Alarm bell reports

Two new reports should be setting off alarm bells among Michigan’s leaders, both political and business.

One comes from Ed Trust Midwest entitled Michigan Achieves! More accurately, it would be Michigan doesn’t achieve. The report details Michigan’s status as a national laggard in student achievement and going in the wrong direction fast. All Michigan students, not just poor kids and/or minority kids, affluent and white kids too in Michigan under perform the nation. In a terrific column Detroit News business columnist Daniel Howes writes:

Education Trust-Midwest released a report Thursday leveling a devastating critique of educational achievement in Michigan. It shows steep performance declines for white, black, Latino students and all three combined, under both Democratic and Republican administrations, for the dozen years between 2003 to 2015.

The biggest shocker to all those predisposed to believing the worst about minority academic achievement is the collapse in the academic performance of Michiganʼs white students on the National Assessment of Educational Progress, or NAEP, tests. In fourth-grade reading, white students ranked 49th out of 50 last year, down from 13th in 2003; in fourth-grade math they dropped to 47th from 13th in 2003; in eighth-grade reading, to 42nd from 12th.

For blacks and Latinos, the decline in performance was less precipitous. But the overall message stands: educational achievement in Michigan continues to slip further behind rival states. They are doing more and achieving better results, underscoring just how much the state needs to improve to catch up.

To drive home the reality that this is all Michigan students there is this from the Ed Trust report: “And for those who believe Michigan’s educational woes are due to poverty, the data tell a far different story. In fact, our higher-income students in Michigan rank 48th in fourth-grade reading and 41st in eighth-grade math compared to higher-income students in other states. Indeed, our higher-income students now trail the performance of the combined student population in Massachusetts in both fourth-grade reading and eighth grade math.”

The second alarm bell report comes from Great Lakes Economic Consulting, for the Michigan Municipal League, entitled Michigan’s Great Disinvestment.  It details the effects of far lower state revenue sharing and strict revenue limitations on the ability of Michigan local governments to provide services. Using Census Bureau data they found that between 2002-2012 state revenue sharing to local governments in Michigan declined by nearly 57 percent compared to an average increase of 48 percent nationally. The report continues:

“We only have numbers for Michigan through the current budget year so we cannot do a multi-state comparison past 2012, but from 2002 to 2016 as enacted, Michigan’s statutory revenue sharing has declined 61 percent. As other states are increasing municipal revenues, Michigan continues to reduce funding for municipalities and a comparison of all 50 states from 2002 to 2016 would likely show an even greater relative decline for Michigan.”

We detailed in a previous post the consequences of this disinvestment which leaves Michigan with local governments unable to provide the basic services and amenities needed to retain and attract residents.

Why should these reports be setting off alarm bells? Because quality cities and schools are essential ingredients to recreating a high prosperity Michigan. As Harvard economist Edward Glaeser says: In the long run, America will be richer than China only by having smarter citizens, and that requires the skills that come from schools and cities, not dispersed factories.

It is a great summary of our approach to economic development. In an increasingly knowledge-based economy, human capital/talent is the asset that matters most. And the policy levers that have the greatest impact on prosperity at the state and regional levels are those which prepare, retain and attract talent. So schools (from early childhood through college) matter most for preparing for the economy of the future. And cities are essential because increasingly that is where mobile young talent wants to live and work after college.

For at least two decades Michigan has made lower taxes and smaller government its primary recipe for improving economic outcomes. Being business friendly was the magic elixir that would make Michigan prosperous again. It didn’t work. We are now structurally in the mid thirties in per capita income––even in the midst of a domestic auto industry boom––after being in the top twenty for all of the 20th Century.

Why? As the state focused on lower taxes and smaller government that led to less investment in education and support for local government. And demonizing both public schooling and local governments. Somehow political and business leadership seems to believe that Michigan would be better off with weaker public schools and local governments. Not smart! In an economy that is increasing rewarding states and regions with the greatest concentrations of talent this recipe is highly unlikely to return Michigan to high prosperity.


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