I previously wrote about Minnesota and Alabama having virtually the same unemployment rate at the time we published our last report. That had been true from 2006-08. But with the same unemployment rate, Minnesota had per capita income more than $8,000 higher. From our perspective it is clear that Michigan needs to move in the direction of Minnesota not Alabama.
Now there should be no debate! Since December, 2008 Alabama’s unemployment rate has gone from 6.5% to 10.1%. Minnesota from 6.6% to 8.4%. So Minnesota is now far ahead in both metrics: high prosperity and low unemployment.
This matters because Alabama is the poster child for low taxes/small government. The formula many believe is the policy prescription for revitalizing the Michigan economy. Think again!
Turns out that Alabama, Indiana and much of the South – which we are constantly being lectured on by the Right as places we need to be like – are collapsing in the downturn. They now have high unemployment to go along with low income and low education attainment. Who wants to be like that?
In the low education attainment South a lot of their job growth in the years before the crash was housing/cheap money bubble driven. Not the way to build a sustainable prosperous economy.
So if low taxes isn’t the answer, what is? Minnesota provides the answer. It is in the top ten in the proportion of adults with a four-year degree. Of the top ten states in college attainment, nine are in the top twelve in per capita income. Education attainment – talent – is now the preeminent predictor of prosperity, Nothing else is close! So the economic growth priority for Michigan policy makers is preparing, retaining and attracting talent.