First came news about Foxconn not building a 13,000 employee manufacturing plant in Wisconsin. Then the next day came stories that they were going to continue with plans to build the manufacturing facility. Who know what will finally happen.

What is clear is that if they build a plant it will not be the one that was promised when Wisconsin offered them $4.1 billion in incentives.

The Verge did a detailed article on the topic in October. The article is titled Wisconsin’s $4.1 billion Foxconn boondoggle. The Verge summarizes the change in plans this way:

But what seemed so simple on a napkin has turned out to be far more complicated and messy in real life. As the size of the subsidy has steadily increased to a jaw-dropping $4.1 billion, Foxconn has repeatedly changed what it plans to do, raising doubts about the number of jobs it will create. Instead of the promised Generation 10.5 plant, Foxconn now says it will build a much smaller Gen 6 plant, which would require one-third of the promised investment, although the company insists it will eventually hit the $10 billion investment target. And instead of a factory of workers building panels for 75-inch TVs, Foxconn executives now say the goal is to build “ecosystem” of buzzwords called “AI 8K+5G” with most of the manufacturing done by robots.

The Verge writes that Michigan put together the second most lucrative incentive package for Foxconn. “And no other Great Lakes state came close to offering the $4.1 billion Foxconn is getting. Michigan came the closest, offering $2.3 billion, but it was partly a tax subsidy rather than cash.

Foxconn wasn’t the only company Michigan offered huge incentives to. Crain’s Detroit Business did a highly-recommended article on the tax breaks Michigan is providing to General Motors entitled General Motors may keep cashing in tax credits after cuts, closures. Crain’s reports that the tax breaks General Motors is entitled to are based on employment of at least 34,750 in Michigan. GM currently has 51,000 Michigan employees. So they could continue to collect tax incentives through 2029 as long as they don’t lay off more than 18,250 Michigan employees.

Crain’s reports the value of the GM tax breaks is not public. But it almost certainly is far more than a billion dollars since Crain’s reports: “Ford agreed to cap its remaining credits at $2.3 billion through the end of 2029, while FCA accepted a $1.7 billion cap for the remaining life of the MEGA tax credit program.”

Hopefully the Foxconn and General Motors experiences will call into question continuing an economic development strategy in Michigan dominated by providing huge tax breaks to companies that make investments here. There are all sorts of lessons that policymakers should learn from Foxconn and General Motors, but the two largest may well be:Companies are going to do what the market demands them to do irrespective of tax breaks. Big tax breaks aren’t powerful enough to stop General Motors from big layoffs. The October Verge story indicated that if Foxconn builds a manufacturing plant in Wisconsin most of the work would be done by robots. There was never a realistic chance that Foxconn was going to hire 13, 000 blue collar workers.

If you have to give tax breaks it should be for new high-wage/high-benefits jobs, not new investments. The two do not go hand in hand. To General Motors credit they are a high-wage/high-benefit employer. Many manufacturers are not. But that does not justify billion dollar plus tax breaks for retaining some portion of your current workforce.

(The New York Times has a great overview editorial on the topic entitled Taxpayers always lose industry’s shell game with jobs. The editorial’s subtitle is: G.M. is the latest example of a company getting incentives based on empty promises.

The Amazon HQ2 location competition told a similar story. Yes they got big incentive packages from New York and Virginia. But neither were close to the largest incentives. The incentives were, at best, the icing on the cake, not the driver of Amazon’s decision.

This topic is so important because the funds provided in business tax breaks can be used for other items that are far more important to the Michigan economy and, most importantly, to the economic well being of Michiganders. In a fascinating column, entitled Maybe tax breaks should go toward bringing in people,rather than jobs, Crain’s Dustin Walsh suggests:

Michigan must flip economic development on its head to solve population stagnation by transitioning from tax incentives to create jobs to tax incentives to fill jobs. … The prescription: Offering tax incentives to workers, rather than to businesses, to come to Michigan.

Michigan Future’s preference would be to use the funds that would go to business incentives for public investments in education from birth through college, creating places where people want to live and work, and shared prosperity. Michigan has been under investing in all three for decades. Our recommendations are detailed in our A Path to good-paying careers for all Michiganders report.

Former Governor Snyder got it right when he wrote in his 2011 Special Message on Developing and Connecting Michigan Talent: “In the 20th century, the most valuable assets to job creators were financial and material capital. In a changing global economy, that is no longer the case. Today, talent has surpassed other resources as the driver of economic growth.”

Unfortunately he and his predecessors for the last three decades have been doing the opposite. Subsidizing financial and material capital rather than investing in preparing, retaining and attracting talent. It is far past time for a change.

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Think about the work world as a practical matter: The only time you really care about someone’s degree is if someone’s talking about who’s playing football or basketball. Nobody cares once you’re on the job six months or a couple years. It’s not relevant.

The labor market, however, begs to differ.

The presentation that accompanied the rollout listed high-demand occupations, along with the total number of available jobs projected through 2024 in each occupation, and the average salary in that occupation. The Marshall Plan calculates the average salary for all these occupations as just over $60,000. However, that average hides the fact that nearly all of the occupations that pay $60,000 or more require a bachelor’s degree or higher.

Below are three charts, showing the target occupations listed in the governor’s plan, split by the education typically required for entry to the occupation, defined by the Bureau of Labor Statistics. The charts show the number of job openings projected through 2024 using the figures in the Marshall Plan materials (though we have some questions on the validity of these figures, as they’re far different from the official projections released by the state’s Department of Technology, Management, and Budget); the median income of that occupation; and the percentage of workers in that occupation with a bachelor’s degree or higher.

As you can see, of the 38 occupations listed (the Marshall Plan materials list 37 occupations, as the two sales representatives occupations are collapsed to a single category), 15 have a median income of over $60,000. 14 of those 15 jobs require a four-year degree. For every target occupation in the Marshall Plan for Talent that requires a bachelor’s degree, the median income is $60,000 or more. For all the rest of the occupations, only one – plumber – clears the $60,000 threshold.

And using the Marshall Plan projections, these high-education, high-paying occupations represent over 50 percent of the 811,000 openings in these target occupations through 2024.

We included the third column, which shows the percentage of workers in each occupation with a bachelor’s degree or higher, because people often question whether a bachelor’s degree is truly necessary in some of these high-paying jobs. The fact that the vast majority of the high-paying occupations have a high proportion of workers with a bachelor’s degree or more shows that employers are paying a premium for that degree, and that those with less than a bachelor’s degree would indeed struggle to get a job – and a higher paying job, in particular – in that field.

The Marshall Plan messaging seems to be that there are a bunch of $60,000 jobs out there that we can fill through competency-based certificates and stackable credentials. A look at the data, however, tells a completely different story. Employers continue to reward four-year degree holders, and not because a four-year degree represents some competency in a discrete set of skills. They reward four-year degree holders because a four-year degree represents deep and broad knowledge in a particular discipline, as well as a whole set of communication, learning, and thinking skills that will enable workers to adapt to an ever-changing economy.

In other words, if you want a high-paying job, the surest route is a four-year degree. End of story.

In the rollout of the plan, Governor Snyder, talking about all the jobs that need to be filled in the coming years, said “It’s a disservice if we don’t do something to solve this problem – to our citizens and ourselves.” We agree that there’s a problem, but as the data clearly shows, the solution is that we need far more Michiganders attaining bachelor’s degrees to fill these high-paying jobs, and attract even more high-paying jobs in years to come.

Yes we need more funding to help Michiganders earn occupational certificates and Associate’s Degrees for those of us who choose to pursue that path. But we also need to  invest more in our public universities. Since 2001, the state has cut appropriations to our public universities by over $1 billion in real terms. This both blocks access to non-affluent students by increasing tuition, and prevents universities from putting in place the necessary programs to increase degree completions. Investing in our four-year universities, and in the students who seek to attend them, would surely have the potential to be revolutionary for thousands of Michigan students.

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Largely because of machines increasingly doing the work now done by humans, we are now in an economy where losing a job will almost certainly be routine. McGowan writes:

As machine intelligence advances, humans will offload work to machines, and then adapt, re-skill, and redeploy to new, uniquely human work. That process of adaptation requires a foundation in learning agility and a mindset that prepares them for change. You might think of it this way: Mindsets are like operating systems and skill sets are applications. Higher education and workforce development have operated like application development; skills are defined in curriculum and applied to the student. This approach is reaching its useful end. Just like an old computer becomes obsolete, so will this application transfer process. Instead, schools need to focus on providing students with an operating system upgrade, developing fundamental abilities to acquire and shed rapidly changing skills requirements (a metaphoric app update). This foundation instills the ability and agency to continuously learn and adapt. This is a big shift in how we think about preparing a workforce.

… The right mindset provides safe harbor in a sea of disruption. It enables graduates to make sense of shifting context and to recast their story so that they can march back to relevance. This continuous reinvention will dominate the future of work, and developing empathy for yourself and the grit to manage your internal critic will separate those who are successful in the future with those who struggle.

Mc Gowan’s framework is consistent with Google’s findings on the characteristics of their most successful current employees. The Washington Post reports:

They found that: The seven top characteristics of success at Google are all soft skills: being a good coach; communicating and listening well; possessing insights into others (including others different values and points of view); having empathy toward and being supportive of one’s colleagues; being a good critical thinker and problem solver; and being able to make connections across complex ideas.

Governor Snyder in a Bridge Magazine guest commentary entitled The revolution has started. Now Michigan needs to lead lays out his analysis that underpins his “Marshall Plan for talent”. His description of future work is quite similar to McGowan’s. Lots of occupations being destroyed largely by machine learning. And lots of new jobs that we can’t imagine today. So that workers will need to be constantly learning new skills to stay employed.

What is dramatically different between the Governor and McGowan is the prescription: what kind of education do we need to prepare for a future of constant occupation shifts. Using McGowan’s framing Snyder emphasizes the aps (job-specific skill training), McGowan the operating system (broad adaptability skills)

The Governor writes:

First, learning will move to a competency-based model where completion and success will be measured by demonstrated achievements of particular skills. … Degrees will mean less in the future since employers will hire students once they achieve the appropriate certificates and competencies. … A system of collecting competencies and accompanying certificates will provide more direct paths into exciting employment opportunities. Employers want to find good people who can walk into a position and get right to work.

So rather than pursuing a college degree or apparently a college prep curriculum in high school, the Governor envisions an education characterized by CTE in high school and post-secondary students enrolled in relatively short-term certificate programs to build job specific skills for today’s job. And then repeat the process over and over again of learning job-specific skills in certificate programs whenever one loses a job.

The Governor’s approach is similar to the one that Google followed for years and has discarded based on what they learned are the most important skills of their most successful employees. They started by basically only hiring those with STEM degrees. Their version of occupation-specific skills. Not now!

As the Washington Post continues, Google “… After bringing in anthropologists and ethnographers to dive even deeper into the data, the company enlarged its previous hiring practices to include humanities majors, artists, and even the MBAs that, initially, Brin and Page viewed with disdain.”

In the Governor’s vision the humanities and the arts are a waste of time and money. So more broadly are the liberal arts in high school and college. They don’t build the occupation-specific skills that he believes employers are looking for today.

Turns out that would not be good for employers like Google. Or, more importantly for Michigan’s children who now, more than ever, need an education that first and foremost builds broad, rigorous non-occupation specific skills so that they can navigate an economy where occupation-specific skills have a shorter an shorter half life.

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Let me take you through a few of my highs and lows.

1

Governor Snyder writes:

Although this transformation will be very challenging, it is our opportunity to create a more engaging educational system that leads to well-paying careers in high-demand jobs.

Yes, great, let’s do that! Good-paying careers for all Michiganders is the right goal, and reforming our education system is a critical strategy for meeting that goal.

He follows that up with this:

For example, there is very high demand for many professional trades and yet we live in a society that does not encourage young people to enter career technical education programs to gain the necessary and important skills to meet these needs.

There will never be enough good-paying jobs in the professional trades in Michigan for this to be the right strategy to meet his stated goal. According to the state’s own Pathfinder site, the median wage for carpenters is $43,070. Only 10 percent of carpenters make more than $66,880. Fifty percent of welders make less than $36,410. And only 10 percent make more than $55,290. According to the United Way’s ALICE report, a family of four needs to make more than $56,000 just to afford basic necessities. That income level doesn’t even allow a family to save for retirement, let alone buy a little cottage up north. And if we do indeed have a shortage of skilled work for these professions, the wages aren’t likely to rise if the labor market is awash with new carpenters.

Plumbers do slightly better, with a median wage of $63,610. The state’s website predicts an 11 percent growth rate in the number plumbers needed over the next ten years. Not bad! But not close to the wages and growth rate of mechanical engineers.

On top of that, the numbers of job openings in each professional trade just don’t support the governor’s enthusiasm. According to Pathfinder, there will be 393 annual openings for carpenters through 2024. There are 279 openings for plumbers, and 489 openings for welders. These might seem like big numbers. But not when you look at the total number of job openings. Through 2024–again, according to the state–there are projected to be about 140,000 job openings annually. With a certificate for any one of the professional trades (e.g., carpenter), you are prepared for fewer than one percent of those jobs because if you become a carpenter, you aren’t simultaneously prepared to be a welder.

Don’t get me wrong: we need carpenters, and for some kids it might be the perfect career. But we only need a few hundred more each year. I added up the number of annual job openings expected in the state’s list of “hot 25” professional trades, and it is almost 7,000. In other words, if we have 102,000 high school seniors graduating every year, we need 7,000, or just 6.8 percent, of them to pursue a professional trade. And only nine of those 25 occupations have a median wage higher than the ALICE rate. This just is not the mass solution to “well-paying careers” that the governor suggests.

Not to mention—for an economy to provide jobs to people in the trades, there needs to be a customer base: a population who are working in truly high-wage jobs, which tend to require a college degree. According to the 2012-2016 ACS, the median wage for all Michiganders who have some post-secondary education but not a college degree is $31,801. The median wage for those with a B.A. is $49,711.

2

Governor Snyder notes:

Our current system does a poor job of providing students useful information regarding the connection between fields of study and well-paying careers.

Too true! Kids have no idea what different jobs pay, or what income level equals a comfortable living, or how to prepare for a good-paying career. For instance, many people push kids to consider carpentry based not on the young person’s interest, but on the fact that carpenters are legitimately really busy these days. And also a guy they went to high school with is a carpenter and he makes $100,000. Yet the actual median wage of carpenters is well under the United Way’s ALICE rate for supporting a family with two kids. The carpenter who makes $100,000 is an outlier. Being a carpenter is the right choice for some kids, but it doesn’t come with a guarantee of strong lifelong earnings.

He follows up with this:

A positive exception that does better than most is career technical education. It often provides the appropriate competency for a well-paying job at either the high school or college level. But as a society, we push college degrees and tend to diminish the value of CTE.

If we are pushing college degrees, we are pretty bad at it. Only 27.4 percent of Michiganders 25 and up have a college degree or higher. By the way, their lifetime earnings are expected to be between half a million and almost three million dollars more than those without a degree (studies vary). This gap is largely thought to be widening over time—not shrinking.

3

One of the enormous challenges of post-secondary education today is the issue of cost. It is expensive to solely go to school for two, four or more years of education. Staggering student debt is something that causes many not to finish or significantly burdens those who complete their programs.

Yes! I would love to hear his ideas about reducing the costs of college and helping kids persist to achieve their degree, since having a well-educated population is so fundamental to our economic success. Not to mention it promotes equity and fosters an educated citizenry. Of course, incurring debt to get a college degree pays off over time in significantly higher lifetime earnings.

With a competency-based certificate model, students can move into well-paying jobs within a year or two in many cases, and with much less financial burden.

It may be true that some skilled trades pay relatively well within two years of the certificate being awarded. But what matters in the economy that the governor correctly understands is going to be full of increasingly rapid change isn’t whether that first job pays well—it’s whether that individual is set up for a career of good-paying jobs. There is simply no comparison between the lifetime earnings of most people with a college degree and most people without one.

Employers are already struggling to find people with the necessary competency in fields as diverse as information technology, manufacturing, healthcare and the professional trades. Job providers are hiring people who have the skills but not a degree.

While some employers may feel this way, this just isn’t true from the perspective of a citizen. The unemployment rate for Michiganders with a post-secondary credential that isn’t a college degree is 6.8 percent. The unemployment rate for those with a college degree is 3.3 percent. People with degrees are having a much easier time getting jobs. (Not to mention, they have a higher rate of labor force participation: 85.6 percent vs. 77.1 percent).

While the governor doesn’t mention the failed Amazon HQ2 bids of Detroit and Grand Rapids in his commentary for Bridge, the entire Marshall Plan is seemingly a response to the loss—neither city even made the list of finalists. Does anyone think that Amazon didn’t decide to locate here because we have a shortage of plumbers? Did the governor really miss the key message: Amazon—and other companies that offer good-paying careers—need a population that is high-skilled. And by high-skilled, they mostly mean college degree-holding.

I understand the desire among many to emphasize CTE and skilled trades for young people. Our talent gap—especially in college degree attainment—is daunting. It’s a lot easier, and cheaper, to get a young person to complete a certificate course than to graduate from college, and we know that high school graduates who don’t pursue any post-secondary education are most likely going to live a life of financial hardship. On top of that, the trades offer honorable and reliable work, and some do pay well. But overall, discouraging college and promoting a lower educational credential is the wrong solution, for our young people, and for Michigan. Governor Snyder seems to think it’s silly that our society values a college degree over a recognized set of earned competencies. I disagree, but it’s not my opinion that matters—it’s the market’s. And there is simply no evidence that the market is suddenly going to stop valuing college degrees and start valuing a set of earned competencies.

Governor Snyder closes:

We are in a fast-changing world that may soon look like a place some of us may not yet even be able to imagine. But as we travel this path, we must lead the way for the sake of our children and grandchildren.

He’s absolutely right about how urgently this transformation requires a new approach to education. Unfortunately, in his prescribed response to this transformation, many of his ideas are absolutely wrong. And more than anything else, I fear they lead to a state where, instead of figuring out the difficult work of how to make sure college is an opportunity every child is prepared for and, if they want to pursue it, supported through, we throw up our hands. We decide to accept that college and the choices it affords are reserved for the affluent, and hope that everyone else can make a good living pursuing their passion for pipe-fitting.

For an alternative approach, check out our recommendations on policy changes that would actually improve outcomes for kids.

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NPR, in a story entitled Tax cuts put Oklahoma in a bind, now Gov. Fallin wants to raise taxes, provides an overview of the push to raise taxes in a deeply red state. NPR writes:

In her State of the State address Monday, Gov. Mary Fallin expressed the state’s frustration. “We have two clear choices,” she said. “We can continue down a path of sliding backwards, or we can choose the second path, which is to say ‘Enough is enough! We can do better! We deserve better! Our children deserve better, too!’ ”

Many of the tax cuts and subsequent revenue failures have happened on Fallin’s watch. Now she wants to fix it, and she’s gotten behind a large coalition of business leaders who have come up with a plan to raise taxes and enact reforms.

The details of the plan were put together by the business community. Their plan is called Step Up Oklahoma. Its supporters include the State Chamber of Oklahoma and many local chambers. The plan calls for increasing sin taxes, energy taxes and the graduated income tax. You read the last item right! A Republican Governor and business community calling for income taxes to go up most on those who earn the most.

Leaving aside the support of the Republican Governor this is quite similar to what happened in Kansas earlier this year. Republican joining with Democrats to override a gubernatorial veto to raise taxes––including a graduated income tax––after a failed tax cut experiment. (See my post on Kansas here.)

Why is a Republican governor and the business community in Oklahoma pushing to raise taxes? To fill a structural revenue shortfall. And to invest more in education. In their case specifically to raise teachers pay. In Kansas it was predominantly to increase funding for roads and education.

What ails Michigan? A structural revenue shortfall and woeful under investment in infrastructure and education. For details see Governor Snyder’s 21st Century education and infrastructure commission reports and the Citizens Research Council report on the precarious state of the General Fund.

One can make a strong case that Michigan is facing the same challenges as Oklahoma and Kansas. That for two decades we overdid tax cuts. The Governor’s own commissions have made the case for more public investments. But unlike Oklahoma, neither our Governor nor the business community has taken the lead in making the case that to pay for the essential public investments we need higher taxes.

And the Democrats are equally to blame here. They not only aren’t making the case either for the need to raise taxes to support education and infrastructure, Democrats in the legislature continue to vote for more tax cuts.

It’s time we stop pretending that we can have the public investments we need and not have to pay for them. Just as in Oklahoma and Kansas, now is the time for politicians––from both parties––and the business community to lead and take to the voters ideas on how to pay for the public investments that are essential to improving the economic well-being of all Michiganders. To make the case that the value of the investments is worth the cost of paying higher taxes.

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Both are part of a broader effort by the business community and their political allies to make the primary purpose of education meeting the immediate needs of employers. Of course, most of those pushing for this kind of education are sending their kids to schools that are doing the exact opposite. Schools that are building broad liberal arts skills to prepare their kids for four-year degrees or more that lead to the best-paying forty-year careers as professionals and managers. Schools that are designed to expand, not limit, opportunities so that their kids can take advantage of opportunities any place on the planet, not just for what Michigan employers need today.

Detroit Free Press Columnist Nancy Kaffer got it exactly right when she wrote:

The same day, Gov. Rick Snyder and state Superintendent Brian Whiston endorsed new steps to further entrench career readiness for K-12 students, an extension of the governor’s position that education should be more closely calibrated to the current job market.

Snyder’s emphasis on education as a means to career readiness is nothing new. But it’s still short-sighted. The point of education should be education — the folks who have fared best in our rapidly changing economy aren’t workers with specific job training, but those who’ve been taught to think critically and express themselves clearly.

Training students for jobs that might be obsolete within the next decade means preloading another economic bust. It’s a business-friendly position, but it’s a bargain that seeks short-term job gains at the expense of long-term career prospects. And beyond that, there’s something inherently dangerous in shifting the intent of a public education and what that means for the Michiganders who trust the state to provide it.

This kind of narrowing education for others’ children almost certainly will retard their ability to have good-paying forty year careers. In an economy where jobs, occupations and industries are increasingly insecure largely because of smarter and smarter machines we need an education system that builds broad skills in all Michigan children, not narrow first job skills.

As we wrote in our new state policy agenda we need an education system 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 what is on the test or to narrowly preparing non-affluent children for a first job.

The second is that none of us have 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 be successful rock climbers.

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 forty-year careers.

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The case Henderson makes is far broader than where one office should be located. Its a broader indictment of the Governor’s k-12 eduction policies. which has resulted, as we have explored in previous posts (for instance here and here), in some of the worst student outcomes in the country.

Henderson writes: Here’s the problem: Snyder has earned zero points for successful education reform efforts in Michigan, and the state’s worst-performing schools reflect that failure more brilliantly than any others. What has he done to indicate he should be given more power?

… The governor gets A’s for pushing and stretching and trying different approaches to fixing our schools. But he gets a gentleman’s D for the outcomes, so far.

… He’s more than entitled to those frustrations, but political differences are not sufficient reason to end-run around endowed authorities. This is choosing ideology over outcomes, pushing the doctrine of choice as a panacea to improve educational performance, despite a lack of evidence to back up this belief. (Emphasis added.)

… Take the Education Achievement Authority reform district in Detroit. That’s already being operated outside the auspices of regular Department of Education oversight. It was a fine idea, modeled after at-risk districts that have made schools better, over time, in several other states.

But the execution was flawed, overall, and atrocious in some instances. Many of those 15 low-performing schools were awful 20 years ago, when I covered Detroit schools for the Free Press, and they’re not much better today, despite years of EAA oversight.

Its almost certain that capturing control of the state education reform office to speed up implementation of policies that have not improved student achievement will not significcantly improve student achievement in the future.

What matters is a willingness to change policy. As Henderson writes to move away from “choosing ideology over outcomes”.

So what would an effective k-12 policy look like? As I wrote in a previous post:

So Massachusetts has achieved the nation’s best student achievement through:

• setting rigorous standards for all kids and not lowering those standards when kids had trouble meeting them
• testing aligned with those rigorous standards
• developing teachers prepared to teach all kids the standards
• state funding that provides more resources for poor kids
• a limited number of charters that must meet rigorous quality standards to be able to operate (open, stay open and replicate) in the state. 

Michigan, of course has gone in a completely different direction. We have been ambiguous at best about rigorous standards and aligned tests. Have not invested in developing educators to teach rigorous standards. Moved away from preferential state funding for low income students. Instead we have relied on parental choice as the prime lever to drive student achievement. Culminating in the elimination of the cap on charters without any quality standards.

The bottom line: the Massachusetts approach has worked, Michigan’s hasn’t. The United States Chamber of Commerce Foundation Leaders & Laggards: A State-by-State Report Card on Educational Effectiveness gives Michigan an overall grade of D. For academic achievement a D and for academic achievement low income/minority an F. Maybe more concerning, the report gives Michigan an F in both categories for progress since 2007.

Massachusetts received an overall grade of A. For academic achievement an A and for academic achievement low income/minority an A. In terms of progress since 2007 the report gives Massachusetts a B for academic achievement and an A for academic achievement low income/minority.

Seems like its time for Michigan … to learn from the state with the highest student achievement in the country.

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The bottom line is clear: today’s middle class is no longer centered in manufacturing or construction as it was in the 1980s and most of the 20th Century. Today health care is at the center of middle class jobs.

The Times calculates the change per 1000 of middle class workers from 1980-2014. The three occupational categories with the steepest declines? Machine operators and assemblers; skilled production workers; and construction and agriculture workers. The first two, of course, are manufacturing workers. The three occupational categories with the largest gains? Professionals and specialists; managers and administrators; and service workers and sales people. The first two categories––professionals and mangers––are occupations where those with four year degrees or more are concentrated. (Although its not the Time’s topic, these are also the occupations where those who make more than $80,000 are concentrated.)

The infographic contains lists of gains and losses by occupation. If you want to understand today’s American economy take the time to go through the lists. The occupation with the largest gains? Registered nurses. The occupation with the largest decline? Machine operators.

The Times summarizes the data this way:

Most of the new jobs produced by America’s sprawling economy — especially since the turn of the century — are either in highly paid occupations that often require an advanced degree, or, more predominantly, in lower-paid positions providing direct services that cannot be sent overseas and, at least for now, are difficult to automate.

But even with a hollowing out of the job market and a broad stagnation in wages, an analysis by The New York Times has found, a set of occupations has emerged that holds promise as the base of a more robust middle class. Many are in health care, which has grown sharply over the last few decades.

Economists at the Labor Department project that by 2022, as baby boomers age, health care and social assistance will absorb nearly 20 percent of consumer spending, double the share of manufactured goods. The sector is expected to support over 21 million jobs, five million more than today. This includes half a million more registered nurses.

… In 1980, 1.4 million jobs in health care paid a middle-class wage: $40,000 to $80,000 a year in today’s money. Now, the figure is 4.5 million.

The pay of registered nurses — now the third-largest middle-income occupation and one that continues to be overwhelmingly female — has risen strongly along with the increasing demands of the job. The median salary of $61,000 a year in 2012 was 55 percent greater, adjusted for inflation, than it was three decades earlier.

And it was about $9,000 more than the shriveled wages of, say, a phone company repairman, who would have been more likely to head a middle-class family in the 1980s. Back then, more than a quarter of middle-income jobs were in manufacturing, a sector long dominated by men. Today, it is just 13 percent.

The lesson we need to learn is that good paying 21st Century occupations are different from those in the 20th Century. Globalization and technology are driving increasing demand for workers in service sectors and driving demand down for workers in goods producing industries (manufacturing, construction and agriculture).

Unfortunately far too many of Michigan’s political, business and media leadership have not learned that lesson.  Governing Snyder has stated his economic growth priority this way: “Number one would be career tech education for the skilled trades. If you look at it, people know about (becoming a) welder, plumber and electrician. Those are great careers. But now the skilled trades really define most people in manufacturing and agriculture in terms of needing additional training.” Pushing schools to steer our kids towards skilled trades in manufacturing and construction runs counter to the trends/reality of today’s and tomorrow’s economy.

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The Governor’s response: “Number one would be career tech education for the skilled trades. If you look at it, people know about (becoming a) welder, plumber and electrician. Those are great careers. But now the skilled trades really define most people in manufacturing and agriculture in terms of needing additional training. We have tens of thousands of open jobs that are critically important for business to be successful.”

Lets leave aside whether or not there really are labor shortages in those skilled trades and if there is whether its primarily up to employers or government/education to solve the problem. (You can explore our thinking about those topics here and here.) What I want to focus on here is the sectors that the Governor has identified in his answer above as his number one priority: construction (“welder, plumber and electrician”), manufacturing, and agriculture.

These industries are the goods producing sectors (along with mining, forestry and commercial fishing) of the economy. Everything else is classified as service providing sectors. In our last report––THE NEW PATH TO PROSPERITY: LESSONS FOR MICHIGAN FROM TWO DECADES OF ECONOMIC CHANGE––Don Grimes and I detail the change in employment and employment earnings in those sectors since 1991.

The bottom line is clear: goods producing industries declining, service providing industries growing. The data in the report is from 1991 through 2011. (The basic trends have not changed during the last three years.) Over those two decades the good producing sectors of the U.S. economy lost 4.3 million job and fell from 21.9 percent of employment to 14.8 percent. In contrast employment growth in private (non government) services accounted for all the job growth in the country and then some, growing by 38.7 million out of total employment growth of 37.5 million. Private services grew from 62.8 percent of U.S. employment to 71.4 percent.

When it comes to employment earnings (wages and employer paid benefits) per capita the trend away from the goods producing sectors of the economy is even clearer. Goods producing sectors accounted for 31.0 percent of private sector employment earnings in 1991 and 21.6 percent in 2011. Declining in 2011 dollars by more than $1,000 (16 percent) over the two decades. In contrast private services employment earnings per capita grew in 2011 dollars by more than $5,000 (37 percent) and now account for 78.5 percent of private employment earnings per capita.

In the report we distinguish between knowledge-based private services and other private services. Because knowledge-based services are both growing and where high paid jobs are increasingly concentrated. If Michigan wants to realize the more and better jobs that Governor Snyder has identified as the state’s economic goal knowledge-based services are the sectors that matter most.

We define private knowledge-based services to include private health care and social services; finance and insurance; information; professional services; and management of companies. (If you include government education would be included as a knowledge-based service.)

Private knowledge-based services employment over the two decades grew by 55 percent (compared to 39 percent in other private services). Employment earnings per capita in 2011 dollars grew by 52 percent (compared to 23 percent in other private services).

In the report Don and I write: “Notwithstanding the current auto-recovery-driven factory jobs rebound here in Michigan, the long term trends are clear: The defining characteristic of those places with the most prosperous economies today—and almost certainly even more so in the future—is their concentration in the knowledgebased sectors of the economy.”

Growing these sectors should be the state’s top economic priority. It is, by far, the most reliable path back to a prosperous Michigan.

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The assumption seems to be that government is the prime cause of labor shortages. If only government––largely through the education system––were more aligned with the needs of employers there would be no labor shortages. Many believe this analysis is wrong.

As we have explored previously a far more likely prime cause for labor shortages is that the jobs are not attractive to job seekers. Largely low wages. And that the way to balance supply and demand is for employers to raise wages and make those jobs more attractive.

What follows is a post I wrote in 2012 on the topic. Its analysis remains relevant today.

“Conventional wisdom is that there are plenty of jobs available that are vacant because too few Americans have the skills employers need in an increasingly knowledge-based economy. Not just the STEM professions, but also technical jobs in manufacturing, construction, health care, etc. President Obama and Governor Snyder are among many business and political leaders pushing for a re-emphasis of vocational training in high schools and/or community colleges as the key to dealing with labor shortages, particularly in the skilled trades in manufacturing and construction.

A terrific New York Times Magazine article by Adam Davidson entitled “Skills don’t pay the bills” argues that low pay is the main cause of those unfilled jobs, not a skills shortage. Highly recommended. As Davidson writes:

The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages. (Emphasis added.)

In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren’t many places where manufacturing wages were going up and employers still couldn’t find enough workers. “Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.” The study’s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages.

The article features a manufacturer that pays its plant floor technicians from $10-18 per hour. No where near the $28 an hour that unskilled factory workers were earning at the Detroit Three a few years ago. And what are the skills that employers are seeking at up to $18 an hour? As the Times describes: “Running these machines requires a basic understanding of metallurgy, physics, chemistry, pneumatics, electrical wiring and computer code. It also requires a worker with the ability to figure out what’s going on when the machine isn’t working properly.” Hardly anyone with those skills is going to be satisfied with a $10-18 an hour job.

Add to lower wages jobs the fact that manufacturing (and construction) skilled trade have seen mass layoffs for years. There may be more demand for workers today than jobs, but this comes after a long period of far more supply than demand. Hard to attract workers to occupations when fathers and older brothers in those occupations have been laid off repeatedly or have lost a job and never found another in the occupation.

The article reports on a manufacturing CEO who has machining jobs that he can’t fill: “He was deeply frustrated when his company participated in a recent high-school career fair. Any time a student expressed interest in manufacturing, he said, “the parents came over and asked: ‘Are you going to outsource? Move the jobs to China?’ ” While Isbister says he thinks that his industry suffers from a reputation problem, he also admitted that his answer to a nervous parent’s question is not reassuring. The industry is inevitably going to move some of these jobs to China, or it’s going to replace them with machines. If it doesn’t, it can’t compete on a global level.”

The article continues: “In earlier decades, Wial (from the Brookings Institution) says, manufacturing workers could expect decent-paying jobs that would last a long time, and it was easy to match worker supply and demand. Since then, with the confluence of computers, increased trade and weakened unions, the social contract has collapsed, and worker-employer matches have become harder to make. Now workers and manufacturers “need to recreate a system” — a new social contract — in which their incentives are aligned.”

So what is the answer? A Yahoo Finance article, on the same topic, portrays how employers can effectively deal with labor shortages. In some part it is about training, but it is far about employers offering higher paying and more attractive jobs. Yahoo writes about a trucking company that is dealing with chronic shortages of truck drivers by making the job more attractive to job seekers. The article and accompanying video are worth checking out.

Yahoo writes: “Our team traveled to Omaha, Neb., to meet with the president of Werner Enterprises (WERN) to see how one of the biggest players in the business is addressing this shortage of drivers. Not only are they training more, paying better and putting their people in an almost brand new fleet of trucks, they’re also reinventing themselves in a way that allows their drivers to get home to their families a lot more often.” Yahoo says the average wage for truck drivers is $55,000.

This is how markets should deal with supply and demand mismatches. Not government picking occupations or moving P-20 education away from providing students with the broad skills they will need for a forty year career rather than pushing educators toward emphasizing the narrow skills needed for whatever jobs where there might be a shortage of workers today.”

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