Not Factories, Farms and Tourism

The dominant vision of a successful future Michigan continues to be a recreation of our past success. Won’t happen! Can’t happen! Until we give up on the vision of an economy driven by factories, farms and tourism we are going to continue to have slower job and income growth than the country. As we wrote in our latest annual report on the Michigan economy:

The inescapable conclusion is that what made Michigan prosperous in the past is no longer a path to prosperity. The knowledge-based economy is now the path to prosperity for Michigan. There are some hard truths that Michiganians needs to confront:

• Michigan’s prosperity in the last century was built primarily on good-paying, lower-education attainment jobs. Those jobs are gone forever.

• The auto industry will never again be the major engine of prosperity in Michigan. … It will be substantially smaller, employ far fewer and will pay its workers less with fewer benefits.

• The decline in autos is part of an irreversible new reality that manufacturing (work done in factories) is no longer a sustainable source of high-paid jobs. Nor is it a source of future job growth. Manufacturing makes up less than 10 percent of the American workforce today and is declining. … So whether it’s traditional Michigan industries like autos and furniture or new industries like alternative energy, factory jobs will not be a source of new high-paid jobs for Michiganians.

• The other industries that are widely believed to be drivers of the Michigan economy – farming and tourism – are also not a source of lots of good-paying jobs. Less than 2 percent of Michiganians work on a farm and, on average, it is not a high paying industry. And tourism, although a likely source of job growth, is also a low-wage industry.

To be clear, we are not advocating that Michigan abandon these industries. They are and will be important parts of the Michigan economy – especially in rural communities – and as such deserve support. But, they are not a path to high prosperity or a broad middle class.

If the Michigan economy of the future is built on a base of factories, farms and tourism we will be a low-prosperity state. The world has changed fundamentally. We either adjust to the changes or we will continue to get poorer compared to the nation.

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