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Original article URL: http://bridgemi.com/2013/12/michigans-christmas-carol/
16 December 2013
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).
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?”
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.”
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.”
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.”