Bridge Listens: How economic, affordability issues are hitting Michigan

Readers identified affordability struggles as a top election issue
Challenges include troubles with housing stock, Michigan’s aging population and Michigan’s economic development prospects
We break down the problems and what the research says about solutions

Michigan’s economy is dragging and residents are feeling the pinch: Prices are up for most goods, gas and housing, the state’s 5% unemployment rate is higher than the national average and the workforce is getting old.

About 1 in 4 readers have identified the economy and affordability as top concerns in Bridge Listens, our informal survey of Michigan’s most pressing election-year issues.

Here’s what some readers had to say:

“I live on a very small fixed income with disabilities. Grocery bills keep going up, taxes keep going up, Social Security payments certainly don’t keep up with the cost of living … I am just one person, but there are so many affected. How can families with kids manage?” — Constance, Lansing
“In the last year, my monthly grocery bill has increased and costs for the holiday last year were expensive as well. Tariffs have affected our family greatly; and despite the (Supreme) Court’s decision, its effects continue to ravage our resources.” — Kathy, White Lake
“It is way too expensive to eat, pay for heating and electric, put gas in the car, go to the doctor and taxes on everything is out of control crazy! ” — Michelle, Mount Morris

So what’s going on with Michigan’s economy? Are our affordability struggles unique, and can state officials do anything about it?

We spoke with experts and dug into the research. We also asked gubernatorial candidates to weigh on these same issues. See what they had to say here.

Affordability

It’s getting expensive to live in Michigan.

The state ranks 36th in the nation for median household income at $72,875 a year. Accounting for inflation, real median income fell about 1.6% in Michigan between 2021 and 2024, meaning actual purchasing power dropped.

Related:

Grocery prices climbed 3% nationwide over the past year. Michigan gas prices remain higher than the national average. As of mid-June, the state’s $4.14 average for a gallon of gas was up more than a dollar from the prior year, according to AAA.

It’s estimated that 1 in 5 Michigan households spends more than 30% of their income on housing, which financial experts generally advise against. About 13.4% of Michiganders live in poverty, more than the national average of 12.5%.

What the research and experts say

The affordability crisis is not unique to Michigan, and some aspects of it are outside the purview of state officials.

Gas prices, for instance, are largely dependent on global factors, although Michigan taxes fuel at a higher rate than most states. Gov. Gretchen Whitmer has resisted suspending taxes that fund road repairs, an option some experts view as a short-sighted Band Aid.

But there are some things the state government can do.

Michigan has offered tuition-free community college, provided free breakfast and lunch for students in schools and expanded free pre-school education opportunities for the state’s 4-year-olds.

In 2023, Whitmer and a Democratic-led Legislature expanded the state’s Earned Income Tax Credit. University of Michigan researchers say the EITC reduces the likelihood of a family being in poverty and cuts down on the use of public assistance in adulthood

Business attraction

How Michigan spends to boost the economy and increase prosperity is up in the air as lawmakers scrutinize state subsidies — and whether they work.

Most business attraction efforts are run through the Michigan Economic Development Corp., which has been beset by failed projects, steep spending, secrecy and an ongoing criminal investigation into an earmark it oversaw.

Lawmakers last year defunded Whitmer’s signature large-scale corporate grant program, the controversial Strategic Outreach and Attraction Reserve. State House Republicans want to eliminate all business attraction funding.

Since 2022, Michigan has awarded more than $3 billion to employers promising big hiring. So far, jobs have been slow to materialize. A Bridge investigation found that only about one-fifth were realized.

Yet uncertainty in Lansing comes at a critical time for the state, experts say: Michigan’s economic indicators are “getting worse and not better, and we’re not really doing anything to move the needle,” Eric Lupher, president of the Citizens Research Council, told Bridge in June.

“There’s not a lot of confidence in the economic development strategies that we have,” Michigan Chamber President Jim Holcomb told Bridge last fall. “We have to have a strategy that brings people along and creates buy-in.”

What the research says

Spending to subsidize business growth can be effective, but experts say resulting jobs should benefit Michiganders — not new arrivals — and that subsidizing jobs in low-unemployment areas just shifts workers around instead of adding more.

Listen up

Bridge Michigan reporters will discuss the economy and affordability Tuesday at around 11:18 a.m. on WJR Detroit. Jordyn Hermani and Simon Schuster will join “All Talk” with Kevin Dietz. Listen here.

Bridge reporters will also lead a free, hour-long online discussion about the economy and affordability in Michigan on Wednesday, June 24, starting at 7 p.m. The event will dissect gubernatorial candidates’ proposed solutions and discuss unique challenges the state’s residents are facing. Register here.

Incentives “are assumed to pay for themselves,” according to the Upjohn Institute for Employment. But in reality, “fiscal benefits rarely come close to covering incentives’ direct budget costs,” wrote researcher Tim Bartik.

Another recent Upjohn study on clean energy incentives found that offering specialized services — not cash — improves the cost effectiveness, and clawbacks need to be enforced if a deal falls apart.

Research also shows that small businesses create the most jobs, but may not qualify for traditional incentives. Specialty small business goals could pay off, the Pew Charitable Trusts found.

Bridge research documented that the state’s incentives since 2019 largely supported low-wage jobs.

Taxes

Amid affordability concerns, Michigan Republicans are calling for broad tax cuts, while the Democratic governor continues to encourage a more targeted approach, such as her recent proposal to cut property taxes by 10% for seniors.

Tax collections have increased significantly in Michigan in recent years, but the state’s overall tax structure is considered the 16th most competitive in the country, according to the nonprofit Tax Foundation. That group says:

Michigan’s 6% sales tax is the second-lowest in the Midwest.
Michigan is one of 15 states with a flat income tax, and its 4.25% rate is considered “relatively low” but higher than neighbors Indiana and Ohio.
Michigan’s property tax system is “reasonably competitive,” ranking 29th out of 50 states.
The state’s 6% corporate income tax is close to the national average.

What the experts and research say

Experts say tax cuts are most effective when they target lower- and middle-income households, whose residents are more likely to spend the extra money than save it.

Cutting property taxes, as House Republicans have proposed, would provide the biggest benefit to homeowners with the most expensive homes.

State and local governments collected $21.6 billion from property taxes in 2025, up from $20.3 billion in 2024. Those taxes fund schools and local governments.

Michigan collected about $13.3 billion in state income taxes last year. Eliminating that tax, as several gubernatorial candidates have proposed, would also cut funding for schools, transportation and government services.

Because Michigan has a flat 4.25% income tax, wealthy residents would save the most money from elimination.

Based on 2021 tax data, which is the most recent available, the 2.7 million Michigan filers with adjusted gross incomes of $50,000 would have saved an average of $162. The 22,485 filers who earned more than $1 million would have saved an average of $48,964.

Housing

The state of housing in Michigan is complicated.

While it’s still more affordable to both build and buy a home here than in many other states, local zoning and regulations, labor shortages and older housing stock can quickly make the costs stack up.

Michigan is short 195,000 affordable houses, according to a recent report published by the National Low Income Housing Coalition (NLIHC), which calls it a “severe” shortage. State officials peg the shortfall closer to 119,000 units.

Home prices are also up just over 4% year over year, according to data from Zillow. The firm estimates the average Michigan home is worth $263,590, a more than $109,000 increase from January 2018.

Lawmakers have introduced legislation to allow for more homes to be built on smaller parcels of land, repeal certain real estate and property taxes, update the state’s mobile home codes and introduce a state-level tax credit to make building easier. Some have even argued that allowing longer campground stays could help solve the housing crisis.

Partisan fighting has slowed or stalled several of those bills.

What the research says

Experts say building more housing is generally the most effective way to lower costs. Michigan is trying to do that but is playing catch-up after it was hit earlier and harder than most by the Great Recession, which led to a dramatic homebuilding slowdown during the mid-to-late 2000s.

Despite efforts, Michigan is building the second fewest homes in the Great Lakes region, according to recent US Census Bureau data.

So is it the result of government regulations? Experts say it’s more complicated than that. Stagnating wages in Michigan have certainly played a role, too.

It’s no real surprise, then, that Michigan earned a C grade on Realtor.com’s state-by-state housing report card, which measures how well states can juggle affordability concerns with new homebuilding efforts.

Diversifying Michigan’s economy

Manufacturing remains Michigan’s most important economic sector — but continues to shed jobs. The state had about 579,400 manufacturing jobs as of April, down from 589,200 the year prior and 838,300 in 1990.

Blue collar manufacturing jobs account for 9.5% of the state’s payroll jobs. That’s a record low for Michigan, which still holds onto its image as filled with high-wage auto production jobs.

Lou Glazer, president of Michigan Future Inc., and others have urged the state for years to encourage higher-wage employment that requires post-high school education — ideally, Glazer says, college degrees.

A strong Michigan commitment to the automotive industry is critical for the state, its advocates say. But policymakers also recognize the industry is at another critical juncture as automation reduces jobs, the electric vehicle push recedes and Chinese automakers gain global dominance.

The Whitmer administration looked to the semiconductor industry to diversify, but a deal with Sandisk, which relied on $27 billion in state incentives, fell apart in summer 2025 after years of secret negotiations. A new law that attempts to lure data centers with tax breaks has ignited controversy, in part because of the limited number of permanent jobs at the facilities.

What the research says

Discussions about diversification focus on cultivating higher-paying jobs that require higher education. Currently:

65% of Michigan jobs do not require bachelor’s degrees.
52% of those jobs pay below what it takes to be considered middle class, about $47,026 per year for a family of three.
Michigan ranks 34th in bachelor’s degree attainment.

Why it matters:

Michigan’s manufacturing pay used to lead the nation. Today, the median manufacturing wage nationally is $36.71, while in Michigan, it’s $33.50.
Today’s blue collar manufacturing jobs pay an average wage of $51,470 a year — an amount 21% below the statewide average for all jobs, Glazer told Bridge.
Manufacturing employment is expected to decline 3% by 2032, falling to about 585,000, according to state projections.

Higher education also is important to retaining higher-paying research and development jobs. The state needs more graduates with software development, cybersecurity, and data analysis degrees to meet future demands, according to MichAuto, the state’s industry advocacy group.

“If we’re supposed to be the global epicenter of mobility and not automotive … why aren’t these companies here?” Tu Le, CEO of Sino Auto Insights asked at a recent MichAuto forum. “Because they don’t feel welcome. The talent is not here, and the automotive companies take all the air out of the room.”

Population/demographic stagnation

Michigan is an old state and is getting older, which has implications for employers and the economy.

As of 2024, one-third of Michigan’s population was older than 55.
Retirees now comprise 22% of the state’s 16-and-older population.
Michigan’s current median age hovers around 40, making it the 13th oldest state in the nation.
It’s also one of 15 states where baby boomers are the largest living generation.

Despite Michigan adding around 28,000 residents last year, younger people aren’t moving to Michigan. Birth rates are also declining and baby boomers are now retiring.

Since March 2025, Michigan’s labor force has lost 93,000 workers. That same year, Michigan also had just over 1.8 million retirees — up more than half a million from 25 years ago.

While the state can’t stop retirements, officials hope free community college and programs aimed at children — such as free pre-K access or free breakfasts and lunch at schools — will attract younger families to the state.

Whitmer convened a population growth council and established the Michigan Growth Office. Lawmakers have not acted on many of the council’s recommendations.

What the research says

An aging population without younger people to replace them could have major consequences for Michigan.

And experts say Michigan’s already-shrinking labor market is likely to contract further, meaning employers could have a harder time hiring and worker shortages could become even more common.

“A growing share of our population is no longer working, not necessarily because of weak labor demand, but because they’ve aged into that retirement population,” Wayne Rourke, labor market information director at the Michigan Center for Data and Analytics, told state officials last month.

The state’s aging population could have a cascading effect: Fewer people working would mean a smaller tax base to support government services. The state could continue to lose representation in Congress, which would mean the loss of federal funding that is divided among states for things like transportation, affordable housing and water infrastructure.

An aging population also spells trouble for schools as deaths continue to outpace births. State demographers recently projected Michigan will be home to about 280,000 fewer school-age kids by 2050. That, in turn, could hurt colleges that experts say are important to growing and diversifying the state workforce.

“You cannot recruit students who were never born,” Siena Heights President Cheri Betz told Bridge Michigan earlier this year as her college closed for good.