Michigan on Track to Become One of the Poorest States in America
A recent study conducted by Lou Glazer from the think tank Michigan Future Inc. and Donald Grimes, a University of Michigan economist, has sparked concerns about Michigan’s economic future. According to the study, if present trends continue and no changes are made, Michigan is just two decades away from becoming one of the poorest states in the Union in terms of per capita income, ranking alongside Mississippi and Alabama. This prediction has raised alarm bells not only for Michigan but for the entire country.
The researchers examined economic data from 1969 to the present, aiming to understand America’s transition from the “Industrial Age to the Information Age.” They found that work is increasingly shifting away from factories and towards offices, schools, and hospitals. This shift in the job market has had a significant impact on Michigan’s economy.
Contrary to popular belief, the decline of the auto industry is not the main cause of Michigan’s economic decline. The study found that the state’s failure to develop or attract high-paying “Knowledge Economy” jobs that require a bachelor’s degree is the biggest contributing factor. In today’s economy, states with a high concentration of young individuals with a bachelor’s degree are driving economic growth and prosperity. Unfortunately, Michigan has been unable to keep up with this trend.
The researchers highlighted four industries within the Knowledge Economy that offer high annual pay: information, financial activities, professional and technical services, and management of companies. These industries are considered the main growth engines of the post-industrial economy. However, Michigan has struggled to create a sufficient number of jobs in these sectors.
One of the startling findings of the study is the stagnant growth rate of industry earnings in Michigan’s Knowledge Economy. Over a span of 23 years (1999-2022), the growth rate was a mere two percent. This stands in stark contrast to the state’s history as the “Automobile Capital” of the world, where good-paying factory jobs once attracted people from all over seeking a better life.
Michigan’s population growth is now stagnant, and the state is facing an aging population. Educated young individuals are leaving in search of better career opportunities, causing Michigan to shrink relative to other states. In terms of per capita income, Michigan now ranks 39th in the nation, a sharp decline from its 16th place ranking in 1999.
If the current trends persist, Michigan is projected to become the 48th poorest state in the country by 2045. The state’s per capita income has consistently fallen below the national average, reaching its worst showing in 2022. Additionally, Michigan has experienced slower growth in income derived from investments compared to the rest of the nation.
Another concerning development highlighted by the study is the reliance on transfer payments, such as social security, disability, and welfare. Between 1999 and 2022, these payments accounted for a significant portion of all personal income growth in Michigan. This dependency raises concerns about long-term economic sustainability.
In conclusion, Michigan is facing a troubling future if no changes are made. The state’s failure to adapt to the changing job market and attract high-paying knowledge economy jobs has led to a decline in prosperity. To secure a path to prosperity, Michigan must focus on growing high-wage, high-educational attainment jobs and increasing wages in these industries. Without these changes, Michigan’s economic decline will continue, making it one of the poorest states in America.
