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Michigan NewsExperts say ‘Michigan is going to get poorer compared to the country’s...

Experts say ‘Michigan is going to get poorer compared to the country’s average’ if no actions are taken immediately

Michigan – Michigan Future Inc., a group working to boost Michigan’s wealth, is bringing back a 2004 report. This report advises that Michigan should invest more in industries that require a lot of knowledge. Lou Glazer, who leads Michigan Future Inc., says that things haven’t changed much since 2004.

“Everything we wrote in 2004 is true in 2024. If Michigan does not become concentrated in the knowledge economy and does not concentrate young talent, we’re going to get poorer compared to the country than we are now,” Glazer said.

Michigan currently ranks 39th when it comes to income per person

Right now, when it comes to income per person, Michigan is 39th in the nation, the report shows. Glazer and Donald Grimes, a researcher at the University of Michigan who helped write the report, believe this is because Michigan doesn’t have enough jobs that pay well and require special skills. They also note that Michigan is not doing well in attracting young adults aged 25 to 34 with college degrees.

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“Two-thousand and four was sort of, for us, the light bulb going off moment,” Glazer said. “After 30 years of analyzing data, it became pretty clear to us that high-prosperity states and regions were no longer over concentrated in manufacturing. In fact, by 2004, most of the states that were over-concentrated in manufacturing were below the national average in per-capita income, including Michigan.”

The report highlights that while manufacturing is still key to Michigan’s economy, it’s not the main driver of growth or wealth anymore. The focus, it suggests, should shift towards industries that need a lot of knowledge and drawing in young professionals. At a press conference on Monday, Glazer and Grimes explained the seven big sectors of the knowledge economy. These include chemical and computer manufacturing, non-vehicle transportation manufacturing, information, finance and insurance, professional and technical services, and company management.

Auto industry pays less on average compared to other jobs

Grimes emphasized that these sectors typically hire people with a college degree and offer salaries over $100,000 annually. In contrast, the auto industry, a traditional strength for Michigan, is different. Here, only 13% of jobs need a college degree, and the average salary is $73,000, just slightly above the U.S. average across all industries.

Grimes noted that the auto sector offers middle-range salaries, not high ones. He further added that there are other knowledge-based jobs in government and healthcare, but these offer mixed salary levels. Grimes pointed out that Michigan’s lag in economic growth isn’t just due to the decline of the auto industry. The state is also not progressing in sectors that require higher education and offer higher wages.

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Finally, Grimes commented on Michigan’s Strategic Outreach and Attraction Reserve (SOAR) fund. While it’s beneficial for manufacturing, he said it’s not enough to raise overall wages in the state.

“SOAR is playing defense,” Grimes said. While playing defense can save the industries the state has, the state will need more than the SOAR fund, he added.

Glazer emphasizes the importance of making Michigan a place where young, college-educated people want to live, especially for boosting knowledge-based industries. He notes that many states, particularly their big cities, have focused on making their central areas more attractive, often through improved transit, to draw in young people. However, Michigan is lacking in this aspect. Glazer points out that in many places, business communities lead the push for revamping city centers and transit systems, but this drive is missing in Michigan. He believes this should be a top priority. According to Glazer, areas with many young, college-educated adults are often the ones that develop new, high-paying industries.

Michigan should focus on attracting more college-educated people and focusing on population growth

Grimes praises Governor Gretchen Whitmer for establishing Michigan’s population growth council and appointing a chief growth officer to focus on economic expansion. However, he stresses that these initiatives need to play a larger role in Michigan’s future. Grimes argues that attracting more college-educated people and focusing on population growth should be ongoing efforts, not just short-term projects.

Grimes also touches on the economic strategy promoted by President Joe Biden, which focuses on middle-class growth. He suggests that Michigan should aim to expand more at the upper end of the economic spectrum. However, Grimes acknowledges a challenge with this approach: while promoting high-paying jobs for college graduates can increase the state’s wealth, it might also widen the income gap. This could lead to a divide between those with degrees in high-paying jobs and those without degrees in lower-wage sectors.

“If Michigan becomes a more prosperous state, we have to be very careful that that does not create an income distribution problem,” Grimes said.”We’re aware of that. But you also have to realize that the only way to get to be a high prosperity state is to have a lot of people making a lot of money.”

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“We need affluent people, people with high pay households with high income and that’s what’ll drive up the personal income on a per-capita basis. And then once you’re more affluent, then the government foundations have more resources to try to handle any inequality problems that that will cause — and it will cause inequality problems,” Grimes said.