Sharing prosperity with those not participating in the high-wage economy

Most jobs now and in the future will not be high skill. And therefore will not be high paid. That is the fundamental shift that has occurred in our economy over the past several decades. The high-paid, low-education-attainment jobs that were the backbone of Michigan’s mass 20th Century middle class are gone forever.

In their book the Second Machine Age Erik Brynjolfsson and Andrew McAfee project that in an age of brilliant technologies economic growth will accelerate substantially but the distribution of economic gains will concentrate even more than today at the top. So there is little reason to believe going forward that there will be a higher proportion of good-paying jobs.

This means Michigan cannot reach the goal of rising household incomes for all unless it finds ways to increase the amount of work and the pay and benefits of that work for those with low education attainment.

Our recommended policy menu includes expanding the safety net. Michigan has been doing the opposite recently, at least in part due to the belief that a too generous safety net discourages people from working. Minnesota’s experience has been the opposite. As we document in our State Policies Matters report, Minnesota has a far more generous safety net than Michigan. And it is third in the proportion of those 16 and older working, Michigan is 40th. If the same proportion of Michiganders age 16 and above worked as Minnesotans there would be 830,000 more Michiganders working today.

Our agenda for getting more Michiganders working and to make work pay more for those in low wage jobs:

  • Helping Michiganders get family supporting employment through a combination of income supports and comprehensive and customized case management. As chair of the House Ways and Means Committee Paul Ryan proposed an opportunity grant system where folks eligible for public assistance would receive benefits and services needed to get on the path to self-sufficiency all coordinated by a case manager. Services could include housing, childcare, transportation, substance abuse support, mental heath, job training, financial education, etc. These services continue beyond a first job.
  • Using TANF (Temporary Assistance to Needy Families) funding to help those out of work or underemployed get family supporting jobs. To provide low-income families with a safety net that acts as a trampoline rather than a snare (as described by former Massachusetts Governor William Weld). Michigan instead has been a leader in getting out of the business of providing cash grants or services designed to help people get to self-sufficiency.
  • Augmenting wages and benefits through some combination of employer mandates and/or a strengthened safety net. The employer mandate recommendation is the area where we have the most disagreement amongst the Michigan Future Board and staff. But we all recognize that to achieve the goal of getting all Michiganders on the path to good-paying careers that income from work will need to be augmented for many.
  • Reforming the criminal justice system: To achieve fewer imprisoned, shorter time spent in prison and barriers to work removed after release.
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