Michigan personal income plummets to lowest in history compared to nation

• Michigan’s personal income is falling farther behind the nation 
• The average Michigan resident earns 87 cents for every dollar earned on average in the U.S.
• Incentives to increase knowledge-based jobs could provide a boost

Personal income in Michigan hit the lowest mark in history compared to the U.S. average last year, another in a sobering litany of data points that illustrate the enormous challenges faced by the state.

The average income of Michigan’s roughly 10 million residents in 2022 was $57,038, compared to a national average of $65,470, according to recently released census data. That means for every $1 the average U.S. resident earns, a Michigander earns just 87.12 cents. That’s lower than the former record of 87.13 cents, which Michigan hit in 2009.

Per-capita personal income is the total of all income state residents receive in wages, proprietors' income, dividends, interest, rents, and government benefits, divided by the total number of residents. Michigan, which was above average for most of the 20^th Century, now ranks 39^th in the nation in personal income, and is the lowest in the Midwest. Ohio is ranked 38^th; Indiana, 34^th, Wisconsin, 27^th; Illinois 16^th’ and Minnesota, 13^th.

“This is the poorest we’ve been compared to the country, ever — I just think it’s shocking,” said Lou Glazer, president of Michigan Future, Inc. “It’s the culmination of 40 years of decline, irrespective of what party is in charge in Lansing or Washington.”

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The personal income of Michiganders peaked 70 years ago, in 1953, when the auto industry was thriving and union jobs guaranteed a middle class life. That year, the state ranked 8^th in the nation in per capita income. Michigan was still ranked 16^th in 1999, before a steady decline over more than the next two decades.

Michigan’s low personal income is offset somewhat by a lower-than-average cost of living — the state ranks 35th in that measure. Still, the data indicates that Michigan residents today are, on average, worse off financially than their parents, when compared to other states.

“People have to realize Michigan is no longer a rich state,” said Eric Lupher, president of Citizens Research Council. “Michigan used to be a high-income state — the birth of the middle class, arsenal of democracy and all that stuff -- and we’ve hit a new low as a state.”

Most of the state’s economic indicators are below average today. Michigan now ranks 37^th in median household income and 34^th in the percentage of adults with a bachelor’s degree or higher. We also rank 49^th in population growth since 2000, a factor that discourages companies from expanding their Michigan operations or moving to the state.

Gov. Gretchen Whitmer launched a commission to examine how the state can retain and lure college graduates, and has supported aggressive business incentives to attract battery assembly plants to support the state’s auto industry.

Complicating those economic revitalization efforts currently is a United Auto Workers strike now entering its fourth week. The strike has cost the U.S. economy about $4 billion so far, with Michigan bearing more than its share.

Changes in the auto industry over the past 40 years account for some of Michigan’s slump from a wealthy state to the poorest in the Midwest, said Brian Calley, president of the Small Business Association of Michigan.

There are fewer autoworkers today than a generation ago, and those workers are paid, when adjusted for inflation, less than their parents earned.

“The drop really tracks with the change in the industrial economy and the amount of income you can make in those areas,” Calley said.

Lupher said he believes the message is becoming clear to state leaders that “the status quo isn’t acceptable anymore.

“Thinking about who we are as a state differently is a necessary step to moving forward,” he said.

Calley suggests that the state needs to examine its K-12 education system, which scores below average in the National Assessment of Educational Progress, often called the Nation’s Report Card. In 2022, Michigan fourth graders ranked 40th in the country in reading.

“There’s no reason to expect (the economy) will improve until we have an education system that is redesigned to meet the requirements of today’s workforce,” Calley said.

Glazer said the state’s economic development efforts continue to be more “factory-based rather than knowledge-based.”

Michigan, he said, needs to focus on jobs that require college degrees, which are more likely to boost the economy.

“Until we do,” he said, “we’ll be one of the poorest states in the nation.”

To Lupher, the new data on per-capita income is another bullet point to help convince residents that the state has a problem. “It’s like the frog and the boiling water,” he said. “We as a state are the frog and we’ve had things deteriorate around us slowly, and we just don’t realize it.

“You're in the bottom third in all these measures, and those measures can open eyes when we realize the heat is turned on and it doesn’t bode well for me or my business and my community,” Lupher said. “What are we going to do?”