New report: lessons learned

Our latest report identified a clear path to prosperity for states and metropolitan area in an economy shaped by globalization and technology. The only exceptions to the pattern are those few who have been benefiting from high energy prices (like North Dakota).

In the midst of an auto boom, Michigan in 2014 is 35th in per capita income (the best and broadest measure of a community’s economic well being). The first time ever Michigan has been a lower tier state in per capita income when the domestic auto makers were doing well. In the last Detroit 3 boom in 2000 Michigan was 18th in per capita income.

Its clear that what made Michigan prosperous in the past––chiefly high paid manufacturing jobs––will not make us prosperous today or tomorrow. So what will? Here are the lessons we learned in doing our latest report:

  • High per capita income requires high employment earnings (wages and benefits paid by employers). Its about two thirds of per capita income
  • Employment earnings are a function of how many people work and how much they earn. The states and regions with the highest per capita income are most characterized by high four year degree attainment (not associates degrees or occupational certificates) and a high proportion of adults working in knowledge-based services (where 42% of jobs and 54% of wages reside nationally)
  • College educated adults and knowledge-based services are concentrating in big metros. This is good news for Michigan because we have two of the 52 metropolitan areas with a population of at least one million
  • The challenge Michigan faces is that the state and metro Detroit are laggards in the proportion of adults who work and they plus metro Grand Rapid are laggards in the proportion of adults who work in knowledge-based services and the proportion of adults with a four year degree or more
  • Metro Grand Rapids also has some of the lowest wages in all sectors. And the state and its two big metros have lower wages in knowledge-based services
  • The key to raising Michigan’s per capita income is more adults working and far more working in knowledge-based services. Both, particularly the latter, are highly correlated with four year degree attainment
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