“Workers Strike” is becoming an increasingly common headline as the casino workers in Detroit join the UAW, health care workers and more across our state.
How can this be when unemployment is again near record lows, workforce participation is up, and inflation is coming down? These glowing measures, that are touted by politicians, businesses, and economists, are clear indications of a strong economy and reasons for workers to celebrate.
Yet these traditional measures of economic well-being are simply not telling the real story of the working Michigander. A much better measure, and the one that begins to shine a light on the disconnect between “strong economic signals” and what is really happening inside our homes, is per capita income.
Per capita income – big words to describe what a working adult brings home to the kitchen table to pay bills, secure housing and childcare, tuck something aside for retirement and have a little something left over to enjoy life.
Economists use per capita income to understand the overall level of economic prosperity of a particular geography. The measure is simply all of the income received by all of the people in a particular region, divided by the total number of people.
Here in Michigan, our per capita income has been growing more slowly than the national average for the past 20 years. Today, Michigan’s per capita income is 13 percent below the national average, the lowest we have ever been compared to the rest of the country. On this measure, our state ranks 39th, just one spot above the bottom 10.
Michigan is now structurally one of the nation’s poorest states.
But what does this mean for kitchen table economics? What does it mean for the working family? Across the US, from 1999 to 2022, per capita income rose by nearly $37,000; here in Michigan, per capita income grew by roughly $28,500. That’s $8,500, per person, for all 10 million Michiganders (or $85 billion in all), that we don’t have to pay the bills, invest in the future, and save for retirement.
Things look far worse when we look at the most prosperous and fastest growing states. In 1999, per capita income in Michigan was roughly $6,000 below that of Massachusetts. Today, our per capita income sits $27,500 below the Bay State. This is a dramatic difference that is felt dearly by our working families.
This is why Michigan’s low unemployment rate has not meant what it used to – a glowing, satisfied workforce. This is why feelings of dissatisfaction and fear for the future persist against declining inflation.
Because there is less money on the kitchen table to do the basic things every working family needs to do.
Why does it matter what we measure? Because these measurements drive policy, business decisions, and education choices. When we measure per capita income and make “Rising Income for All” our primary political, regional, and statewide goal, we make decisions that work for everyone. We invest in our people to grow our talent, which attracts high wage employers and fills current employers’ needs. We invest in our communities to keep our talented people, which leads to higher quality of life and more Main Street business opportunities.
Sounds crazy, right? But states like Minnesota, Colorado, and Massachusetts have seen per capita income growth over the past twenty years not by resorting to large business tax incentives, but by investing in people and place. Michigan can too – we just need to judge ourselves by the right measure.