Study: Mich. not best for business, but getting better

Lauren Abdel-Razzaq
The Detroit News

Detroit — When it comes to business development and growth, Michigan is running at the middle of the pack compared to other states. But it’s showing signs of improvement, according to a report commissioned by a business advocacy group.

“After years of decline, Michigan is getting back in the game again,” said Doug Rothwell, president and CEO of Business Leaders for Michigan. “But running in the middle of the pack isn’t going to get us the jobs and investment we want.”

Michigan was a top 10 state as recently as the 1990s, but after the recession and the bailout of the auto industry, the state has been struggling.

According to the report, returning to the top 10 would bring in, on average, 150,000 more jobs, add $12,000 more to each worker’s income and produce $16,000 more gross domestic product per person.

Although the state is far from achieving that, there are signs that things are improving, said Rothwell.

“For an entrepreneur, Michigan is one of the most business-friendly states in the country,” he said. “You do have a relatively low cost of entry and we’ve also got some great customers you can sell goods to.”

Rothwell outlined his organization’s 2014 Economic Competitiveness Benchmarking Report Thursday during the Michigan CEO Summit at the Westin Book Cadillac Detroit. He was one of more than a dozen business leaders who addressed topics like competitiveness, investing in the state and changing with the times.

According to the report, Michigan is currently ranked 46th of the 50 states for job growth, with 8.8 percent unemployment in 2013, a full 3 percentage points higher than the top 10 states. Private sector job growth is 14th, down from the 6th spot in 2011-2012. The state has the 9th best income growth, but we’re still 35th for per capital personal income.

At the same time, the corporate tax climate is now the 9th best in the country, up from the bottom now that the state has eliminated the Michigan Business Tax. The overall business tax climate is in 14th place, which Rothwell said will only get better as the personal property tax is phased out.

“If we are serious about winning, the best-performing economies focus on offering more value for cost than their competitors do,” said Rothwell. “Michigan has not had a history of thinking this way. If we want to be a top 10 state, we think that’s what it’s going to take.”

The study looks at a number of factors from 2013, the most recent data available — including GDP, employment and labor costs. It was compiled and researched by Anderson Economic Group and Business Leaders for Michigan is using the study as a guide for the next steps to furthering business development in the state.

Rothwell said the re-election of Gov. Rick Snyder should help continue the turnaround.

“We were concerned that the actions that the governor has taken to make Michigan more fiscally responsible would need to have time to work,” he said in an interview after this presentation. “With the continuation of his administration, that should allow for that time.”

One of the biggest challenges that Business Leaders for Michigan wants to focus on is education, including technical skills.

Michigan ranks 37th for career and college readiness. The study says just 21 percent of 11th-graders are deemed ready to go to college or join the job force after graduation. In addition, technical education ranks in 26th place.

“This is a state that prides itself on being a manufacturing place,” said Rothwell. “Clearly, we need more workers with technical skills if we are going to make that boast.”

Rothwell says the state needs to put a higher priority on all forms of higher education, but at the same time, businesses need to partner with schools to provide greater opportunities for students to get internships and co-ops.

Overall, Rothwell said the study paints a picture of a state that is better than where it was, but still in need of improvement.

“The optimistic message is we, the business leaders in this state, believe if we act on what data tells us we can correct it and be the top 10 state we want to be,” he said.

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