Why Michigan doesn’t pivot to a high-prosperity economic strategy

The first post I wrote for this blog was 13 years ago. It was entitled the Need For a New Michigan and made the case that what made us prosperous in the past, won’t in the future. That if we wanted to recreate a high-prosperity Michigan, the state needed a new economic agenda––one that focused on competing in the rising knowledge-based economy, rather than the factory-oriented strategy that had been in place for decades.

Unfortunately everything I wrote in August 2009 I could write today. Only the data needs updating.

The 2009 post ended with a warning: “As long as most Michiganders want political and civic leaders to get their old job back for them –something they can’t do–we are going to continue to decline!”

And decline we have. We detailed that decline in our last three posts. One on the failure of Michigan’s factory-based strategy, one on the failure of the state’s low-tax strategy and one on the out-performance of Minnesota compared to Michigan in both employment and wages.

Minnesota has pursued for decades a public investment in preparing, retaining and attracting talent based economic strategy that we have been recommending Michigan pursue as the most effective way to recreate a high-prosperity Michigan. 630,000 more Michiganders would be working today if the state was doing as well as Minnesota. And the average full-time, year-round worker in Michigan would be earning about $9,000 more if Michigan had average wages equal to Minnesota.

Here is what I wrote in 2009:

Our vision and strategy for growing the Michigan economy is laid out in our New Agenda for A New Michigan report. As I talk to audiences across the state I am constantly reminded that if you don’t understand the need for a new Michigan, the new agenda is irrelevant.

Its clear to me that many – probably most – Michiganders have not accepted that a new Michigan is required. That what made us prosperous in the past, won’t in the future.

Michigan enjoyed high per capita income for most of the last century. As recent as 2000 we were sixteenth in per capita income. Now we are consistently below the national average in both upturns and downturns. In 2007 we were thirty third – 11 percent below the national average. This is the lowest Michigan has been since the federal government started collecting data in 1929.

Why? What made us prosperous for nearly a century––an extraordinarily long run––was good-paying, lower-skills jobs primarily in manufacturing. The hard truth is those jobs are gone forever.

The new reality is 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 about 10 percent of the American workforce today and is declining. Its average wage nationally is about $35,000. Michigan factory work in the future will pay around the national average. So whether it’s traditional Michigan industries like autos and furniture or new industries like alternative energy, factory jobs will not be a source of new high-paid jobs for Michiganders.

Until we understand and embrace that new reality we are not going to work on what really matters to rebuilding a high-prosperity Michigan. As long as most Michiganders want political and civic leaders to get their old job back for them – something they can’t do – we are going to continue to decline!

A recent insightful Politico article demonstrates that this post is as relevant today as it was 13 years ago. The article makes clear that many Michiganders still want their old jobs back (high- wage/extensive-benefits factory jobs).

The assets we need to build to recreate a high-prosperity Michigan with lots of good-paying jobs and careers was clear 16 years ago when we published A New Agenda for a New Michigan. And Minnesota has been working on building those assets for 50 years: education from birth through college and creating places where talent wants to live.

What the Politico article makes clear is that you cannot get to building those assets as long as Michiganders are demanding their elected officials recreate the economy of 1969 when Michigan had the 2nd highest average wages in the country. As long as that is what many, if not most voters, are demanding, we are going to continue pursuing factory jobs first and foremost––even though they are no longer high-wage except for Detroit 3 UAW jobs. And the way we are going to pursue those jobs is with a combination of low taxes and big project-based incentives. Which, of course, makes it impossible to make the public investments in education and placemaking which is what is needed to recreate a high-prosperity Michigan.

Unfortunately our 2009 warning is as relevant today as it was then: As long as most Michiganders want political and civic leaders to get their old job back for them––something they can’t do––we are going to continue to decline!

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