Allan

Bernadette
Wed, 04/10/2019 - 11:47am

Well said, Allan

Matt
Wed, 04/10/2019 - 1:13pm

Allan, You're not really answering the question, show me your poor state that became a wealthy state by jumping up its taxes? To address your Kan. picture, no one is claiming that huge accross the board tax cuts are the answer either, but Conn. has tried its hand at steadily jacking up its rate with apparently very bad results.

middle of the mit
Thu, 04/11/2019 - 12:23am

Could you show me an example of a poor state lowering taxes to make their state a high income state?

Bernadette
Thu, 04/11/2019 - 9:23am

Matt,

You are like the Wizard of Oz, and are revealing yourself every time you post.

David Waymire
Thu, 04/11/2019 - 6:21pm

Let's look at Massachusetts, Michigan and Minnesota, 1980 (when the handwriting was on the wall for good paying mfg. jobs, and most recent data from the Tax Foundation:
In 1980, they all had close per capita income: Mass at $29,284, Michigan at $28,313, Minn at 27843. Mass state and local tax rate was 11.4; Mi was 10.0, Minn was 10.03. Fast forward to 2012: Mass per cap income is $57179. Michigan is $38,636. Minnesota is $47,865. Tax rates: Mass is 10.3; Michigan is 9.4, Minn is 10.8. (2012 is most recent data Tax Foundation has on this chart.) So the state with the lowest taxes also has the lowest per cap income. In other words, our tax cuts didn't help our economy (but that's why our roads, cities and schools suck). If we had more recent info, we would see Michigan has cut taxes even more, and fallen further behind Mass and Minn...Minn which increased taxes during this decade on the wealthy and businesses, has seen per cap income continue to outpace on a dollar value Michigan by major figures. So, bottom line: Cutting investment in education and infrastructure in a knowledge-based economy doesn't lead to a better outcome.

Anna
Tue, 04/09/2019 - 10:19am

While I understand completely why parents, especially parents of pre-school children, are both economically and emotionally stressed, why does the United Way (and the writer?) expect that even retirees should have enough income to pay for full-time child care in addition to their rent, food, transportation, medical care, cell phone and taxes? Retirees often have a low, fixed income and are only occasionally responsible for paying for child care.

Yet parents, especially single parents, cannot earn enough except in very well-paid jobs to pay for child care without significant subsidies. During the K-12 years, child care expenses drop significantly, to be replaced by college or professional training costs once your children graduate from HS. The wise parents save at least some of what was once spent on child care, to help their adult kids fund the rest of their education. But not enough Michigan parents seem to be wise in that way. Why is that?

If we want Michiganders to earn higher incomes, we need to start by dramatically expanding need-based child care subsidies, access to birth control and well-child care including immunizations, and reinvigorate career and technical education in all our K-12 schools. I'm not talking about drafting and wood shop here, though basic familiarity with those areas should be every bit as common to a middle-school graduates as recognizing the Mona Lisa or the ability to multiply two 4-digit numbers. I mean understanding the basics of how economics and government trade policies affect wages and employment levels, and how much it costs to live in relation to how much certain careers / jobs/ industries pay. I'm talking about understanding that "Graphic Arts / Web Design" isn't a salaried job anymore, if it ever was. It's an endless series of free-lance gigs that are relatively low-paid because now almost everyone under 30 knows the basics of how to do it. I'm talking about knowing the odds of getting an athletic scholarship to college, and once on a college team, the even smaller chances of turning pro.

Bones
Wed, 04/10/2019 - 9:46am

We don't teach economics or civics anymore because it would become obvious that our democracy is a joke and capitalism is a scam

Ken Tokarz
Tue, 04/09/2019 - 10:35am

Did you ever consider an article about how an overhaul of our state constitution in regards to city government could help to reduce taxes. In the city of Adrian our leaders decided to provide mutual aid to fire departments in the township and added 6 full time positions to the department when we have a pension deficit of $22 million dollars ( 65% of budget). I do not believe that we should be subsidizing people who chose not to live in the city, if they want fire services annex your land to the city and pay city taxes. Our leaders additionally sold more water than the water department could produce and now we have a microcystin bacteria problem because the wells cannot produce enough water and we have to draw water from the lake. Again our leaders created this problem by providing /selling more water than we could produce and offering to provide water to a new hospital that relocated from the city to the township. One final note on the hospital, we will now need to plow the roads to the hospital in the winter and if we ever pass our city income tax proposal we more or less lost all of that hospital employee salary income .

BD
Tue, 04/09/2019 - 10:35am

Love the article, but it does not fully address the reasons behinds the whys. In Detroit, numbers of people migrated out of Detroit during the economic downturn. Who could leave, left. Many of those who stayed wanted to stay and many others did not have the income and/or skills and education to move. The highest priority should be education k-12, affordable college, trade education and re-training for those looking to work but don’t have the appropriate training (including computer, email, smartphones). I believe I read that in Detroit approximately 48 percent of the adults cannot read. That is not acceptable. The problem is that some business models support iliteracy/poverty. Why? Poor people are typically consumers (money) and are more apt to work as service providers. In my opinion, education and training is the answer.

Laurence Rosen
Tue, 04/09/2019 - 11:03am

Thank you Lou Glazer for pointing out what many Michiganders don't see or refuse to believe. In addition, many Michigan college and university graduates leave the state to find higher paying managerial, technical, and professional employment and a higher quality of life elsewhere. Many of them move to the high income states listed above, most of which are also high tax states that have both the capacity and willingness to fund education, infrastructure, environment, culture, etc. that make for a high quality of life. For the past 40 years Michigan has tried to grow by lowering taxes and incentivizing manufacturers. It is painfully evident that this has not worked very well. It is no wonder that many of Michigan's best and brightest seek opportunities elsewhere.

Ron Tracy
Tue, 04/09/2019 - 11:23am

The single most important driver for statewide Per Capita Income is Cost of Living. Michigan has a fairly ow Cost of Living, hence a lower Per Capita Income.

Enid
Tue, 04/09/2019 - 11:43am

Wow!! What an informative article!! Thank you for sharing this information. It prompts so many questions:

1) Are there any areas or counties in Michigan where the stats are more positive? Or is the data pretty consistent across the state?

2) Is the info shared analyzed or disaggregated by race or gender in any way? My guess is....yes.

3) What are your thoughts about why there are not enough people in Michigan actually working? Is it because they lack the education to fill jobs? Transportation barriers? Maybe wages don't make child care affordable.

Thanks again for sharing this information.

Aaron
Tue, 04/09/2019 - 12:13pm

This report is Bullshit why are people moving out of Connecticut do high taxes, Thank To President Trump instead paying additional taxes i get a refund less government is better

Jim
Tue, 04/09/2019 - 12:48pm

And there you have it... an interesting and intellectual response from a supporter of President Trump's policies.
Thank you Aaron, for your informed rebuttal.

Elisa
Tue, 04/09/2019 - 1:46pm

The IRS paid out $6 billion less in refunds this year under Trump's tax plan. In other word, Trump kept $6 billion dollars that under Obama was returned to citizens.

woody
Wed, 04/10/2019 - 8:56am

I'm sure you realize the reason IS withholding are less on a persons pay check. Natural the return will be less.

LA
Tue, 04/09/2019 - 2:53pm

How is the weather in Russia today, "Aaron"?

David Waymire
Tue, 04/09/2019 - 6:09pm

Huh...well, the data shows Connecticut has the third highest share of millionaires in it population, 7.75 percent. That's about 25 percent higher than Florida, at 5.23 percent (31st in the nation.) Michigan has a higher share of millionaires in its population than Florida (5.35 percent). Highest share in the Midwest? Minnesota, at 6.57 percent, 12th in the nation. Seems that millionaires also choose to live in states that use taxes to invest in people and infrastructure. And the states with the fewest millionaires as a share of population? Low tax Mississippi, W. Va., Ark., Kentucky.

Matt
Wed, 04/10/2019 - 1:03pm

Dave, I lived in CT, If you pull out the counties clustering around NY city , it is a surprisingly poor state. Their economy is in the absolute crapper. Being at the top in taxes didn't help them. MN is nowhere near comparable to MI. What percent of their millionaires are big farmers/ Agrabusinesses that have been there 100+ years? MN was wealthy before they rose to position as a high tax state and was in a great position 2000 -2010 due to high crop prices, huge medical sector and Dakota fracking vs MI @ 30%+? manufacturing and automotive. None of these states became wealthy over night and neither will Mi, it is a generational change.

David Waymire
Thu, 04/11/2019 - 6:28pm

No, Minnesota's wealth isn't from farming. We have farmers too. The state's wealth comes from its winning and keeping headquarters companies that employ college graduates. They are a top 15 state in college grads. We are a bottom 15 states. When Amazon passed on us, it was saying "we like Michigan for its warehouses...it has plenty of folks capable of working for $15 an hour. But when it comes to our headquarters, those $100,000 a year jobs, you guys can't provide us with the raw material we want." And guess what...generational change starts with one year's worth of work. In 1980, Minnesota's per cap income was less than Michigan ($27,843 vs. $28,313.) We started cutting taxes; they sustained and even increased taxes to invest in education and infrastructure. A generation later, Minn per cap income is $50,541...$8,000 more than Michigan's $42,427. Policy matters. We chased factories. They chased education. They won. Under Snyder, we continued cutting business taxes, chasing factories, and cutting support for higher ed, eschewing education. We are falling further and further behind the educated states. That's what this entire post is about. Education drives income. End of story.

Elisa
Tue, 04/09/2019 - 1:47pm

I am astounded that you managed to write this entire op-ed without once mentioning right-to-work and the gutting of unions in Michigan. Unions -- groups of employees working together to demand better conditions -- is what made Michigan an economically prosperous state with high employee incomes. If we want employees to have increased incomes, we need to encourage a robust union culture again.

Matt
Tue, 04/09/2019 - 6:28pm

Another logical falacy Mr. Glazer suffers from is that he implies that quantity BAs leads states to have higher income. The very same evidence could just as easily prove that wealthier people in these states are more likey to send their kids to college as are poor parents in other states. Which is more likely? One could also argue that children of wealthy parents would stand a better chance of also being above average income all things being equal. Maybe the best action Michigan could take then would be to encourage it's wealthier residents to have more kids?

Lou Glazer
Wed, 04/10/2019 - 6:50am

Let's deal with the Michiganders are doing fine when you adjust for cost of living. It's nonsense. Here is the data for the two income related measures in the slides. We are 31st in per capita income, 30th in per capita income adjusted for cost of living and 32nd in per capita income adjusted for cost of living without housing. In terms of employment earnings we are 33rd without adjusting, 30th adjusting for cost of living and 33rd adjusting for cost of living but not including housing. All substantially below where the state was in 2000 and substantially below the top ten today. End of story!

Now the reason why you should not adjust for cost of living. People are not dopes. People pay higher prices for everything because they are getting something for their money. It is why some people buy a Lexus and others a Kia. People choose the same house in a good school district than in a lousy school district even though both the housing price and taxes are higher. (My guess is many of those wanting the data to be cost of living adjusted are not living in the lowers cost communities in Michigan and clearly are not dopes.) Young professionals are concentrated in Manhattan, New York City and not in Manhattan, Kansas not because they are dopes and don't know NYC is far more expensive than Kansas but because they value what they are getting for their money.

Matt
Wed, 04/10/2019 - 9:04pm

Just saying this after the fact shouldn't convince anyone, and your slides never address cost of living even once, please show us your supporting evidence. Adjusting for cost of living isn't going to take MI to the top of the pile , but when comparing the standard of living the average income provides here vs. many others, moves us significantly up the scale. Low cost of living , again isn't just housing, and it filters through our entire economy. West Michigan is known as being good economy with a generally lower wage level and it has nothing to do with lacking BAs! Businesses here are well aware of our low cost of living and pay accordingly. They also know they don't have to worry about their employees moving en mass to CA to get that bigger pay check. And the fact that some millennial thinks it's cool to live in a $3000 month 250 sf studio apartment doesn't change the obvious to most people ,value discrepancy and explains why they leave as soon as they have a family spite of leaving behind the skiing or surfing. No one says MI shouldn't or couldn't do better, but it isn't the dumpster fire you portray and there are way too many people with families moving here who would disagree with you.

SherrieVH
Wed, 04/10/2019 - 9:25am

I am in no way trying to trivialize the points in this essay, but isnt a big reason why MI has fewer people working because our population is old? (Which presents its own problems, but that’s not what I’m discussing here)

Mary A Kovari
Wed, 04/10/2019 - 10:41am

Great column - the ideas presented are ones that I support. I am sure there are many economic models that can depict how raising income versus spuring growth can happen but I wonder if basics skills in literacy are a must for those children living in poverty? Everyone wants to act in their own self interest. We need government support for people who are trapped in the cycle of poverty to act. But literacy skills and the laser like focus on the development of these skills is essential if we hope to raise income AND spur economic growth. Because everyone deserves the opportunity to make reasonable decisions based on information they can access. Without basic literacy skills this is difficult to do.

Mary A Kovari
Wed, 04/10/2019 - 10:41am

Great column - the ideas presented are ones that I support. I am sure there are many economic models that can depict how raising income versus spuring growth can happen but I wonder if basics skills in literacy are a must for those children living in poverty? Everyone wants to act in their own self interest. We need government support for people who are trapped in the cycle of poverty to act. But literacy skills and the laser like focus on the development of these skills is essential if we hope to raise income AND spur economic growth. Because everyone deserves the opportunity to make reasonable decisions based on information they can access. Without basic literacy skills this is difficult to do.

Mary A Kovari
Wed, 04/10/2019 - 10:41am

Great column - the ideas presented are ones that I support. I am sure there are many economic models that can depict how raising income versus spuring growth can happen but I wonder if basics skills in literacy are a must for those children living in poverty? Everyone wants to act in their own self interest. We need government support for people who are trapped in the cycle of poverty to act. But literacy skills and the laser like focus on the development of these skills is essential if we hope to raise income AND spur economic growth. Because everyone deserves the opportunity to make reasonable decisions based on information they can access. Without basic literacy skills this is difficult to do.

Michigan Observer
Wed, 04/10/2019 - 10:55pm

Mr. Glazer makes a fundamental mistake when he says, "The single best predictor of state per-capita income is the proportion of adults with a four-year degree or more. " One of the most difficult problems in social research is that of "confounds." When one variable simultaneously affects two other variables, it is easy to conclude that there is a relationship between the two variables. In this case, the confounding variable is intelligence, talent. When someone possesses superior intelligence, they are likely to do well economically. They are also likely to earn a BA or advanced degree.

He says<"So not enough Michiganders working is one of the main reasons that Michigan is a low-prosperity state today. Another major reason is too many of us work in low-wage jobs." The first results from an inadequate work ethic, and the second results from our inability to successfully compete for better paying jobs. It's difficult to visualize how government policy can remedy either one.

A mistake that Mr. Glazer does not explicitly make, but that many of the commentators do, is to assume that high taxes can produce high incomes. It is true that many high income states have high taxes, but it is not the case that high taxes generate high incomes. Rather, it is the case that high income people are sufficiently well-off that they wish to add higher quality public goods and services to their portfolio of assets. Such was the case with the Scandinavian countries.

He notes that, " One problem: this is the first time ever that Michigan has been a low-prosperity state with a strong domestic auto industry." He doesn't consider the possibility that our previous prosperity was due to our having a monopoly on making cars. That enabled us to live well on monopoly profits with a relatively unskilled work force. That ended with the arrival of the Japanese transplants. It's true that we have a strong domestic auto industry, but we have a much smaller share of it. And it's not readily apparent what government policy could have avoided the decline in our standard of living.

He certainly fails to detail just what the " new economic strategy in Michigan." would be. The "One that starts with making raising household income for all the state’s economic mission. Income - not employment or growth - needs to become the focus of economic policymaking." Just how would we set about doing that?

David Waymire
Thu, 04/11/2019 - 6:36pm

The first results from an inadequate work ethic, and the second results from our inability to successfully compete for better paying jobs. It's difficult to visualize how government policy can remedy either one.

Hmmm....so somehow the people of Michigan are different than, say, Minnesota, and have a low work ethic? You really feel that away about your fellow Michiganders? And you don't understand that investing in higher education (we have cut support for higher education from $1.9 billion to $1.6 billion since 2000, driving up tuition and scaring off less affluent families from sending children to college) is the best tool to create more college grads and be able to compete for good paying jobs? You think public policy has no influence on what a state looks like? Since 1980, our public policy has been mostly to cut taxes, and cut support for infrastructure, education and cities. That has made it harder to a) educate our own people and b) attract educated people to our state. Yes, policy matters. And it starts by investing in roads, cities and education -- not more tax cuts that make it impossible to invest in any of those.

Salle
Fri, 04/12/2019 - 11:07am

I want to point out to Mr. Glazer, not as criticism but as a prompt to include more information, that many people who don't want work that is learned in college, or who don't do well in college, are not wanting an income in the highest category. Most people I know want to earn enough to pay for their own needs and save for retirement and health care, which would be an income in the middle category. It shouldn't be that everyone has to go to a 4-year college to have this sort of income. Vocational training and other non-degree job preparation should be sufficient for a decent income. Maybe it could offer some jobs in the highest category too, but that isn't necessary to please many people.
I'd like us all, either individually or together, to make an economy where everyone can earn a living wage. It seems now that we have an economy that doesn't welcome people who want to participate, to work, but instead has set up many requirements and barriers. It also seems to require that getting work to support a family has to be the main focus of one's life (not the family, not other people's well-being, not loving one's neighbor, etc.). I still think that the purpose of making an economy is that it be for the good of people, not the other way around, and that if we are a truly human community we will always be trying to make that possible for everyone in our community

Chris
Tue, 04/16/2019 - 10:32pm

This is a powerful analysis, but what this doesn't account for is cost of living adjustment.

For instance, in my field (law) a first year lawyer at a big-law firm in NYC can start their legal career earning almost $190k/year, but that's equal to earning $86k/year in Detroit. A first year lawyer at certain Detroit law firms start their legal career earning $160k/year (which is like earning $350k/year in NYC as a first year lawyer). Now it's not as simple as just this numbers comparison, but the comparison the author is promoting isn't exactly an apples to apples comparison.

Michigan Observer
Tue, 04/16/2019 - 11:49pm

Mr. Glazer says, our economic policy should be " One that starts with making raising household income for all the state’s economic mission. Income - not employment or growth - needs to become the focus of economic policy making." Given that Michigan's GDP is a flow, and thus income, there isn't a meaningful distinction between faster growth and rising incomes. And "raising household income for all" is not a meaningful statement. Wouldn't raising income by ten percent for some and one percent for everybody else satisfy Mr. Glazer's criteria? Yes, but I doubt that is what he meant. And in any case, how he would raise incomes equally if everyone weren't raising their productivity equally? And how wuld he manage that?

He says, "We are not going to grow our way out of far too many Michigan household unable to pay for the basics. " Doesn't a larger economy mean a larger economic pie to be divided up among our citizens? Isn't a slice of a larger pie equivalent to a higher income? Isn't that exactly how global per capita income grew by 3000 percent since 1800? Is he aware that the World Bank forecast that extreme poverty - people living on a $1.95 or less a day - would be eliminated by 2026? Surely, if economic growth can accomplish that, it can substantially improve the lives of lower income Michigan residents. Is he aware that at current rates of growth, real incomes will quadruple in the next 100 years"?

He says, "So along side not enough of us working and too many of us in low-paid jobs, the third major reason Michigan is a low-prosperity state in a strong economy is low four-year degree attainment. " How does he propose to raise our percentage of workers with four year degrees? Economist Bryan Caplan has pointed out that students who don't do well in high school, seldom earn a four year degree. Does he have a plan to significantly improve the quality of our K-12 education? Given that this country almost quadrupled, in real terms, the funds spent on K-12 education between 1960 and 2005 without any significant improvement, the problem seems to be quite intractable. Does Mr. Glazer have any suggestions for building the necessary foundation for producing more people with four year degrees?

Richard Colony
Wed, 04/17/2019 - 5:42am

This is all good data, but I believe that cost of living needs to be also included. That would show the complete picture.

Patrick
Fri, 04/26/2019 - 4:20pm

So true. Unemployment is meaningless. Per capital income and velocity is what counts. Having lived in many different places, Michigan feels slow, backwards and less than dynamic. The unions are broke and most college grads would rather live in a place that at least can fix their roads. It’s decades of poor leadership and backward looking policies to blame. No indication things are about to change either.

Glenn Copeland
Tue, 06/04/2019 - 11:15pm

Shallow analysis as it does not consider cost of living. Michigan, Ohio and Indiana are virtually identical in income per capita. Housing, food costs also similar and we'll below coastal prices

Eric A Schertzing
Fri, 06/07/2019 - 8:49am

Glazer does good work and it is a shame that anyone would twist it through partisan lenses. Spend time just thinking about Midwest states and the narrative is compelling. Michigan simply is not the rich state of my childhood and higher education is more key to a solution than anything else.