Our work at Michigan Future is focused on recreating Michigan as a high prosperity state. A place, once again, with a broad middle class. It is a status we enjoyed for most of the 20th Century, but now have lost.
In our research we have found that the states that have high per capita income – the best measure of overall economic well being – have in common:
- they are over-concentrated, compared with the nation, in the proportion of wages coming from knowledge-based sectors;
- they have a high proportion of adults with a four-year degree;
- they have a big metropolitan area with even higher per capita income than the state; and
- in that big metropolitan area, the largest city has a high proportion of its residents with a four-year degree or more.
Nearly everyone agrees that the key to realizing the goal of recreating Michigan as a high prosperity state is increasing private sector employment earnings (both wages and employer paid benefits). It is what most economic development policy and programming is designed to grow. Before we look at data, lets take cost of living off the table. Private sector employers don’t care about cost of living when they pay employees. They pay for productivity. If they can get the same work done cheaper in Bangladesh than Manhattan, the work is going to Bangladesh. End of story.
We looked at state private sector employment earnings except those from natural resources (farms, fishing, forestry and mining including oil and gas extraction). Turns out the list of states at the top of private sector employment earnings except natural resources is almost identical to the states at the top of the list for all private sector employment earnings. The only change in the table below would be Nebraska in and Washington State out.
Here are the top 15 states and Michigan in 2010 private sector employment earnings except natural resources:
|
Top 10 Private except Natural Resources |
College Attainment
|
Big Metro (3 million or more) |
Big Metro College Attainment |
|
Massachusetts |
38.2% |
Boston |
37.5% |
|
Connecticut |
35.6% |
New York |
35.6% |
|
New York |
32.4% |
New York |
35.6% |
|
New Jersey |
34.5% |
New York Philadelphia |
35.6% 31.3% |
|
Minnesota |
31.5% |
Minneapolis |
36.2% |
|
New Hampshire |
32.0% |
Boston |
37.5% |
|
Illinois |
30.6 |
Chicago |
33.2% |
|
Delaware |
28.7% |
Philadelphia |
31.3% |
|
Colorado |
35.9% |
Denver |
38.5% |
|
California |
29.9% |
Los Angeles San Jose/SF San Diego
|
27.8% 41.4% 34.6% |
|
Maryland |
35.7% |
DC |
42.3% |
|
Virginia |
34.0% |
DC |
42.3% |
|
Pennsylvania |
26.4% |
Philadelphia |
31.3% |
|
Washington |
31.0% |
Seattle |
35.6% |
|
North Dakota |
25.8% |
none |
na |
|
Michigan |
24.6% |
Detroit |
26.7% |
Michigan is 36th, 16% below the national average. Metro Detroit (nine counties that include Ann Arbor and Flint) is an astonishing 22% below the average for the 17 regions in the country with population of 3 million or more. As we explored previously it is these biggest metros where private sector employment earnings are the highest. It turns out that they are the highest in those very big metros that are also high in college educated adults. (Nationally 27.9%of adults have a four year degree or more.)
It is the combination of the two (very big metro and high college attainment rates) that creates high prosperity regions and in turn high prosperity states. Unlike most states, Michigan can play in this space. We have one of the 17 biggest metros. But metro Detroit lags considerably in college educated adults. And therefore is unable to take advantage of the biggest metros most important competitive advantage: concentrated talent. If metro Detroit, including the city of Detroit, doesn’t get better educated, Michigan will almost certainly not be a high prosperity state.
