2011 Predictions

The folks at were kind enough to ask me again to be one of their guest columnists on what we see happening in 2011. They got quite a distinguished group of Michiganians to write columns. Worth checking out.

Below is the column I wrote. It’s central theme – the choice we make between Michigan 3.0 and Michigan 2.0 – will be the major topic of work for us at Michigan Future, Inc. this coming year. One choice takes us back towards prosperity, the other continues our decline compared to the nation. It is that important.

“2011 will almost certainly bring good economic news. For the first time in more than a decade a year of net job growth in Michigan. Not a lot, but more people working than the year before is good news indeed. The chief reason for those employment gains is once again the domestic auto industry. The same engine that has driven Michigan for the past century. But today it is a much weaker engine. No one expects it to be a major growth engine for the state once it scales back up after its near demise the last two years.

If 2011 is to be a start of a long term Michigan economic recovery it will be because Governor-elect Snyder gets us on the path to the Michigan 3.0 he promised in his campaign. The challenge is that most of the legislature that got elected with him campaigned on restoring Michigan 2.0. The decision we make on which direction to go is what matters most in 2011. It will go a long ways towards defining our economic future. Move towards Michigan 3.0 and we can once again be one of the most prosperous places on the planet. Stay as Michigan 2.0 and we will continue to lag the nation.

What appears to be the preeminent vision of a successful future Michigan is an economy still anchored by factories, farms and tourism. And a policy agenda to get us back to our past success largely through smaller government and weaker unions. If I had to predict where we will go in 2011 it is towards that vision and agenda.

But if we go in that direction I also predict it won’t work. 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.

• 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.

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.

The alternative – Michigan 3.0 – is a Michigan concentrated in the knowledge-based sectors of the economy: health care, education, finance and insurance, professional and technical service and information.These are the fast growing and high wage sectors of the American economy today and tomorrow.

To get there requires first and foremost that Michiganians get better educated. Nearly all the states and regions with the highest incomes will be those with the highest proportion of adults with a four-year degree or more. The policy agenda to create Michigan 3.0 is focused on public investments in education and quality of place. With a particular emphasis on higher education and central cities. The first to prepare Michiganians for the economy of the future, the second to retain and attract mobile talent which increasing is choosing big metros anchored by vibrant central cities.

The Michigan turnaround, compared to the nation, will start only when we focus on improving our ranking of thirty fourth in college attainment. That is our fundamental challenge! Low education attainment regions and states will be low prosperity regions and states. We can do better! But it will require us letting go of what made us prosperous in the past and getting on a new path: one that is aligned with new realities.”

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