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Original article URL: http://bridgemi.com/2013/12/michigans-christmas-carol/

Economy & competitive position

Michigan’s Christmas Carol: A scary look at our jobs outlook

Continued shrinking of the state’s famed middle-class factory jobs. Fast-growing occupations that pay so little, workers may qualify for food stamps. Job growth that ranks 49th in the nation. (Illustration by AJ Jones)

Continued shrinking of the state’s famed middle-class factory jobs. Fast-growing occupations that pay so little, workers may qualify for food stamps. Job growth that ranks 49th in the nation. (Illustration by AJ Jones)

This is not a holiday story Gov. Rick Snyder wants to read to his children.

Continued shrinking of the state’s famed middle-class factory jobs. Fast-growing occupations that pay so little, workers may qualify for food stamps. Job growth that ranks 49th in the nation.

It’s less Christmas joy and more “A Christmas Carol.”

Bridge Magazine economic projections paint a Scrooge-like portrait of the state economy over the coming decade. But that’s just one possible future. In the Charles Dickens story, Scrooge is scared enough to change his ways.

Is Michigan prepared to change?

It won’t be easy. For Snyder and other state leaders, it means facing some uncomfortable truths about Michigan’s future, and taking steps that might not always be popular in the short run. More money for education, starting with toddlers’ first steps and continuing until they walk across a stage with a college diploma. More money to repair and replace our crumbling roads and bridges over which new business and new residents must travel. More of a willingness to invest in the present, to stave off a Dickensian future.

“I’m afraid that’s the direction Michigan is heading,” warns University of Michigan economist Don Grimes, “toward a poor, old state.”

It doesn’t have to be, if leaders view these dire job projections as a wakeup call.

To conduct the analysis, Bridge used projections made by Economic Modeling Specialists Inc., in Idaho, based on federal Census and Bureau of Labor Statistics data. That analysis projects about 266,000 jobs added to the Michigan economy by 2023. That’s a growth rate of about 6 percent over 10 years, compared to a projected growth for the rest of the country of 11.4 percent.

Michigan ranks 49th in projected job growth, beating out only Maine. (That’s actually an improvement for Michigan, which ranked 50th in job growth over the past decade.)

Just being average in job growth would make a major difference. If Michigan added jobs at just the national average over the next 10 years, residents would have 245,000 more jobs to pick from than projected. If the state had a growth rate half way between neighboring Ohio and Indiana (7.6 percent and 12 percent, respectively) Michigan would have 148,000 additional jobs.

Michigan has a bigger hole to climb out of than most states. It lost a higher percentage of jobs in the past decade than any other state. Even with jobs now growing in the state, Michigan likely will still have fewer in 2023 (4,591,000) than it did in 2003 (4,614,000).

If  growth is indeed that slow, it will do little to attack Michigan’s unemployment rate of 9 percent, which is third-highest in the nation.

One more Scrooge-like number: There will be fewer new jobs created in Michigan in the next 10 years (266,000) than Michigan residents who are now unemployed (423,000).

Pay going in the wrong direction

And many of those new jobs are projected to come with smaller paychecks. Five of the seven projected fastest-growing occupations offer salaries that might qualify workers for food stamps. The average salary of occupations projected to shrink is $22.16 per hour; growing occupations pay an average of $19.56 an hour.

Newly created jobs aren’t the only ones available – workers retire, die or leave the workforce. About 1,465,000 Michigan  openings are projected in the coming decade. But with new workers entering the job market every year from high school and college, as well as residents re-entering the workforce, those openings alone won’t be enough to boost the state’s economy.

“Even with retirements, you’re not going to have enough jobs,” said Larry Good, chairman of the Corporation for a Skilled Workforce. “This is a very stagnant picture. The big challenge is, what do you do to change this picture?”

Changing the storyline

Charles Ballard is familiar with doctor visits that end with warnings: Exercise and eat better, or you’re going to pay for it later.

The Michigan State University economics professor looks at job projections for Michigan and can hear a physician’s voice in his ear. If you’re Michigan, Ballard said, “You can hope your doctor is wrong, or you can climb on the treadmill and stop eating Fritos and dip.”

What that treadmill looks like depends on who you ask.

To Ballard, it includes investment in roads and schools. And by investment, he means taxes.

“Tax cuts have overwhelmed all other policies for the past 20 years,” Ballard said. “You certainly don’t want to raise taxes and throw the money away. Nobody loves to pay taxes. But I’d be willing to pay more taxes for better roads.

The expansion of early childhood (education), that’s one success. Education and fixing roads and bridges are very important in positioning ourselves for economic growth. But we have continued to have massive disinvestment in higher education.”

Making higher education more affordable is one of the keys to improving Michigan’s fate, said Gilda Jacobs, president of the Michigan League for Public Policy, along with “raising the minimum wage (and) restoring the Michigan Earned Income Tax Credit.”

U-M’s Grimes argues that Michigan must do whatever it takes to increase the percentage of adults who have college degrees. Michigan gets a lot of kids to college, but it does poorly in getting them to complete college.

If Michigan is going to avoid becoming a poor state, it needs to increase college completion rates for its home-grown students, and find a way to attract college-educated adults to the state.

Snyder and the Legislature should explore tax policies to lure the educated here, Grimes said.

“It would put them (Michigan) on the map. That kind of policy would attract attention.”

Michigan had the fifth-largest net loss of college students in 2012, with more than 8,000 more college-educated moving to other states than moving here. “Essentially, no one’s moving in,” Grimes said.

Business Leaders for Michigan has advocated for investment in higher education as a means to help the state stay competitive. More education generally means fatter paychecks and lower unemployment.

Bridge’s job projections for Michigan back that up. The occupation with the most openings in the next decade for workers with a high school diploma or less is retail sales, with an average salary of $11.96 an hour; the most common job opening for Michiganders with a two-year associate’s degree is registered nurse, with an average salary of $31.12.

“If Michigan is going to be competitive for business investment and job creation, we cannot ignore the fact that Michigan is looking at a severe talent shortage,” BLM President Doug Rothwell said earlier this year.

“Michigan has a weak track record over the past decade or so which is negatively influencing long-term forecasts,” Rothwell said last week. “But it doesn’t have to be that way. Business Leaders for Michigan projects that we could grow as many as 500,000 new jobs over the next decade by growing our life science, natural resource, automotive, engineering, logistics and higher education assets,” Rothwell told Bridge last week. “The key is to take actions now that change the growth trajectory for the future.”

Goodbye assembly line, hello health care

An unchanged trajectory would mean that good-paying factory jobs, the bread and butter of Michigan’s economy for generations, will continue to dwindle. Manufacturing as a whole is projected to lose 30,000 jobs in the state – the equivalent of a busload of workers leaving a plant every week for 10 years. Automobile and light-duty manufacturing is expected to take the biggest hit – losing 12,000 jobs, or about a third of the Michigan workforce.

Meanwhile, jobs in the health care industry are expected to explode. Workers servicing the elderly are projected to double, and home health care workers will increase by 38 percent, and registered nurses increase by 16,000, up 18 percent.

Unfortunately, workers in some of those growing jobs, such as home health aides, earn little more than fast food workers. “About 40 percent of direct-care workers are on some kind of public assistance,” said Hollis Turnham, Midwest director for PHI-Michigan, an advocacy group that works with workers and consumers of home health care. “We need these occupations, but they’re very low-wage and low-benefit.”

A happy ending?

Not everyone believes Michigan’s future is as dark as a Dickens novel. University of Michigan economist George Fulton says models constructed by the school’s Research Seminar on Quantitative Analysis projects a comparatively robust jobs growth of 1.6 percent per year over the next three years (more than twice the annual growth rate projected by Bridge’s analysis).

He points out that Michigan was fourth in the nation in job growth between 2010 and 2012. The 80,000 jobs projected to be gained in 2013 will be the third-highest in Michigan since 1996. Fulton agrees that there will be rapid growth in low-paying jobs, but he also sees pockets of hope in some high-education, high-pay jobs, such as engineering and accounting.

“I find that really encouraging,” Fulton said. “Things may not go gangbusters the next few years, but I’d describe it as solid growth.”

That growth won’t happen with the turn of a storybook page. It will take hard decisions in the Capitol, says Ballard.

For the story to have a happy ending will likely require some drama in earlier chapters. Ballard is blunt: “We’re going to raise your taxes to build better roads,” the economist said. “We’re going to raise your taxes to have better schools.”

Is Michigan ready to change?

“We have to figure out how to accelerate job development, and grow the right kinds of jobs,” said Good. “If we don’t, Michigan either becomes a less populated state or a poorer state.”

Senior Writer Ron French joined Bridge in 2011, after winning more than 40 state and national journalism awards at The Detroit News. See more stories by him here.

34 comments from Bridge readers.Add mine!

  1. Byron

    Any job that can be done over the internet will go some place else. Including engineering and accounting. College is not the answer for many people. What we really need to do is bring back vocational schools. Ferris is an excellent example of such a school. In the foolish attempt to chase the highest profits we have destroyed our country. An example is the new manufacturing jobs that pay $14 for working at GM and Ford. How can they buy the cars that they are making? Or how about a new Wayne County deputy sheriff at $13.50 per hour. Graduation rates from high school and college are meaningless. There are simply no well paying jobs for most people!

    1. Rich

      You are correct with the vocational school need. You hear of job openings that remain vacant because there are no qualified candidates. Qualification is not just a college degree, but some form of training specifically for what is needed. Given a graduate from U of M or MSU with a degree in History, or a graduate from Ferris or Michigan Tech with a degree in Plastics Technology or Stereolithography (3D Printing), who has the better chance of getting hired. The true jobs will be those that make a product that adds value to peoples lives. The history major may be doomed to a lifetime as a barista at Mickey D’s or a retail clerk. Even factory workers today are expected to know more than basic math and be computer literate to operate all the modern machines.

      1. Dad

        Rich – if the person with the college degree is willing to move out-of-state, then their prospects are very good, as good or better than the plastics technology certificate. As the article states, 8,000 graduates moved for jobs because that’s where the good jobs are – out-of-state.

      2. thielas perry

        Why do you say “even factory workers” know as a retiree when I left the plant after 44 years, I had 2 masters and Phd on my team. It was the union that had my company pay for my computer training I have a business systems certificate, have created databases for the company, and every station has a computer at its station. Its important that people be trained but don’t think because the were “factory worker” that they are unskilled. Wake up its companies moving jobs to other countries that is the problem, when we were praying buy American, nobody listened. Listen now It is only by truly joining together and believing in manufacturing that we again become a bountiful country.

  2. ***

    We keep hearing about health care jobs being the future in Michigan and yet hospitals (at least in the Lansing area and I assume statewide) keep cutting the number of staff or their hours because of funding problems, it seems there are mixed messages being
    sent here.

  3. Tom

    As with anything you have to have a good solid foundation to build on, not build the top first and the foundation last.

  4. M

    French’s article misses the mark.

    Tax policies at the state level can only do so much. But legislation at the Federal level can stop the counter-productive inter-state competition for tax-breaks for business “investments.” Having business state tax breaks treated as taxable income at the Federal level will significantly reduce the cold war between the states and reduce the pressures on state governments to make-up these losses by increasing taxes on the poor and middle class.

    The current system of ad-hoc tax breaks for businesses doled-out by the self-motivated interests of the individual states is reminiscent of the lessons promulgated by Garrett Hardin’s “tragedy of the commons.” Everybody looses.

    Next, labor laws at the state and Federal levels need to be strengthened to make the playing field more level. Businesses see little incentive to play fair, and labor unions who’ve been systematically stripped of their collective powers cannot bargain effectively for their members. Repeal of right to work legislation, card-check, tax-deductions of dues will help.

    I realize that in the current political climate, mostly engineered by the ultra-gerrymandering efforts the GOP and related interest groups, that none of these proposals will see the inside of a legislative chamber. But that’s a symptom of a political system diseased with easy access for moneyed interests.

    1. BarryVisel

      M…Let’s see if I understand. Tax break for business = bad…tax deduction for union dues = good. Let’s just get rid of all tax credits, deductions and incentives. According to Appendix A of the State Budget, that could free up over $30 Billion for all sorts of things!

      PS: Why have most commenters stopped using their full names?

      1. M

        «Let’s see if I understand. Tax break for business = bad…tax deduction for union dues = good.»
        In the current political climate with the ultra-majority of “breaks” going to business, yes. Time to level the playing field.

        «PS: Why have most commenters [sic] stopped using their full names?»
        Because I don’t want my personal views confused with my work.

  5. Joshua

    If our economic future depends on highly skilled workers and diverse high-tech companies, why is our educational system set up to ignore the high ability students who have the capability of being these entrepreneurs and innovators? Our schools do not help them reach their potential or prepare them for a career of working hard, overcoming obstacles, and bouncing back from failure.

    Sergei Brin and Larry Page, co-founders of Google, both experienced gifted education through formal programs and their parents. Larry was one of the hardest working gifted students I ever met and using his ability and his work ethic created one of our nation’s premier companies. How many gifted students could have contributed profoundly to our state’s economy if our schools had helped them develop and not demanded they stay at grade level?

  6. Ed Haynor

    I don’t disagree with those who believe that good jobs are hard to find in Michigan and that for employers to expand or come to Michigan, quality education and training as well as a good transportation system are also very important

    But there’s a new phenomenon that seems to be happening as explained in a new study at: http://www.sciencedirect.com/science/article/pii/S0022103113001868, that in essence says that a lifestyle one would like to imagine oneself living, and the cultural, political and consumption-related activities that help people identify where they belong.

    Could it be that the extreme right-wing politics that have infected our state for the last several years are turning young people and employers from living and working here?

    1. Joshua

      Ed, if that were the main reason, one would expect the top states in the projected growth chart to be liberal. Instead, they are fairly conservative states. Michigan had eight years of liberal policies under Gov. Granholm and our state was the only one where population declined.

      1. Jon Blakey

        We had eight years of budget cuts too. Quit blaming liberals for all of the economic problems. They did not crash the financial system unless all of our financial folks are liberals. That’s not likely. Once we quit blaming each other for our problems and decide to place ideology second to rational decision making that benefits everyone, not just the top 10%, we will all be better off. More people with more money equals more demand, which equals the need for more production/services, which equals the need for more jobs.

    2. Dave Maxwell

      ED….right wing such as balancing the budget? In my family we call that prudence.

  7. dlb333

    @Ed – Agreed. I know several intelligent, educated college students who are leaving the state specifically because of the extreme right wing policies enacted here in recent years. Those policies are an embarrassment to our state. I am nearing the end of my career and moving to a more progressive state for retirement is very tempting.

    1. Glenn

      Agree. If you find a more progressive state with warm weather, let me know where it is. I was ready to move to North Carolina till it made a U-turn back to the right. The rest of the South is out of the question. Arizona is worse than Michigan.

  8. Glenn

    Where are all the new jobs that were supposed to be created by the business tax cut funded by retirees? The tax hike on retirees (aren’t Republicans supposed to be anti-tax hike?) was supposed to make Michigan business-friendly, and in turn, business would use their tax savings to create more jobs. That turned out to be another Snyder/Republican myth. Instead business used their tax savings to increase their profits and management compensation.

    1. J

      “He points out that Michigan was fourth in the nation in job growth between 2010 and 2012. The 80,000 jobs projected to be gained in 2013 will be the third-highest in Michigan since 1996.” Gov Snyder has made drastic strides in a short period of time. What part of this don’t you understand? Giving retirees a free ride has turned this state into an old folks home (where do you think all the new medical jobs are coming from). Would a young college educated professional rather watch Driving Miss Daisy with their grandma in a convolescent home or hang out at a restaurant / bar / club with other college educated professionals? The choice is easy – goodbye MI and hello IL, MA, DC, TX, NY, (insert state)…..

    2. Don

      I agree with you!

  9. John Austin

    Terrific and unfortunately accurate analysis that without investing in our people through education, and our communities and state through infrastructure, transportation and other areas that make the state an attractive place to live and work for all, we won’t grow jobs and our economy.

    1. Dave Maxwell

      John….and who is going to pay for all of it? Maybe the govt employees will kick in some of their retirement income.

  10. Neil

    Another chart on Bridge showed Michigan moving up to 14th of the states in job growth, economic growth. Michigan is not independent of the national economy. President Obama, the Democrats, the Federal government will continue to control the economy with the socialist agenda. Governor Snyder will continue to be handicapped by Washington. Michigan must balance its budget. Where is Michigan to get additional tax money to fund state colleges? Raise taxes on Michigan business to drive business and jobs out of the state? The average student is just as smart as Microsoft Bill Gates. Why does the average student not want to be an all A student. Why doesn’t the student want to earn $ 50 billion dollars before retirement? The student must be presented these options by the 9th grade in high school to be able to set the direction of life. The student should not just settle to be a C student and become a fast food worker or a nurse or social worker. If the student takes these choices, the student must accept what he/she gets paid for the choice as an adult.

    1. Joshua

      Neil, I’m not sure why you think that the average student is as smart as Bill Gates, who is estimated to have a 160 IQ. That would be like saying that the average student has the musical ability of Beethoven and the athletic ability of Deion Sanders. It simply isn’t true.

      1. anarchyst

        Bill Gates was not an intellectual with a high IQ, but happened to be “at the right place at the right time”. It may interest you to know that Bill Gates bought the first DOS (Disk Operating System) from a REAL programmer for $20,000.00 At first, IBM approached Digital Research Corporation with an idea to develop an operating system for its upcoming line of “personal computers”. IBM was rebuffed by Digital Research Corporation (big mistake!). In steps Bill Gates with the operating system he bought for $20,000.00 The rest is history. High IQ (or lack of) had nothing to do with it.
        Oh, I might add, that Bill Gates “daddy” owns one of the most prestigious law firms in the Seattle Washington area. Gates never wanted for money. It was definitely NOT a “rags to riches” story.
        I am sure that Bill Gates daddy was instrumental in creating the tight licensing requirements to even PURCHASE an operating system. Gates insisted that a computer be sold with every copy of his operating system. It was only in later years that one could buy an Microsoft operating system without a computer.
        The same situation existed with Thomas Edison–he was not overly intelligent, but was a good showman and promoter. The REAL electrical genius (that Edison screwed out of money) was Nikola Tesla . . .

  11. Matt

    Have the writers at Bridge bothered to look back and gather and review economic projections for that were tossed out for Michigan 10 years ago? I’m sure there were a bunch. Gov Granholm projected that we’d be blown away! How do those look vs. reality? My guess is they missed by a long way. So other than the purpose of stirring up your readership,(kind of a cheap thrill), Why should we put value on this projection or use it to guide policy?

    1. M

      We were all blown away – by the obstruction in the Michigan GOP controlled senate. A body the GOP has controlled for exactly 40 years. Granholm held the governor’s office for eight.

  12. dale westrick

    I observed a technology class at Stockbridge high school to see what they are doing to prepare the students for the future. They were not only teaching the academics they were also teaching hands on skills. I was very rewarding to me to see what they were doing and would only hope other schools would do the same. I also realize that the administration and the teacher are a big part of the success of their program.
    (Note ) I read about this school on bridge and that led me to contact them.
    Dale Westrick

  13. Dana

    To finish your article:
    … or both.

  14. Edjus

    The author’s solution seems to be to throw more tax dollars into higher education and roads. That mantra is getting old. We’ve been doing this for years and it doesn’t put the state or the people ahead..The state government puts tens of millions of dollars into public universities and the cost of tuition for college is still too high. Smart people are wary of going into twenty thousand dollars in debt for an education that doesn’t guarantee a job. There are orange barrels all over the roads every year which indicates that money is being put into the roads. This just sounds like a plea for raising taxes and subsidizing more people’s education. Maybe we should take a new approach and get the state out of the education and the road business. Now there’s a job creator.

  15. dale westrick

    I read an article on bridge a few months ago about a technology class at Stockbridge high school. I called the school to set up a visit I observed the class in action for about 4 hours. It was very enjoyable to observe students working with their hands. On another point they were also doing the math and reading to be able to go into the work force with needed skills. Many of our schools including our local school have done away with classes like this. I am quite sure Stockbridge that attend these classes will gain valuable useable knowledge when they graduate. To see what these students are doing check out Stockbridge schools on the web.
    Dale Westrick

  16. Jon

    Wow, his average wages for those jobs seems very high! Most open jobs in Michigan pay 8.00 an hour or less. I get rejected for minimum wage jobs even with my 45 years work experience. Now unemployment is ending, that will kill job growth further, and starve people like me out. I’m a US Army veteran also, with a degree.

  17. Me

    When a state is known to be last in assisting help to our Veterans you can expect the worst! Mich is 53rd out of 53,behind Guam for getting help to our veterans.If you cant help those who have given their all so THEY can exist,then you become A USER! MICHIGAN is the USER STATE! I served for 6 years so this state and all its crooks could have a comfortable life.Now when my health is failing I am better off dead! Dont worry about US! My remains will be scattered in CANADA! The enemy will catch up with you soon enough, but I will be at PEACE!

  18. Tim

    What needs to be done when the majority of the under 50 employee shop owners close their doors lay all their loyal employees off to continue to conduct their business with companies in China?The owners get rich and the rest try to figure out how to feed their family.Why can’t we seem to stop this?

  19. mike pommerenke

    you need two do what Indiana did on welfare make them work 20 hours or cut them off !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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