James M. Hohman, Mackinac Center for Public Policy
The country has fully recovered the jobs it lost during the pandemic and has been steadily growing in recent months. Michigan, meanwhile, is still falling behind.
Michigan’s added 39,000 jobs since February 2020, a 0.9% gain. That’s well below the 4.2% national average. Michigan is ranked 40th in job growth. Jobs in Idaho, the fastest growing state by this measure, are up by 12.9%.
Recent trends are worse. The state has lost jobs over the past three months, a time in the business cycle when it should be adding jobs. Most of the other states — 37 of them — added jobs over the period.
Breaking job gains down by industry does show a bright spot. Michigan added 27,200 construction jobs from prepandemic levels, a 15.3% increase and above the 8.7% national average.
Job growth in other industries tends to be weaker than the national average, though. Manufacturing jobs are up in the United States and down slightly in Michigan. The same goes for professional and business services, which employ more people than the manufacturing sector in Michigan.
Michigan’s added 39,000 jobs since February 2020, a 0.9% gain. That’s well below the 4.2% national average. Michigan is ranked 40th in job growth. Jobs in Idaho, the fastest growing state by this measure, are up by 12.9%.
Recent trends are worse. The state has lost jobs over the past three months, a time in the business cycle when it should be adding jobs. Most of the other states — 37 of them — added jobs over the period.
Breaking job gains down by industry does show a bright spot. Michigan added 27,200 construction jobs from prepandemic levels, a 15.3% increase and above the 8.7% national average.
Job growth in other industries tends to be weaker than the national average, though. Manufacturing jobs are up in the United States and down slightly in Michigan. The same goes for professional and business services, which employ more people than the manufacturing sector in Michigan.
Other states have grown more, and Michigan can’t catch up when it is losing jobs.
Jobs are not the only measure of growth. A strong economy also helps people earn more money, regardless of whether the state is adding jobs. Michigan is falling behind in income growth as well.
Michigan’s inflation-adjusted per-capita personal income increased from $57,900 to $59,714 from 2019 to 2023, a 3.2% increase. The state’s growth was below the 3.5% national average.
Lagging growth is bad because Michigan incomes were below average in the first place. Michigan was ranked 34th in per-capita personal income in 2019 and fell to 39th in 2023. Missouri, North Carolina, Indiana, Utah, and Arizona surpassed Michigan’s average income levels. Michigan incomes are 12.9% below the national average.
Michigan’s median household income trends are also well below the nation’s. Incomes dropped from $71,000 to $69,200. This 2.6% decrease was more than the 0.8% decline in the national average.
Again, it’s tough to catch up when growth is below average, and this shows in Michigan’s rankings. The state dropped from 32nd to 38th in median household income from 2019 to 2023. Michigan is 11.0% below the national average.
Other measures validate the conclusion that Michigan is falling behind. It lags the national recovery in economic production, in population, in poverty rate, labor force growth and more.
Lawmakers and media point to politics to explain all economic trends. For every phenomenon, they will say that things are good when their guys are in charge and bad when those other guys are in charge.
This is not all Gov. Whitmer and the Democratic legislature’s fault. There are ten million people in Michigan and most of them are not waiting for policymakers to find a new job or start a new business.
Yet lawmakers must share some blame. They establish policies that can help or hurt Michigan’s baseline trends. What they’ve done has not helped.
Michigan’s economic policy has been to reward Democratic stakeholders at public expense. This has raised government costs, wasted taxpayer money, and weighted the scales against the typical resident in favor of special interests.
Lawmakers increased government construction costs to please union stakeholders. This raises taxpayer costs without getting the public something in return.
Lawmakers approved billions in pork projects This money could have been spent on the public interest rather than being directed to some legislator’s political interest.
They got rid of workers’ right to opt out of paying unions. Right-to-work laws boost employment and income growth.
They authorized $4.6 billion in select business subsidies — which costs around $1,100 per household — and have proposed billions more.
And they raised income taxes. The state collects 0.2% more of your income than it did last year. This gave lawmakers $700 million more than they would have had; and this helped transfer money from taxpayers to special interests.
It is no exaggeration to say Michigan lawmakers are bringing back the spoils system, where political leaders reward select interests rather than serving the broader public.
Lawmakers ought to reconsider their strategy. It’s not working, and Michigan is falling behind. There are better ideas.
—————
James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy.
