Michigan’s business climate is improving, but educated workforce is shrinking

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Schools struggle to improve student performance, and many companies say they struggle to find enough qualified employees to fill vacant positions. Infrastructures are failing, which poses problems for companies that rely on adequate transportation to move products and healthy communities to attract workers.

Michigan’s unemployment rate was below 5% at the end of 2017, roughly reflecting the national rate. This is much better than the 15%, the worst unemployment rate in the country in 2009. Yet Michigan’s labor participation rate is low, with many workers having given up looking for work in the last decade. And wages haven’t grown as fast as some economists believe, given the length of the current recovery.

Policy changes in recent years

Governors are often credited with a good economy and blamed for a bad one. But heads of government do not create jobs. Their role is to create the environment in which businesses can develop. Governor Rick Snyder and the Michigan legislature have adopted a wide range of measures (some of them very controversial) to improve Michigan’s business climate. These changes include:

  • Repeal of Michigan’s unpopular business tax and significant reduction in business tax. The state collected $ 2 billion less in corporate taxes in 2016 than in 2008. The state paid for the business-friendly reduction largely by shifting the personal tax burden.
  • Pass right to work laws prohibiting unions from collecting dues as a condition of employment. Supporters claim that the right to work gives workers more freedom in their jobs. The results to date are unclear. The state did not provide proof that a company moved to Michigan because of the right to work.
  • Gradual abolition of the property tax on certain manufacturing equipment.

Michigan is not yet in the top 10 states for jobs, income and economy, according to Business Leaders for Michigan, a roundtable of statewide CEOs.

Competing ideas for the future

The next governor and legislature elected in November 2018 will be faced with a plethora of recommendations on how to improve Michigan’s economy in the future.

Related economic coverage of our 2018 Michigan Issue Guide

The nominated by Snyder The Commission on the Economy of the 21st Century published in May 2017 a recommended policy… Build a talent pool by increasing the skills development of Michigan residents and recruiting talent from elsewhere … Investing in infrastructure, including “social infrastructure” systems such as housing and child care children … Government efficiency and customer service to support business growth. Promote the quality of life, from natural resources to the creation of places.

Michigan business leaders includes investment in long-term infrastructure projects as political priorities, creating a stronger business climate by improving government fiscal stability and strengthening Michigan’s education system from early childhood through high school. Michigan Future Inc., an Ann Arbor-based think tank, thinks policymakers should focus on increasing the educational attainment of Michiganders, attracting young talent to cities and expanding the social safety net to increase Michigan household income and prosperity.

Yet the newly elected leaders who will take office in January 2019 could also face a countdown. Leading economists openly wonder how long Michigan’s recovery (as mixed as it may be) will continue – and when will the the next recession is looming.

The talent puzzle

One of Michigan’s biggest challenges in attracting business is talent. The state ranks 37e for participation in the labor market among residents aged 16 and over. Michigan has approximately 6,700 job openings in the skilled trades each year through 2022. Yet since 2010, the vast majority of new jobs in the United States have required post-secondary education – and only 39.4 percent of Michigan adults have at least an associate’s degree.

Urban and rural economies

The recovery has been uneven in recent years across the state. Among urban areas, Grand Rapids has been a star of the recovery – 90,000 new jobs from 2012 to 2015. Ann Arbor, Metro Detroit, Lansing-East Lansing and Kalamazoo have also performed relatively well. Other old manufacturing towns like Flint and Saginaw continued to struggle.

Rural Michigan communities are supported by jobs in natural resource-based industries such as lumber and mining, agriculture, and tourism. But sparsely populated communities lack the necessary infrastructure, namely high-speed internet access, which can attract new residents and help businesses compete in a 21economy of the th century.

Property values

Real estate markets have improved in recent years. But it’s a long climb back to pre-Great Recession levels. From 2008 to 2016, property values ​​statewide have fallen by billions of dollars. Flint has lost three quarters of its taxable property value. Detroit lost 60%. Across the state, some 1.4 million people live in communities where the assessed value of properties has fallen by more than half during that eight-year period. On the positive side, farm property values ​​have risen dramatically over the same period.

KEEP DIGGING: MORE INFORMATION ON MICHIGAN’S BUSINESS CLIMATE


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