What about Up North?

Recently I have been receiving lots of questions about how to improve the economy in northern lower peninsula Michigan. To be honest, we don’t have good answers.

Across the country, in rural areas/small towns––except for those with lots of high priced energy related commodities––incomes and college attainment are low and populations, by and large, are stagnant, if not, declining. And the proportion of income coming from government transfer payments is high.

Our work at Michigan Future has been primarily about what is happening to the economy rather than what to do about it. One of the lessons we have learned is states and communities can’t beat big trends.

If the economy needs more knowledge workers and less factory workers wishing it weren’t so doesn’t change anything. If knowledge-based employers and college educated workers prefer big metros and young college educated workers prefer central cities in those big metros wishing it weren’t so also doesn’t change anything.

So places that do well are going to be those that align with rather than resist new realities. I know that is pretty depressing for those communities which aren’t well positioned to take advantage of those trends. And I know that it would be great if we had some effective strategies for how “out of favor” communities could respond, but we haven’t found any examples of rural places that have developed those strategies. Although to be honest we haven’t spent a lot of time studying small towns.

The fact that work can be done anyplace––as it becomes increasingly digital––doesn’t mean it will be. This is what the futurists so far have gotten wrong. Talent is concentrating in big metros, in large part, because of place preferences. Particularly young professionals who in large numbers are looking for walkable, amenity rich, lots of transit neighborhoods. And where they are concentrating knowledge-based employers are following. There also is economic theory that dense talent is more productive. (For details check out Edward Glaeser’s Triumph of the City.) That the advantages of face-to-face communications is still more value added than digital communication. Both of which give big metros a big advantage in an increasingly knowledge-driven economy.

Not good news for rural/small town Michigan. For the foreseeable future rural/small town Michigan is almost certain to have predominantly goods-producing (manufacturing, construction, farming, commercial fishing, forestry and mining) economies plus tourism. As we document in our latest report this means low employment growth and low wages. And as you would expect, that leads to struggles in retaining and attracting residents, particularly young talent.

So for Michigan having talent-rich big metros––which means metro Detroit and metro Grand Rapids––matters most to the state’s future prosperity. Both of those regions are laggards at the moment. We need to fix that. And we know how to. Places like metro Pittsburgh provide a road map.

We can’t identify a path to a prosperous 21st Century Michigan without an even more prosperous metro Detroit and metro Grand Rapids. The advantage for the rest of the state is more indirect. But it does benefit the entire state. It creates more prosperous consumers for things like vacations and higher priced/locally grown foods for example. High paid knowledge workers today play the same role that high paid factory workers played in helping northern Michigan in the 20th Century. (And I would argue that high-prosperity metro Chicago today plays in the along Lake Michigan communities.)

We are always open to new ideas. Because we haven’t found any, doesn’t mean there aren’t examples of rural/small town America that are creating vibrant non-energy-based (we know that works if prices are high) economies. Please feel free to share with us any models for northern Michigan you know of.

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