Blue collar manufacturing jobs––officially called production jobs––are no longer high paid. In 2024 Michigan had 445,000 production jobs out of 4.39 million payroll jobs. A little more than 10 percent of all Michigan payroll jobs. The median wage for a full time, year round Michigan production job was $45,470 compared to $48,300 for all Michigan workers. The average wage for a full time, year round Michigan production job was $49,730 compared to $63,120 for all Michigan workers. 

Given that Michigan’s core economic challenge is that we don’t have enough high paid jobs, the average wage deficit of more than 20 percent is more impactful/important than the median wage deficit of about 6 percent. Both belie the notion that production jobs are good paying jobs that policymakers in both parties routinely claim.

Turns out the Michigan production workers now earn less than production workers nationally. Something that was unimaginable in the past. The national median for production workers is $45,960. The national average is $50,900.  Production workers are a little less than 6 percent of all national workers. 

At the bottom of this post is a table with 2024 data for the nation, Michigan and the top ten per capita income states. (The Colorado data is from 2023 because the 2024 data is not available.) The table has average wages for production jobs and for all jobs. And the production jobs location quotient (LQ). LQ measures how concentrated in an occupation a state is compared to the nation. If you have the same portion of production jobs as the nation your LQ is 1. Under 1 means you are less concentrated. 

As you can see lots of high wage production jobs have nothing to do with a state being prosperous. The nation’s most prosperous states are under concentrated in production jobs and in each state their average wage of production jobs is lower than the average wage of all jobs, in most of the states substantially below. 

Although Michigan has succeeded in being over concentrated in blue collar manufacturing jobs, production jobs are no longer a big share of Michigan jobs. And more importantly are not a major source of high paid jobs. And the same is true for all prosperous states. Blue collar manufacturing jobs were what made Michigan one of the nation’s most prosperous states in the 20th Century. In the 21st Century lots of production jobs are no longer a path to prosperity.

Michigan is having a hard time learning that lesson. Retaining and attracting production jobs is the core of Michigan’s economic development strategy for both parties. At a cost of literally billions of dollars. The state has been pursuing a retain and attract manufacturing plants first economic development strategy for decades and over that time we have fallen from the 16th most prosperous state in the nation to the 12th poorest state. Sure seems like it is far past time for a new economic development strategy.

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Conventional wisdom has it that there are myriads of high-wage jobs that don’t require a B.A. but do require something more than a high school degree. These jobs are labelled middle-skills jobs. The claim of so many high-wage middle-skills jobs is a central component of the you don’t need a B.A. messaging that students––particularly non-affluent students––are constantly bombarded with.

It is important to note that the Bureau of Labor Statistics (BLS) determines educational attainment required for each occupation based on the level of education achieved by workers who are employed in the occupations. So whether employers require a B.A. or not in posting a job is not a factor at all in the BLS education requirement determination.

Turns out the claim of many high-wage middle-skills jobs is greatly exaggerated. Only about one in ten 2023 Michigan jobs that pay at least $65,000 are in occupations that require more education than a high school degree, but less than a B.A. (About three in ten Michigan jobs pay at least $65,000.)

Completely contrary to conventional wisdom, there are far more Michigan jobs that pay at least $65,000 that require a high school degree or less that there are high-paid middle-skills jobs. About one in four Michigan jobs that pay at least $65,000 require a high school degree or less.

The details of the education attainment distribution of Michigan jobs that pay at least $65,000 is:

• 65.7 percent require a B.A.or more
• 2.4 percent require an apprenticeship
• 3.2 percent require an associate degree
• 4.2 percent require more that a high school degree, but not an apprenticeship or associate degree
• 24.5 percent require a high school degree or less

Of the 1,329,406 Michigan jobs that pay at least $65,000:

• 872,867 require a B.A. or more
• 32,530 require an apprenticeship
• 42,194 require an associate degree
• 55,817 require more that a high school degree, but not an apprenticeship or associate degree
• 325,530 require a high school degree or less

It also turns out that most middle-skills jobs don’t pay at least $65,000:

• 43.9 percent of jobs that require an apprenticeship pay at least $65,000
• 44.4 percent of jobs that require an associate degree pay at least $65,000
• 15.1 percent of jobs that require more than a high school degree, but not an apprenticeship or associate degree pay at least $65,000

The very small percent of jobs that require more than a high school degree, but not an apprenticeship or associate degree should call into question the constant promotion of non-degree credentials and certificates. They simply are not a reliable path to high-paid jobs.

The bottom line is clear: the most reliable path to a high-wage job is getting a four-year degree. End of story! We simply have got to stop delivering the opposite message to students.

The post The paucity of high-wage middle-skills jobs appeared first on Michigan Future Inc..

As we explored in our last post conventional wisdom about the value of a B.A. in obtaining a good-paying job and having a prosperous forty-year career is vastly underestimated. The Georgetown University Center on Education and the Workforce calculates that 59 percent of today’s good-paying jobs require a B.A. and that will grow to 66 percent in 2031.

The stories that dominate the public conversation about the labor market are not only inaccurate in their portrayal of the value of a B.A. compared to sub B.A.credentials, but also in its description of which occupations provide the most good-paying jobs. Conventional wisdom has it that good-paying jobs are narrowly focused in the skilled trades and in STEM occupations. Not close to reality both today and tomorrow.

The reality is that there are a wide variety of good-paying jobs now and as projected by the Center on Education and the Workforce will be a decade from now. As you can see below, management is, by far, the occupation cluster with the most good-paying jobs. Computer and math occupations are the largest STEM occupation cluster and it ranks the seventh largest. The largest skilled trades occupation cluster is construction and extraction ranking eight.

In the Michigan Future analysis of good-paying jobs we pull out first-line supervisors from all the occupation groups. If you do that, the proportion of good-paying management jobs goes up substantially. We found that first-line supervisors are the largest good-paying jobs occupation among jobs that don’t require a B.A.

Here are the proportions of good-paying 2031 jobs by occupation in the Georgetown report. Only those occupations that have at least 3 percent of all good-paying jobs are listed. A far more diverse list of occupations than conventional wisdom.

• Management: 21%
• Business and finance: 9%
• Healthcare professional and technical 9%
• Education, training and library: 7%
• sales: 7%
• Office and administrative support: 7%
• Computer and math: 6%
• Construction and extraction 5%
• Transportation and materials moving: 4%
• Production: 4%
• Architecture and engineering: 3%
• Installation, maintenance and repair: 3%

How many parents and students do you think know that there are more good-paying jobs projected in 2031 in both sales and office and administrative support than either construction or computers?

If we’re serious––as we should be––about providing all students information about all good-paying occupations we will have to dramatically change the story we are telling them about what the labor market today and tomorrow looks like. We need a reality based story about a labor market where there are a wide variety of good-paying job opportunities. Where the path to a prosperous career is not narrowly focused on either a STEM degree or learning a skilled trade. And where a four-year degree in any major is the most reliable path to the middle class.

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We have written frequently about the wage premium enjoyed by those with a four-year degree or more. And yet we continue with a public conversation that increasingly questions the value of getting a four-year degree or more. The reality is that a four-year degree or more is the most reliable path to a middle class or better career. End of story!

One of the main reason why a B.A. is the most reliable path is that the B.A. premium grows larger as one ages. The data below details this ever expanding premium. The data are for 2022 money earnings for full-time, year-round workers from all work: payroll jobs, gig jobs, self employment, second jobs, overtime pay, bonuses, you name it.

• 25-29 year olds with a B.A. have average work earnings of $77,090: $17,010 greater than those of the same age with an Associates Degree, $22,090 more than those with some college, no degree and $31,260 more than those with a high school degree.
• 30-34 year olds with a B.A. have average work earnings of $96,530: $33,560 greater than those of the same age with an Associates Degree, $40,930 more than those with some college, no degree and $43,830 more than those with a high school degree.
• 35-39 year olds with a B.A. have average work earnings of $109,900: $45,100 greater than those of the same age with an Associates Degree, $45,450 more than those with some college, no degree and $55,630 more than those with a high school degree.
• 40-44 year olds with a B.A. have average work earnings of $118,700: $47,570 greater than those of the same age with an Associates Degree, $56,550 more than those with some college, no degree and $57,530 more than those with a high school degree.
• 45-49 year olds with a B.A. have average work earnings of $121,000: $55,1900 greater than those of the same age with an Associates Degree, $48,490 more than those with some college, no degree and $60,960 more than those with a high school degree.
• 50-54 year olds with a B.A. have average work earnings of $123,800: $49,740 greater than those of the same age with an Associates Degree, $53,210 more than those with some college, no degree and $64,390 more than those with a high school degree.
• 55-59 year olds with a B.A. have average work earnings of $122,300: $48,440 greater than those of the same age with an Associates Degree, $50,680 more than those with some college, no degree and $62,400 more than those with a high school degree.
• 60-64 year olds with a B.A. have average work earnings of $125,900: $54,0700 greater than those of the same age with an Associates Degree, $54,620 more than those with some college, no degree and $62,180 more than those with a high school degree.

Apologies for so many numbers. But given all the misinformation about the value of a four-year degree we wanted to present the overwhelming case that over a forty-year career the B.A. premium is ever present and growing year after year after year. The B.A. premium compared to an Associates Degree starts around $17,000 and grows to around $50,000 annually at 45-49 and stays there through age 65. The B.A. premium compared to those with some college no degree starts at $22,000 and grows to $50,000 annually by 40-44 years old and stays there through age 64. And the B.A. premium compared to a high school graduate starts at $31,000 and grows to $50,000 annually by 35-39 and to around $60,000 annually by 45-49 and stays there through age 64.

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This, of course, is the exact opposite of Michigan in the 20th Century when the state was structurally a high-prosperity state. In 1999 we ranked 16th in per capita income, just a smidge below the nation. In this post I want to focus on the reasons for Michigans decades-long economic well-being decline by comparing the components of Michigan per capita income in 1999 and 2022.

As readers of this blog know the core MFI description of the reason Michigan has been getting poorer compared to the nation is that we are over concentrated in manufacturing which is declining in both employment and wages and we are under concentrated in knowledge economy industries––information; finance and insurance; professional and business services; and corporate HQs––which are both growing and high wage.

And that is exactly what has happened between 1999 and 2022. U.S. per capita income in $2022 grew by $19,389. Michigan grew by $11,095. Knowledge economy industries share of per capita income in the U.S. has grown from 16.0 percent to 17.4 percent. In Michigan it has declined from 14.7 percent to 14.1 percent. Manufacturing share of per capita income in the U.S. has fallen from 10.9 percent to 6.1 percent. In Michigan it has declined from 18.9 percent to 10.3 percent.

Massachusetts, which is the economic well-being gold standard state, by comparison gets about 26 percent of its per capita income from knowledge economy industries and about 5 per cent from manufacturing.

Knowledge economy earnings (both wages and employer paid benefits) per capita in the U.S. went from $7,379 to $11,364. Manufacturing earnings went from $5,029 to $4,008. In Michigan, knowledge economy earnings went from $6,742 to $8,024; manufacturing earnings went from $8,689 to $5,888. A very big proportion of Michigan’s manufacturing earnings decline is in motor vehicles and motor vehicle body parts manufacturing where earnings declined by $2,026 out of a total decline in Michigan manufacturing earnings per capita of $2,801.

32.6 percent of Michigan’s decline compared to the nation is attributable to slower growth in knowledge economy earnings. Another 26.4 percent is attributable to our much steeper decline in motor vehicles, fabricated metals, and machinery manufacturing earnings. The two other big contributors to Michigan’s growing gap with the nation are slower growth in government earnings which explains 12.5 percent of the gap (so much for the Michigan is big government myth) and capital income which explains 18.6 percent of our decline.

Capital income, which is investment earnings not including capital gains, are almost certainly highly aligned with knowledge-economy employment and four-year degree attainment rates.

One item that does not explain our growing gap is transfer payments which grew in Michigan by $6,143 compared to $6,081 nationally.

For us the basic lesson of this data is what matters most to Michigan reversing its decades-long economic well-being decline is growing the knowledge economy. The knowledge economy is the high- wage and high-growth sector of the 21st Century American economy.

You can find our recommendations for how the state can best grow the knowledge economy here.

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Crain’s Detroit Business recently reported that Governor Snyder is going to propose that coding earn a foreign language credit in high schools. This would be part of a major initiative to push more Michigan high school and college students into computer science occupations.

In a recent interview with Bloomberg TV technology entrepreneur Mark Cuban said:

The people who are writing software, unless you are doing advanced things, they’re gone. … I personally think there’s going to be a greater demand in 10 years for liberal arts majors than there were for programming majors and maybe even engineering. When the data is all being spit out for you, options are being spit out for you, you need a different perspective in order to have a different view of the data. In particular, experts in philosophy or foreign languages will ultimately command the most interest from employers in the next decade.

So Cuban––who started his career as a programmer––believes sooner rather than later the occupations our Governor wants more and more of our kids to pursue are going to be automated away. That what is coming is the automation of automation. That software––not humans––will increasingly do the coding and programming.  That what humans will be needed for is not math-based work, but rather understanding what to do with data. And that comes from the liberal arts––including foreign languages––not STEM-based skills.

Who knows if Cuban is right about the degree and timing of when automation will take over coding and programming. I sure don’t. But I sure wouldn’t dismiss him. There is a reasonable chance that he is right. What we know is that automation is going to transform work. We just don’t know what occupations and when.

This is the debate we should be having most now about the education system we want for all kids in Michigan. One path is represented by the Governor and many other public officials and business leaders. Educate other’s kids for the jobs in demand by Michigan employers today. The other, as represented by Cuban, is to educate all kids to build the skills needed for a successful forty-year career, not a first job. In a world where we know many occupations are going to be continuously automated away.

We clearly prefer the latter. The education system we recommend in our new state policy agenda is:

Our education policy recommendations are built on two core principles:

First, that all children deserve the same education no matter whom their parents are. Without that we cannot live up to the core American value of equal opportunity for all.

We are on the opposite track at the moment as both a country and a state. The education that is provided for affluent kids is, by and large, designed and executed differently than it is for non-affluent kids. One system delivers a broad college prep (dare we say liberal arts) education, the other delivers an increasingly narrow education built around developing discipline and teaching what is on the test or narrowly preparing non-affluent children for a first job.

The second is that none of us has a clue what the jobs and occupations of the future will be. Today’s jobs are not a good indicator of what jobs will be when today’s K-12 students finish their careers in the 2050s or 2060s. We simply don’t know how smarter and smarter machines are going to change labor markets. So the purpose of pre K-12 education (maybe even pre K-16) is to build foundation skills that allow all Michigan children to have the agility and ability to constantly switch occupations.

To thrive in the new economy, workers have to be adaptable, have a broad base of knowledge, be creative problem solvers and be able to communicate and work well with others. In other words, workers need to be really good at all of the non-algorithmic skills computers aren’t good at yet.

The best definition we’ve found for this complex set of skills comes from the book Becoming Brilliant, by learning scientists Roberta Michnick Golinkoff and Kathy Hirsh-Pasek, who label these skills the six Cs: collaboration, communication, content, critical thinking, creativity and confidence.

These are the skills students will need to complement rather than be replaced by machines, solve today’s problems, and create new solutions to problems we can’t yet envision.

If Michigan is going to be a place with a broad middle class, if employers are going to have the supply of skilled workers they need and if Michigan is going to be a place once again where kids regularly do better than their parents, it will happen because the state made a commitment to provide an education system for all from birth through higher education that builds rigorous broad skills that are the foundation of successful 40 year careers.

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This post was originally published in October 2016. It is arguably more relevant today than then. As Farhad Manjoo details in a recent New York Times column coding will not be a high-paid occupation for much longer. As Kim Trent made clear in this post technical/occupation specific skills are not foundational to successful forty-year careers. That learning how to code is not the same as learning “skills like the ability to communicate, think critically, collaborate and create become increasingly vital for future careers. These are all skills that students hone in college.” 

At the turn of the 20th century, two iconic leaders framed the debate about education in the black community: Harvard-trained intellectual and activist W.E.B. Dubois, who thought a classical education would best equip African Americans for lifelong success and Booker T. Washington, the most famous black man of the era and a staunch advocate of vocational education for African Americans.

I’ll pause here and confess that I have always been on Team DuBois, believing – as he did – that a college education is the black community’s most direct path to economic stability and intellectual advancement. That said, I will also concede that in the early 1900s, few African Americans could afford the luxury of a college education and that opportunities for black workers with a trade were plentiful.

My own paternal great-grandfather moved to Detroit in 1912 and landed a plum job as a skilled tradesman at Ford Motor Company. Both his son – my grandfather – and my uncle later comfortably raised families with good skilled trade jobs at Ford. My maternal grandfather, meanwhile, made a solid living as a welder at Detroit auto companies.

Trade jobs are not encouraging future careers

There’s no doubt that skilled trades jobs were a boon for African Americans in the 20th century. But this is 2016, and futurists have predicted that globalization and automation will make modern workers with transferable skills more valuable to employers. Skills like the ability to communicate, think critically, collaborate and create become increasingly vital for future careers. These are all skills that students hone in college.

That’s why I am highly skeptical of Rooted School, a high school that Jonathan Johnson proposed in New Orleans. The founder hopes to teach students skills like coding and software development so they can skip college and instead begin “high-paying” jobs right after high school. Johnson, who is still raising money to launch the school in 2017, told The Hechinger Report that he designed the school to diversify the ranks of the tech industry.

On its face, Johnson’s pitch may sound appealing. After all, tech jobs are high growth right now; an 18-year-old won’t sneeze at a $16 an hour wage for a coding job.

But mounting evidence shows that narrow educational schemes are the wrong path to prepare for ever-evolving 21st century careers. Today’s booming job field can be tomorrow’s career wasteland and workers who have only been trained to do one thing can find themselves out in the cold. For example, a 2015 Medium.com essay predicts the demise of software engineers. Dan Auerbach, a well-renowned software engineer himself, states that the increasing accessibility of software engineering platforms and the growing capability of software to create software will make human software engineers obsolete by 2060.

Transferable skills for a future career

There will undoubtedly be some who will think my view is elitist. Perhaps this is not surprising since I work for an organization that has consistently pushed higher education as a platform for life and career success. Not to mention that I’m a board member for a four-year university.

The truth is that I have deep respect for anyone who gets up every day to make an honest living. But I also think it is great folly to steer black children into narrow training for jobs that may or may not exist over the span of their careers instead of giving them broad skills that will help them adapt to changing work landscapes.

There’s a reason you rarely hear arguments for vocational education in wealthy suburban districts and it’s not because the parents there don’t want their children to succeed. Quite the opposite! Those districts offer college preparatory curricula because they know that in a rapidly-evolving economy, transferable skills are desirable not just to secure a short-term job but to build a lifelong career.

Encouraging future careers through educational reform

I recently re-watched a video of a panel discussion about the impact of educational reform on anti-poverty agendas that was sponsored by the Thomas B. Fordham Institute in 2014. Some of the panel’s speakers lifted up vocational education as a poverty eradication tool and wondered whether if it is unwise to continue to advocate for college prep curricula for all high schools.

On the panel, I found a kindred spirit in famed educator and civil rights activist Howard Fuller, who expressed his belief that all students should be given a rigorous secondary education that will prepare them to succeed in college and whatever career they choose. Like me, Fuller is skeptical of schools that track students into jobs instead of giving them access to a wide range of choices.

“Most of the people who talk about ‘kids don’t need to go to college,’ hell, they went to college,” Fuller said. “That’s where my problem starts right there. Why is it that it was ok for you [to go to college] but for these low-income kids it’s ‘all of y’all can’t go to college?’”

Why, indeed.

The post Preparing Black students for life and career, not just a job appeared first on Michigan Future Inc..

A little more than three years ago the Grand Rapids Public Museum hosted Outsmarting the Robots: Redesigning education from the classroom to the halls of Lansing. The conference was organized around the question “How do we redesign our system for learning to build the 21st century skills that matter to meeting the needs of our children, economy, society, and world?”

The conference organizers––including Michigan Future––believed that our education system needed redesign of both what we teach and how we teach. That standardized test driven schooling is designed to teach a too narrow set of skills and is delivered in a way that does not engage students nor create lifelong learners.

The conference was organized around the belief that all schools and youth development programming needs to be designed to build more rigorous and broader skills than what is on the test and that how we teach needs to be far more engaging and experiential. Our premise? We don’t have an education reform challenge; we have an education redesign challenge.

New York Times best-selling author of Becoming Brilliant: What the science of learning tells us about raising successful children Kathy Hirsh-Pasek served as the conference guide.

Becoming Brilliant makes the case that foundation skills for all students––no matter what path they choose to take after high school––are the 6Cs: communication, collaboration, content, critical thinking, creativity and confidence.

They also are the foundation skills students will need to outsmart the robots. To complement, rather than be replaced by, machines and to compete in a labor market that is increasingly rewarding those who are good at working with, solving problems with, innovating with, and leading people who don’t look like you and don’t think like you.

Fast forward to today where the latest headline grabbing smarter bot is ChatGPT. ChatGPT is widely viewed as a precursor to a wave of artificial intelligence which will take over from humans much of our high-paid mental work. Which, of course, raises the question in a world of constantly improving A.I. “What work will humans do?”.

In an insightful New York Times column, entitled In the Age of A.I., Major in Being Human, David Brooks suggests this list of outsmarting A.I. bots skills: a distinct personal voice; presentation skills; a childlike talent for creativity; unusual worldviews; empathy; and situational awareness.

It is clearer today that if Michigan is serious about preparing all its children to be successful in life and work we need to redesign schooling. One where students are engaged, not bored; one where all students are developing agency to create and realize their own dreams; and one where all students develop the broad non-content and non-occupation specific skills that will enable them to keep learning and adapting in a world characterized increasingly by constant change.

That means we need to deemphasize standardized tests which focuses schooling on way too narrow content skills and drives out developing the Becoming Brilliant and Brooks’ foundation skills.

We need to deemphasize building occupation-specific skills. Knowing coding or welding or accounting is not what matters most to having a successful forty-year career. All of those occupational skills have a shorter and shorter half life. It’s not that knowing how to code, weld or do accounting is irrelevant to getting a job today, it is those are the icing on the cake career-ready skills, not the essential skills. 

We need to reemphasize the liberal arts. As Harvard economist Dave Deming writes:

A liberal arts education fosters valuable “soft skills” like problem-solving, critical thinking and adaptability. Such skills are hard to quantify, and they don’t create clean pathways to high-paying first jobs. But they have long-run value in a wide variety of careers. … But even on narrow vocational grounds, a liberal arts education has enormous value because it builds a set of foundational capacities that will serve students well in a rapidly changing job market.

And maybe most importantly we need to redesign how we do teaching and learning. Schooling needs to look like the rigorous and engaging projects featured in the movie Most Likely to Succeed. And to look far more like extracurriculars and electives than the tradition classroom.

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In 1979 General Motors employed 468,000 American hourly workers. 76 percent of their U.S. workforce. In 2021 General Motors employed 45,000 American hourly workers. 46 percent of their U.S. workforce.

Today 24,000 work at the General Motors Global Technical Center in Warren. Their average annual salary is $120,000. Around double what their highest paid hourly workers made. GM describes the Center as where the “the world’s best designers and engineers come together to help redefine the future of transportation”.

Last October General Motors unveiled their plan to double revenues by 2030. They titled their presentation to investors From Automaker to Platform Innovator. Yes you read that right: GM no longer defines itself as an automaker.

As the Detroit Free Press, in an article entitled GM’s new business model turns carmaker into a software company describes:

General Motors’ transition to all-electric vehicles will transform the century-old automaker into a software company that just happens to make hardware: cars.

In the new business model, the cars will be a platform to deliver GM-developed software to offer consumers services beyond their vehicle. Services that can be used in their homes and other areas of their lives, GM leaders say.

GM projects auto sales and financing will grow from $138 billion to $195-230 billion in 2030. With $90 billion from EVs. Software and new business is projected to grow from $2 billion to $80 billion in 2030. In addition to GM Defense, these new business ventures include:

• ULTIFI: End-to-end software platform to seamlessly deliver software-defined features, apps and services over-the-air
• OnStar Insurance: A centralized location for home and auto insurance needs.
• Cruise: Self-driving technology taking on challenges in hardware, AI, embedded systems, simulation, and infrastructure.
• Future Roads Using connected vehicle data to help cities make smarter infrastructure decisions
• BrightDrop: Reimagining commercial delivery and logistics for an all-electric future.
• GM Hydrotec: Affordable hydrogen fuel cell power solution for land, air and sea applications
• GM Energy: All-new product lines will provide cohesive energy management at the home, commercial and community level.
• GM digital retail platform: Whether it’s selling parts or vehicles, GM will meet customers where it’s most convenient for them.

GM the platform innovator will almost certainly have an even higher proportion of salaried employees in 2030 than today. And most––if not all––their employment growth between now and 2030 will be in salaried employees. Many of them high-paid professionals and managers.

Michigan needs a General Motors 2030 economic development strategy. One can make a strong case that today Michigan has a General Motors 1979 economic development strategy. A strategy designed for an economy that no longer exists, where a preponderance of good-paying jobs were hourly production workers.

GM is transitioning from automaker to platform innovator. Michigan needs to transform its economic development from factory-focused to knowledge-based focused.

Currently six in ten Michigan jobs do not pay enough to support a middle class household of three. No matter how low the unemployment rate, an economy where so few jobs pay enough to pay the bills and save for emergencies, retirement and the kids’ education is not a good economy.

Michigan needs an economic development strategy laser focused on more good-paying jobs.

GM has been an important driver of Michigan’s economy for more than a century. In 1979 their good-paying Michigan jobs were overwhelmingly hourly production workers. Today their good-paying Michigan jobs are predominantly professionals and managers who invent, develop, design and commercialize motor vehicles.

In 2030 GM’s good-paying jobs will be even more dominated by professionals and managers who invent, develop, design and commercialize the future of transportation and also software; insurance; infrastructure; energy; commercial delivery and logistics; and e-commerce good and services.

Michigan needs to be the place where GM can best succeed in all these businesses. If the state cannot make that case to GM––and to all the other companies in those businesses––the state will continue to be a state where a preponderance of jobs do not pay enough to be a middle class household of three.

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In our last post we detailed that states with employment most concentrated in production––front-line factory––jobs are all structurally low-prosperity states, with per capita income substantially below the nation’s. Those states include Michigan and Tennessee, both with per capita income twelve percent below the nation’s

Tennessee matters particularly because when it was chosen by Ford for its Blue Oval City electric vehicle automotive manufacturing ecosystem, it became the state that many Michigan political and business leaders put forward as the state Michigan should want to be like economically.

Which raises the question what state economy should Michigan want to be like? Is Tennessee the correct answer to that question?

In the table below we look at economic outcomes for the nation, Michigan, Massachusetts, Minnesota and Tennessee. The first three columns are the economic outcomes we all should want for Michigan: high per capita income, high average hourly wages for private sector employees and a high proportion of adults who are working (employment-population ratio).

If those are the outcomes we want for Michigan, it is clear that Tennessee is the wrong choice as a model for Michigan. Minnesota (chosen by us as a model because it is a non-coastal, cold-weather state) and, even more so, Massachusetts have far better economic well being outcomes. Both are far better choices for the state economy Michigan should want to be like.

As we explored in our last post it was clear to us in 2004 that “knowledge-based industries and young
knowledge workers will be the most important driver of future economic growth. Communities with high concentrations of both will become more prosperous, and communities with low concentrations will become poorer compared with their neighbors.”

You can see how that has played out in the B.A. attainment and high B.A. occupation job share columns in the table below. Unlike Tennessee, Minnesota and, far more so, Massachusetts have excelled at concentrating knowledge-based industries and young knowledge workers. The fact that they are less concentrated in factory jobs has not prevented them from structurally being high-prosperity states.

The reason why Minnesota and, far more so, Massachusetts are high-prosperity states and Michigan and Tennessee are not is that their economies are over concentrated in knowledge-based enterprises and adults with a B.A. or more. The two are inextricably linked. Because the asset that matters most to high-wage, high-growth. knowledge-based enterprises is talent. For Michigan to have the economic well being outcomes of Minnesota and Massachusetts we must make preparing, retaining and attracting talent economic development priority one.

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