Despite recent job gains, prosperity eludes Michigan

Brian J. O'Connor
Detroit News Finance Editor

Michigan may be gaining jobs faster than much of the rest of the nation, but those new jobs aren’t making the state a prosperous place to live, according to a study released Monday.

The latest report from the nonprofit Michigan Future Inc. finds that while Michigan added jobs at a fast enough pace between 2010 and 2014 to be ranked seventh-best in the nation, it remained mired in the bottom third of states ranked by per capita income, which ranged from 35th worst in the national to 38th worst. Michigan also ranks near the bottom in the proportion of adults who work, ranking 42nd in the number of 25-64 old residents with a job.

Despite adding 441,200 nonfarm payroll jobs since the end of the recession in 2009, Michigan is a state with structurally low prosperity, says Lou Glazer, president of Michigan Future Inc.

“You cannot say now that the reason we’re lagging in all these metrics is because we have a declining economy,” Glazer said. “We have a growing economy and we’re still low in per capita income and the proportion of adults who work. This is the first time in a booming auto economy that Michigan has been a low-prosperity state. It’s because the economy changed.”

Glazer, who prepared the study with University of Michigan economist Donald Grimes, says the key to becoming a more prosperous state is becoming a more educated one.

As recently as 2000, Michigan ranked 18th in per capita income, even thought the state was ranked 34th in the number of residents with a bachelor’s degree or better. Since the recession, however, income has dropped to more nearly equal education levels. In 2013, Michigan ranked 37th in per capita income and 33rd in the proportion of adults with a four-year degree or more.

Education levels of the work force influence overall prosperity because of the growth of high-paying jobs in the service sector that require at least a four-year degree. That work force, in turns, attracts companies eager to pay good wages to access the local talent pool.

“If you want knowledge-based services, which is more than 55 percent of the wages in the economy, you have to have talent concentrations,” Glazer said.

Glazer noted that, while the tallest office building in Detroit recently sold for $8 million, at about the same time Google paid $1.9 billion for an office building in New York because of the highly educated talent pool available there.

“The difference between $1.9 billion and $8 million is not the building,” Glazer said. “It’s the access to brains.”

Another disturbing finding of the study was the low proportion of working-age adults in the labor force, Glazer added.

“One thing that surprised us is the degree to which Metro Detroit and the state in general have so many fewer adults working,” Glazer said. “If Michigan had the same employment-to-population ratio as Minnesota, there’d be something like 750,000 more Michiganders working.”

But some residents are starting to come off the employment sidelines, notes Karen Gutman, director of Business and Career Services for JVS, the nonprofit career development and employment services center in Southfield.

“We are seeing a lot of people getting jobs, so that’s the good news,” Gutman said. “Some people who have been unemployed for quite some time do feel discouraged, and we try to get them re-engaged and freshen up their job search and their resume and their skills.”

She added: “It is tough, but we definitely see things picking up.”

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