How did this happen?

In today’s talent-driven economy, the prosperity of a region is dependent on the educational attainment of the people in that region. Where you have high concentrations of highly-educated talent, high-growth, high-wage, knowledge-based enterprises locate, expand, and are created. So the economic development goal in today’s economy is to attract highly-educated talent; and in particular, because they are the most mobile, highly-educated young talent. The new reality is that talent attracts capital, and quality of place attracts talent.

Over the past twenty-five years, metro Detroit has not attracted talent at scale. And the primary reason for this is that its principal city, Detroit, has not attracted talent at scale. Young people, and highly educated young people in particular, continue to flock to vibrant central cities that feature dense, walkable, amenity-rich neighborhoods. Detroit the city’s still nascent economic resurgence, it still lacks these kinds of talent magnet neighborhoods.

Detroit vs. Denver

How do we change this? We could do much worse than to follow the example of Denver. One can make a strong case that Denver is the American region that has understood best the new reality that talent attracts capital.

In 1990 metro Denver and metro Detroit had roughly the same per-capita income – $21,295 for metro Detroit and $21,972 for metro Denver. Today, the per-capita income in metro Denver is more than $23,000 higher than it is in metro Detroit – $89,297 to $66,098. Denver’s per-capita income is nearly 30 percent above the nation’s while Detroit’s is five percent below.

The reason, of course, is that metro Denver has far higher levels of educational attainment than metro Detroit. Fifty percent of adults in metro Denver have a bachelor’s degree or more, compared to 34.5% in metro Detroit.

As noted above, because highly educated young adults are the most mobile segment of society, and they tend to congregate in vibrant central cities, a core driver of educational attainment at the metro level is the number of young professionals (25-34 year olds with a bachelor’s degree) in a metro’s central city. Since 2010, Denver has nearly doubled its number of young professionals, from 59,316 to 112,247. An astonishing 67 percent of young adults in Denver have a bachelor’s degree.

Most of these additional Denverites are transplants. Data from Migration Patterns shows that less than half of young adults in metro Denver raised in higher income homes (here household income is used as a proxy for college education) actually grew up in the Denver area, while 49% came from other states, many from the metro regions of Chicago, LA, DC, Minneapolis, and Detroit. Denver became a talent magnet, and young professionals flocked there from across the country.

The picture is much different in Detroit. Less than 25,000 young professionals live in Detroit, and just 25% of all young adults in the city have a bachelor’s degree. While the young adult population raised in higher income homes of metro Denver is largely made up of transplants, most young adults raised in higher income homes in metro Detroit (85%) grew up in metro Detroit. Detroit’s problem is not retention of young people as much as it is attraction of young people.

While young professionals make up 16% of Denver’s population, they make up just 4% of Detroit’s population. If Detroit’s population had the same share of young professionals as Denver’s, there would be an additional 75,000 young professionals living in the city.

The Denver story: rail transit and talent magnet neighborhoods

So how did Denver become a talent magnet? First, they went big on rail transit. The region now has the kind of rail transit system the Detroit region can only dream of, with a line running from the airport to downtown, throughout city neighborhoods, and into suburban communities. Transit oriented developments – new dense, walkable, neighborhoods, complete with housing and small businesses – have sprouted up along rail stops, and downtown Denver has exploded with development.

In addition to rail transit, Denver has prioritized building dense, walkable, vibrant neighborhoods across the city. It is a city’s neighborhoods – densely packed with young professionals, amenity-rich, with recreational, arts, and cultural offerings – that are the main attraction for young talent.

Economic development leaders in Denver have long understood this, and made the creation of talent magnet neighborhoods a priority for the city. In 2007, the Downtown Denver Partnership put out its vision for downtown Denver, copied below. The themes of walkability, the expansion of amenities, the cultivation of distinct neighborhoods, and the prevalence of outdoor recreational opportunities are evident throughout. It’s a citywide plan designed to create the kinds of neighborhoods/districts that attract young talent.

It’s not the mountains

When we use Denver as an example of the kind of place that Detroit or Grand Rapids ought to model itself after, folks will often say that it was the mountains and natural beauty that attracted so many young folks to Denver, not the rail transit or the city’s vibrant, walkable neighborhoods. What we like to point out is that the mountains were also there in 2005, when the city had just 45,000 young professionals. It was only after rail transit and an explicit focus on building dense, walkable, vibrant neighborhoods that the city emerged as a talent magnet.

If Detroit hopes to attract talent at anything like the scale that Denver has over the past decade, metro Detroit needs a robust rail transit system, and the city needs to intentionally build dense, walkable, amenity-rich neighborhoods. The example of Denver makes clear that in order for that to happen, we need leaders – in Lansing, in Detroit city government, in the Detroit business community, and in suburban communities across the region – to champion rail transit as their central cause, over and over again, for years. And we need these leaders to prioritize building talent magnet neighborhoods in our central cities as the economic development imperative in today’s economy.

Last year, the state created the Michigan Talent Partnership, based on a proposal we designed – a competitive grant fund that calls for Michigan cities to create the kind of dense, walkable, vibrant neighborhoods/districts that Denver has been building since the mid 2000s. It’s a start, but we will need much more of this kind of activity if we are to build a more prosperous Michigan.

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These low scores are unacceptable, and must be fixed. Developing strong literacy skills early in a child’s education is critical for their long-term educational and life success, setting the strong foundation needed to build knowledge, think critically, and solve problems. Political leaders in Michigan are right to be concerned, and are right to emphasize the need for widespread adoption of evidence-based practices, like the science of reading, across all Michigan schools.

However, as important as early literacy is, it is also not enough. When we talk about Michigan’s broken education system, we need to be talking about much more than 4th grade reading scores.

Reframing the goal of Michigan’s education system

We have long argued that the goal of Michigan’s K-12 education system ought to be centered around postsecondary success. And given that most high wage jobs in today’s economy require a bachelor’s degree, we argue that the goal of Michigan’s K-12 schools should be to prepare all students to pursue and complete a bachelor’s degree if they so choose.

If we use postsecondary success as our ultimate measure of our K-12 system’s success – rather than 4^th grade reading scores – Michigan is in no less of an educational crisis. After rising slowly from 2008 to 2014, the share of graduating Michigan high school students who complete a bachelor’s degree within six years of finishing high school has plateaued, and even declined slightly in recent years. Today, just 32% of graduating Michigan high school seniors will have a bachelor’s degree six years later, and less than 40% will have a degree or certificate of any kind.

One might reasonably argue that even if our ultimate goal is postsecondary success, political leaders are justified in placing our near-term focus on 4th grade reading scores, because surely 4th grade reading scores are an indicator of one’s future educational attainment. But the relationship between test scores and educational attainment is not as strong as one might think. A number of studies, leveraging the natural experiments created by charter school lotteries, find that schools that are very successful in raising test scores have little impact on postsecondary attainment, while some schools that have a large impact on postsecondary attainment have little impact on test scores. Another well-regarded study found the same effect with teachers – that those teachers who reliably improved their students’ “non-cognitive” skills were a different set from those teachers able to move test scores, and that the advancement of non-cognitive abilities ended up being a better predictor of long-run outcomes than improved test scores.

We see the same disconnect between test scores and postsecondary success when we look at NAEP scores among states, and those states’ overall levels of educational attainment. Test scores are an easy area to place our focus because they feel controllable. In the complex process that is a child’s education, test scores give us a concrete number, that we can try and improve upon and in doing so, we think, improve a child’s education and their life outcomes. However, for this to be true, test scores would need to be predictive of educational and career success. Improvements in test scores in one year would need to lead to improved test scores in future years, which would lead to greater levels of educational attainment.

The trouble is this smooth line of predictability doesn’t exist. Just look at Michigan. From the late 1990s to 2019, Michigan’s scores on the NAEP 4th grade reading exam were basically flat. Over that same period, however, Michigan’s scores on the 8th grade NAEP reading exam fluctuated dramatically. In other words, steady 4th grade scores did not lead to steady 8th grade scores. Add to this that the students who took the 8th grade reading NAEP in 2007, when Michigan’s scores bottomed out, went on to have the highest level of educational attainment of any educational cohort in the history of Michigan.

Some of the states we have heard mentioned over the years as potential models for Michigan’s K-12 education system include Indiana, Mississippi, Ohio, Louisiana, Tennessee, and Florida. But in each of these states you see the same disconnect between NAEP scores in 4th grade, NAEP scores in 8th grade, and ultimate levels of educational attainment. Indiana has long had 4th grade reading scores well above Michigan’s – yet the share of young adults in that state with a bachelor’s degree is three percentage points below Michigan’s. Mississippi’s 4th grade reading scores have been growing at a steady clip since the late 90s, but this progress has not been matched by their 8th grade test scores, which have been essentially flat. And for all that state’s growth in early reading, the share of young adults with a bachelor’s degree today is just 28% – roughly the level of educational attainment Michigan young adults had in 2010 (today we are at 37%).

What states should Michigan be looking to as a model for its K-12 system? Again, we think the ultimate assessment of a school system ought to be the educational attainment and career success of the students in that system. And if we use this as our barometer, there are three states that stand out: Massachusetts, Minnesota, and Colorado.

The Lumina Foundation publishes a database called Credentials of Value, which measures the share of adults in every U.S. state that both have a postsecondary credential and earn a wage that is at least 15% more than the national median wage of those with no education beyond high school. Massachusetts, Minnesota, and Colorado are the only U.S. states where more than 50% of adults 25-64 meet both of those criteria. This is in large part because all three states have very high rates of BA attainment, and those with a bachelor’s degree or more are the most likely to be earning high wages. States like Tennessee, Mississippi, and Louisiana, which are often mentioned as models for Michigan’s education system, all sit below 40%. A table of select states is below.

Focus less on the tests, more on what happens in the classroom

The reason that performance on standardized tests doesn’t line up neatly with educational attainment is that standardized tests measure only a small sliver of the capacities we need our students to develop if they are to be successful throughout their academic and professional lives. To be successful in college and career, students need to have a broad base of knowledge, be able to think critically, be able to communicate clearly, and be able to solve problems. On reading standardized tests, they are asked to read and demonstrate their understanding of arbitrary and decontextualized texts. One of these is not like the other.

It also turns out that if we want our kids to be better readers, we might do well to do less of what we might call literacy instruction. In 2001, President George W. Bush signed into law the No Child Left Behind Act (NCLB), which altered the shape of schooling in America. The law stated that by 2014, every student in the country would be proficient in math and reading. Much like 3rd grade reading laws that have emerged in state legislatures across the country over the past decade, NCLB stated a bold goal that was centered around students earning a “proficient” score on a high-stakes standardized test. Failure to make progress towards that goal would lead to consequences – principals and teachers would lose their jobs, failing schools would be shuttered. The theory of change felt sound: create a high standard, and then hold people accountable to achieving that standard.

The effect of the law on our schools and classrooms was that our students spent a lot more time on math and reading instruction, and a lot less time learning about science, social studies, literature, and the arts. But NCLB fell far short of its goals. In 2014 every student in the country was not proficient in math and reading – not by a long shot. In fact, between 2001 and 2014, student scores on the NAEP barely inched up. Over the same stretch, students’ scores on the SAT, ACT, and the international PISA exam either stagnated or declined.

Why did this happen? It turns out that doubling down on literacy skills in an effort to boost test scores may actually be counterproductive if we hope to produce proficient readers. We often think of reading as sounding out words, and of course that’s a big part of it. But in order to read effectively, and comprehend what you read, you not only have to be able to sound a word out, but also need to know what that word means, how it relates to all the other words in that sentence, what they all mean together, and how this piece of knowledge relates to everything else you know. In other words, your reading ability is directly related to your content knowledge.

In fact, many scholars cast doubt on the idea that there is a sort of “generalized” reading ability – rather, they suggest that all reading is context dependent. That is, if you know a good deal about what you’re reading about, you will read and comprehend more fluently than if you’re reading about a topic you have never encountered before. In one study, students were split into groups based on reading ability – one group of weak readers and one group of strong readers – and asked to read a passage about soccer. However, the weak readers all were quite knowledgeable about soccer, while the strong readers were not. The weak readers, able to neatly fit what they were reading into the web of knowledge already stored in their heads, performed better than the strong readers, who were attempting to build a new knowledge web while they read.

It may seem obvious that the more knowledge you have about a topic the better you will understand a passage about it, but these kinds of findings have dramatic implications for what students ought to be doing in our K-12 schools. If content knowledge is so important to reading fluency and reading comprehension, it means that when faced with low reading scores we perhaps ought to be spending less time on literacy instruction and more time on building students’ broad base of knowledge through science, social studies, literature, and the arts.

This has not, however, been our response so far. Faced with low proficiency scores on standardized tests, our students have been fed more drills and more “literacy instruction,” and less knowledge about the world. The worry is that a single-minded focus on 3rd grade reading scores as the sole measure of our education system’s success would only accelerate this trend, pushing more and more “literacy” instruction into our K-12 schools, which would yield little to no improvement in student learning, and the longer-run outcomes we ultimately care about.

What should we be focusing on in K-12?

The case I’m trying to make in all that’s outlined above is that we need to be really careful about building our education system around a single test in a single year, and the ways in which such a single-minded focus can negatively impact the learning experiences of Michigan children. If we place all our focus on the narrow band of educational skills measured by standardized tests – which may end up being counterproductive in actually improving even that narrow band of skills – we may miss all of the rest of what we should be developing in kids: the ability to communicate clearly, think critically, and build a broad base of knowledge that will help them to read, solve problems, and ask the right questions.

Indeed, it is this set of “other” skills, mindsets, and capacities that our children will need to be successful in college and career, and where we should be placing our focus. Engaging content – through which students can build a broad base of knowledge – should sit at the center of our children’s education. Without a broad base of knowledge, students will struggle to comprehend what they read, think critically about information they consume, or solve complex problems. Students should develop a deep understanding of math and science concepts, rather than surface-level “rules” for solving problems. And the ability to write clearly – to make arguments, and back them up with evidence – should be a skill consistently reinforced throughout our children’s education. If we do all these things, our students will be adequately prepared for college and career. Their scores on 4th grade reading exams will improve as well, though that is a secondary concern.   

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Since the turn of the century, our state has experienced a precipitous decline in economic prosperity relative to the rest of the country. In 1999, Michigan ranked 16th in per-capita income. In 2024, we ranked 39th. What we have been doing over the past 25 years isn’t working. We need a new approach.

Yet every year the same topics seem to dominate the agenda in Lansing, many of which have no hope of restoring Michigan to high prosperity.

The latest example is roads.

Road funding is a central topic of discussion in Lansing today. Fixing the damn roads appears to be a priority for both parties. But fixing the damn roads is not at all related to revitalizing the state’s economy.

In today’s economy, the only thing that is predictive of economic growth is the share of adults – and young adults in particular – that have a bachelor’s degree or more. As we often say, if Michigan does not get younger and better educated, we will get poorer.

But when it comes to getting younger and better educated, fixing the damn roads is not the answer.

In a 2023 report, the Citizens Research Council includes a top and bottom ten list of state road conditions compiled by the U.S. Government Accountability Office. The top ten states in order are Nevada, North Dakota, Florida, Georgia, Idaho, South Dakota, Missouri, Indiana, North Carolina, and Utah.

Does Michigan have awful road conditions? Yes, it is ranked the fourth worst. Is fixing the damn roads worth doing? Of course. Does fixing the damn roads have anything to do with reversing Michigan’s decades long brain drain? The evidence says absolutely not.

A 2022 report from the National Bureau of Economic Research (“Grads on the Go”) calculated the number of recent graduates from every state’s two-year and four-year colleges and universities and compared that figure to the number of recent college graduates living in the state. This allowed them to determine which states were net gainers and which states were net losers of college graduates. Here is how the top ten road conditions states perform:

• Nevada -9.4%
• North Dakota -31.6%
• Florida -11.3%
• Georgia +14.5%
• Idaho -30.0%
• South Dakota -17.9%
• Missouri -2.2%
• Indiana -30.4%
• North Carolina -5.5%
• Utah -19.6%

So only one state––Georgia––on the top ten road conditions list is a brain gain state. All the others have fewer recent college graduates living in their state than they have recent graduates from the state’s community colleges and universities.

Michigan is also a net loser of college graduates –– an unacceptable -13.7% percent. Is this because of our poor roads? No. Three other states at the bottom of the road conditions ranking — Washington, Illinois, and New York — are brain gain states. It turns out that despite their poor road conditions, young college graduates still find these states desirable places to be.

The Citizens Research Council report includes another ranking of state roads from the Reason Foundation, which publishes an annual report on the quality of highways across states. The same pattern holds true with these rankings. Georgia is the only brain gain top ten state, while four bottom ten states are brain gain states: Colorado, Washington, California and New York. (Michigan ranks 23rd.)

What does matter in attracting young talent?

So if road conditions have nothing to do with retaining and attracting young professionals, what does? An article on the “Grads on the Go” study from the Washington Post concludes the “winners are primarily states with cities (that are) large, dynamic, and regionally vital…That would include New York, Washington, California, Illinois, Georgia, Texas, Minnesota, and Massachusetts.” (Colorado is the ninth brain gain state, home to the talent-magnet city of Denver).

Exactly! All of the evidence we have seen is what matters most to attracting and retaining young professionals, by far, is transit rich, vibrant central cities. There were 18.3 million 25-34 year olds with a BA or more in the US in 2023. 4.6 million of them live in the central city of the 58 metros with working age populations of 500,000 or more. Of the nine brain gain states in the U.S., all have transit rich, vibrant central cities.

If you care about getting younger and better educated, the top ten list you want to be on is the cities with the most 25-34 year olds with a B.A. or more. That list is: New York, Los Angeles, Chicago, Houston, Austin, San Diego, Philadelphia, Seattle, San Fransisco, and Boston.

Of the 58 regions with working age populations of 500,000 or more Detroit ranks 47th, Grand Rapids 50th. Detroit has 25,000 young professional residents, Grand Rapids 22,000. New York is by far the nation’s leader with 796,000. Chicago is the Great Lakes leader with 323,000.

So state leaders may be right to focus on transportation infrastructure – it’s just that they’re focusing on the wrong kind. The transportation infrastructure that does matter to concentrating young talent is transit. Add to that walkable neighborhoods that give priority to pedestrians, not cars. So infrastructure/the built environment does matter. But it is infrastructure designed for Generation Z.

Fixing the damn roads is just one of many good to do policy ideas that have little or nothing to do with retaining and attracting young talent. If we fix the roads but don’t have vibrant cities, we will not attract young talent at any scale.

Getting younger and better educated requires strengthening and creating more transit rich and vibrant neighborhoods in our central cities and small towns that can attract and retain young talent. These neighborhoods vary in many ways, but all share common characteristics: they are dense, walkable, high-amenity neighborhoods, with parks, outdoor recreation, retail, and public arts woven into residents’ daily lives. And they offer plentiful alternatives to driving.

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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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The Working Parents Tax Credit (WPTC) is designed to substantially benefit both parents and employers. It is life-changing for parents and benefits employers by providing a strong incentive to work and work more.

The WPTC would provide Earned Income Tax Credit recipient households with earnings of at least $10,000 from work a fully refundable tax credit of $5,000 per child under the age of three and $2,500 per child over the age of three and under the age of six. No household can receive a tax credit for more than three children.

Six-in-ten Michigan jobs pay less than what is required for a family of three to be middle class. The pandemic made clear that these lower-wage workers live paycheck to paycheck not because they are irresponsibly buying unnecessary luxuries, but because they are in lower-wage jobs that leave them struggling to pay for necessities. The reality is that most of those struggling economically, in good times and bad, are hard-working Michiganders who, like us, get up every day and work hard to earn a living. What these lower-wage workers need most is income, not programs.

Expanded state tax credits for recipients of the federal EITC should be the cornerstone of a transformation in how the state supports working families. We should move away from a program-based support system to an income-based safety net that benefits far more working families than any program can, and provides working families with increased income to pay the bills and save for emergencies, retirement, and the kids’ education.

The WPTC is a fair, efficient, and simple tax policy that would help Michigan parents raising young children to help themselves in providing for their families.

More specifically the WPTC is good for parents because it:

• Combats the benefit cliff
• Helps to defray the high cost of childcare
• Provides parents with a flexible cash resource they can put towards their most pressing priority
• Can reach far more households than any program can
• Is easy to apply for and quality for

Combatting the benefit cliff

The per child credit is an essential feature of the proposal. For most government benefits, including the federal EITC, benefits decline as one earns more income, contributing to the so-called benefit cliff. Our detailed analysis found that households with children realized very little income gain as declining benefits and increasing taxes steeply offset increased earnings. This is particularly true for households with income between $20,000 and $40,000. Where households net as little as 14 cents from each additional dollar earned.

The best antidote for this high tax rate cliff is a flat per child credit that does not decline as you earn more money. The Working Parent Tax Credit is designed so that recipients will be able to keep a substantial proportion of increases in work earnings.

Paying for childcare

This proposal is targeted at households with young children for a reason. The Michigan Association of United Ways estimates the cost of paying for basic necessities for a two-adult household with no children is $41,106; for a household of two adults and two school age children it is $64,752; and for a household of two adults with two preschool children it is $73,488.

The cost of childcare is the main driver of the increased cost of raising preschool children. The WPTC allows parents to decide what is the best way to provide childcare. It is not limited to sending a child to a formal childcare center or program.

Trusting parents to decide family priorities

The WPTC is flexible. The credit can be used to pay for any and all necessities. It is a based on a belief that parents are the best deciders of what matters most to their family’s wellbeing. For some families it might be childcare, for others it could be housing, food, or transportation.

Assisting far more households than any program can

There is no program/supply side solution the state can afford that can deal with the childcare challenge at scale. The current state childcare subsidy program serves around 30,000 children. The governor’s Tri-Share program – which asks employers, parents, and the state to share the cost of care – serves fewer than 1,000 children. The WPTC will serve around 250,000 children.

Easy to apply for and quality for

The reality is that far too many working households are shut out of benefits they are eligible for by a confusing and limited scale system of safety net programs. All eligible parents need to do to receive the WPTC is file their taxes. If you receive the EITC, have $10,000 in household work earnings, and have children under the age of six, you will receive the full working parents tax credit.

The Working Parents Tax Credit is a win for Michigan families raising young children, employers, and the overall state economy. It meets the criteria of good tax policy. It is fair (targeting relief to those most in need), efficient (tied directly as an incentive to work), and simple (no new bureaucracy). Now is the time to enact a Working Parents Tax Credit.

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The Working Parents Tax Credit (WPTC) is designed to substantially benefit both parents and employers. It is life-changing for parents and provides at scale, strong incentives to work and work more at a time when employers are having difficulty finding reliable workers.

The Working Parents Tax Credit (WPTC) would provide Earned Income Tax Credit recipient households with earnings of at least $10,000 from work a fully refundable tax credit of $5,000 per child under the age of three and a fully refundable tax credit of $2,500 per child over the age of three and under the age of six. No household can receive a tax credit for more than three children. It is estimated that the WPTC would benefit Michigan households raising 250,000 children under the age of six.

The WPTC benefits employers, by providing an at scale solution to three substantial impediments to working and working more: the difficulty low-wage workers face in paying for childcare, which the U.S. Chamber of Commerce Foundation estimates costs the Michigan economy nearly three billion dollars annually; the benefit cliff; and the reality that far too many working households are shut out of benefits they are eligible for by a confusing and limited scale system of safety net programs.

The Working Parents Tax Credit is only for people who are working – it’s helping people get back in the game, providing an incentive to go to work. That’s why employers like it.

The WPTC is pro work, both an incentive to work and a reward for work. The credit is designed to encourage individuals to enter the labor market. The credit is available only to households with at least $10,000 in work earnings.

Only EITC recipients are eligible for the WPTC. The EITC has a proven track record of pulling people into the workforce. In a comprehensive 2020 study on the employment effects of the EITC Diane Whitmore Schanzenbach and Michael R. Strain found:

The Earned Income Tax Credit (EITC) is the cornerstone anti-poverty policy in the United States. Designed to fight poverty by encouraging and rewarding work, decades of research on the EITC has found that the program meets its goals by increasing employment among targeted women, and by successfully raising their annual incomes, lifting millions of families out of poverty.

The cost and availability of childcare and the real and perceived loss of benefits as one works more are two big impediments to lower-wage workers working. The WPTC is designed to deal with both at scale.

The per child credit is an essential feature of WPTC. Our detailed analysis of the benefit cliff found that households with children realized very little net income gain from increased work earnings, as declining benefits and increasing taxes steeply offset the increase in earnings. This is particularly true for households with income between $20,000 and $40,000, who net as little as 14 cents from each additional dollar earned.

The best antidote for this high tax rate cliff is a flat per child credit that does not decline as you earn more money. The Working Parent Tax Credit is designed so that recipients will be able to keep a substantial proportion of increases in work earnings.

Focusing on households raising young children is also an essential component of the WPTC. The Michigan Association of United Ways estimates the cost of paying for basic necessities for a two-adult household with
no children is $41,106; for a household of two adults and two school age children it is $64,752; and for a
household of two adults with two preschool children it is $73,488.

The cost of childcare is the main driver of the increased cost of raising preschool children. For households raising young children, the Working Parents Tax Credit provides a life-changing boost in income which can help families defray the cost of childcare. And because the credit goes to parents, it allows them to determine the childcare arrangement that works best for them and their children.

The WPTC is also flexible, so that it allows parents to pay for other necessities that is keeping them from work

There is no program/supply side solution the state can afford that can deal with the childcare challenge at scale. The current state child care subsidy program severs around 30,000 children. Tri-share fewer than 1,000. The WPTC will serve around 250,00 children.

The WPTC also benefits local businesses. The WPTC will primarily be spent buying goods and services from local businesses. Research indicates that families mostly use the EITC to pay for necessities, repair homes, maintain vehicles that are needed to commute to work, and in some cases, obtain additional education or training to boost their employability and earning power. Because the WPTC provides a flexible cash resource to families, that they can spend on whatever need is most pressing for their household, these dollars will be spent in much the same way. The credit will pump up to $935 million into local economies statewide.

The Working Parents Tax Credit is a win for Michigan employers, families raising young children, and the overall state economy. It meets all the criteria of good tax policy. It is fair (targeting relief to those most in need), efficient (tied directly as an incentive to work), and simple (no new bureaucracy).

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If Michigan had the same share of middle-class jobs as Massachusetts, it would be the equivalent of adding nearly 800,000 middle-class jobs to the state economy. Michigan––a state that once attracted people from across the planet to get high-wage jobs––is now a state where seven in ten Michigan jobs pay less than middle-class wages ($65,000 and above). In Massachusetts five in ten jobs pay middle-class wages.

What accounts for this 800,000 high-wage jobs gap? Overwhelmingly it is a much higher B.A. attainment rate. High prosperity states and regions, first and foremost, are places with a high proportion of adults with a bachelor’s degree or more.

Massachusetts is the nation’s most prosperous state primarily because it has great schools and a talent magnet city. The best K-12 system in the country, great four-year universities, plus a city where recent college grads want to stay and come from elsewhere to live after college.

Schools and cities are the foundation of prosperous states and regions. This is an economy where college educated talent attracts capital. And vibrant cities attract college educated talent. Michigan unfortunately has neither and it has become one of the nation’s poorest states.

Where talent––particularly young talent––goes, high-growth, high-wage, knowledge-based enterprises follow, expand, and are created. Because talent is the asset that matters most to high-wage employers and is in the shortest supply, the new path to prosperity is concentrated talent.

All the traditional items we consider to be vital to economic development and state and regional prosperity––business taxation, the regulatory regime, business assistance programs and incentives, entrepreneurship and growing business supports, technology transfer, sub B.A. post secondary training, on and on and on––are not what distinguishes Massachusetts from other states.

What does distinguish Massachusetts from us and other states is the proportion of adults––particularly young adults––with a B.A. or more. Massachusetts is first in the nation in both categories. In Massachusetts, 47.8 percent of adults over the age of 25 have a bachelor’s degree or higher. In Michigan 32.7 percent. This picture gets worse when you look at young people. 57.2 percent of 25-to-34-year-olds in Massachusetts have a bachelor’s degree or higher. In Michigan 37 percent. The B.A. attainment gap between the two states is widening, not shrinking.

This large B.A. attainment gap leads to a large prosperity gap. In Massachusetts the per-capita income is $93,927. In Michigan, a low B.A. attainment and low-prosperity state, the per-capita income is $63,221––a full $30,000 lower than Massachusetts.

In 1980, the two states had roughly the same per-capita income. But a large prosperity gap grew over time, both because the B.A. attainment gap between the two states grew, and because the B.A. wage premium has grown.

The lesson Massachusetts should teach us is if Michigan does not substantially increase its B.A. attainment rate––particularly among non-affluent students––and create talent magnet cities, we will continue to get poorer compared to the nation no matter how good everything we label economic development is. Schools and cities are the foundation of prosperous places, everything else at best is icing on the cake. 

What we have been doing to increase the economic well-being of Michiganders has not worked. A small course correction will not be sufficient––transformational change in our approach to the economy and education is required if we are to achieve an economy that as it grows benefits all.

To create a high-wage Michigan economy we, first and foremost, need to strengthen and create more vibrant neighborhoods in our cities that attract and retain young talent and we need great schools explicitly designed to increase the share of young Michiganders who pursue and complete a four-year degree.

All of this adds up to the reality that there are two high-impact levers available to state policymakers to reverse Michigan’s decades-long economic well-being decline:

• First, create transit-rich, vibrant central cities that are competitive with America’s young adult talent magnet regions.
• Second, create schooling from birth through college that substantially increases Michigan student’s four-year degree attainment.

If Michigan does not concentrate college educated Generation Z here, and does not substantially increase four-year degree attainment of Michigan students––our state will continue to get poorer compared to the rest of the nation.

Getting younger and better educated requires making bold public investments in place and education––the drivers of today’s economy. The alternative is clear: Michigan will continue to get older and poorer.

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Key takeaways

• In Michigan, just 3 in 10 jobs pay $65,000 or more. In Massachusetts, nearly half do. If Michigan’s economy had the same share of middle-class jobs as Massachusetts, we would have an additional 800,000 middle-class jobs.

• Over the past half century, Michigan has gone from one of the richest states in the country to one of the poorest.

• In 1980, Michigan and Massachusetts had roughly the same per-capita income. Today, Massachusetts ranks first in per-capita income, while Michigan ranks 39^th.

• The reason why is because Michigan is a low BA attainment state, and Massachusetts is a high BA attainment state. In today’s economy, low educational attainment states are low prosperity states, and high educational attainment states are high prosperity states.

• To reverse this decline, we need to advance policies that dramatically increase the share of Michigan adults with a bachelor’s degree.

Since the turn of the century, our state has experienced a precipitous decline in economic prosperity relative to the rest of the country. In 1999, Michigan ranked 16^th in per-capita income. In 2023, we ranked 39^th. And the slide shows no signs of slowing.

What we have been doing over the past 25 years isn’t working. We need a new approach. And that approach centers on increasing the share of Michigan adults who have a bachelor’s degree or more.  

The cause of Michigan’s decline in economic prosperity is simple – Michigan has too few high wage jobs. And to get more of them, we need to dramatically increase BA attainment here in Michigan. This is because in today’s knowledge-driven economy, it is those places with high talent concentrations where high-wage firms locate, expand, or are created. 

What would a Michigan economy with much higher rates of BA attainment look like? How would Michigan’s economy look different from what it looks like today if we had more high wage jobs?

For an answer, we can look to Massachusetts, the nation’s leader in both BA attainment and, not coincidentally, per capita income.

BA attainment in Michigan and Massachusetts

Let’s first look at BA attainment in both states. In Massachusetts, 47.8% of adults over the age of 25 have a bachelor’s degree or higher. In Michigan, this figure is 32.7%. This is a massive difference. If Michigan had the same level of BA attainment as Massachusetts, more than 1 million additional Michigan adults would have a bachelor’s degree.

This picture gets worse when you look at young people. 57.2% of 25-to-34-year-olds in Massachusetts have a bachelor’s degree or higher. In Michigan, this figure is 37%. The BA attainment gap between the two states is widening, not shrinking.

This large BA attainment gap leads to a large prosperity gap. In Massachusetts, a high BA attainment, high-wage economy, the per-capita income is $90,600 – the highest in the nation (green line below). Here in Michigan (blue line below), a low BA attainment state, the per-capita income is $61,100 – a full $30,000 lower than Massachusetts.

In 1980, the two states had roughly the same per-capita income. But a large prosperity gap grew over time, both because the BA attainment gap between the two states grew, and because the BA wage premium (the average wage of BA holders compared to those with no education beyond high school) has grown over time.

How increasing BA attainment changes the economy

Becoming a high BA attainment state alters the shape of the economy – the kind of work people do, and what they get paid. In Michigan, roughly 31% of all jobs pay at least $65,000 annually, a rough threshold for a “middle-class” income. This means that nearly seventy percent of jobs in the Michigan economy do not pay middle class wages. This is what we mean when we say Michigan does not have a high-wage economy.

The picture in Massachusetts is much different. There, nearly half (48.3%) of all jobs pay middle-class wages. If Michigan had the same share of middle-class jobs as Massachusetts, it would be the equivalent of adding nearly 800,000 middle-class jobs to the state economy.

How does a more educated populace lead to more high wage jobs? The first, and most mechanical explanation is simply that those jobs that require a BA or more are the highest paying jobs in the economy. The higher the proportion of adults in your state with a BA or more, the more high-wage jobs there will be.

But in addition, high concentrations of highly educated individuals also lead to the development of more high wage jobs in a virtuous cycle. In today’s economy, capital follows talent, not the other way around.

High talent concentrations also yield the birth of new high-wage firms, owing to the knowledge spillovers that occur when you get a lot of smart people together. Not to mention the fact that where high wage jobs go more high wage jobs follow in the form of professional services industries – law, finance, accounting, consulting – that provide high-wage services to high-earning individuals and companies.

The bottom line is, increasing BA attainment changes the shape of the economy – you become far more concentrated in high wage work, far less concentrated in lower wage work.  

For example, as a share of total jobs, Massachusetts has nearly three times the number of “marketing managers” (median income $134,000) Michigan has, two and a half times the number of “management analysts” (median income $85,000) Michigan has, and double the number of “computer and information systems managers” (median income $151,000) that Michigan has. These are all high volume, high wage knowledge economy jobs, and Massachusetts, as a result of their high BA attainment, has a far greater concentration of this kind of work than Michigan does.

Where are Michigan jobs overconcentrated? In low-wage manufacturing work. Michigan has nearly 7 times the number of “assemblers and fabricators” (median income $38,000) that Massachusetts does; more than 7 times the number of “machine operators” (median income ($41,000); and 21 times the number of “engine and other machine assemblers” (median income $49,000).

Two different economies

In the early 2000s, the economist Ed Glaeser wrote a paper about the way in which Boston, in the 1980s, was able to break away from its industrial past and reinvent itself as a knowledge economy hub. They were able to do this, he wrote, because they had a high concentration of highly educated workers. He wrote that there was nothing certain about Boston’s, and therefore Massachusetts’s, economic rise after 1980 – that the city very well could have gone the way of Syracuse or Detroit. But the city’s high concentration of highly educated individuals allowed it to adapt to the coming knowledge economy, where Detroit, and Michigan, did not.

This carries on to today. Today, Michigan continues to identify itself with manufacturing work, through rhetoric and economic policy, and this shows up in the data: Over 10% of Michigan jobs are production jobs, paying an average median wage of $47,300. In Massachusetts, production jobs make up just 4% of all jobs in the economy. Where Massachusetts is overconcentrated is in the knowledge-economy – defined here as occupations in which most jobs within that occupation require a BA or more. In Massachusetts, 43% of jobs are in the knowledge economy, versus just 34% in Michigan.

This is the essential difference between the two economies. Both economies have roughly the same share of workers employed as HVAC technicians and auto mechanics, electricians and carpenters, retail sales workers and fast-food workers. The difference is simply that one economy is overconcentrated in production, one is overconcentrated in knowledge work. And the difference ends up being that Massachusetts is the most prosperous state in the nation, with a per-capita income of $90,600, and Michigan is 39^th, with a per capita income $30,000 less than that of Massachusetts.

The question is which economy do we want to have? The answer has profound ramifications for how we view economic development policy here in Michigan, and the kinds of policies we pursue in the years ahead.

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Over the past several weeks, I wrote a series of posts about the importance of educational attainment – both to our statewide economy and to individual economic mobility and prosperity –  and how we should be designing our K-16 education system to increase the number of Michiganders who attain bachelor’s degrees.

This is the fourteenth and final post in the series. See links to previous posts below:

Post #1: Educational attainment and economic development

Post #2: Educational attainment and economic well-being

Post #3: College completion rates

Post #4: Beyond free college

Post #5: Developing writers in K-12

Post #6: Building college-ready skills in K-12

Post #7: An assessment system designed for college success

Post #8: Holding school systems accountable to postsecondary success

Post #9: BA attainment and K-12 funding

Post #10: Improving completion rates at four-year colleges

Post #11: Public policy levers to boost completion rates at four-year colleges

Post #12: Improving completion rates at Michigan’s community colleges

Post #13: Policy levers to improve outcomes at Michigan’s community colleges

We are often surprised that we still have to make the case – to policymakers, business leaders, and parents alike – that the best thing a young person today can do to lay a strong foundation for a successful forty-year career is to pursue and complete a four-year college degree. Likewise, when we are confronted with data showing unmistakable link between the educational attainment in a given state and that state’s overall prosperity, we are surprised that we still have to make the case that the best thing a state can do to grow its economy is ensure many more of their young people go on to pursue and complete a four-year degree.

But in this concluding post I’m going to stay focused on the individual, and summarize the key themes I’ve been writing about in the previous thirteen posts: about the impact a four-year college degree can have on one’s life outcomes, and the need for Michigan to design its education systems to ensure every young Michigander is prepared to pursue and complete a four-year college degree.

Let’s again review the data, which are unimpeachable. The “wage premium” associated with earning a four-year college degree is large and growing. If we look at the average full-year, full-time worker with a bachelor’s degree (this analysis is limited to bachelor’s degree holders, and does not include those with graduate degrees, whose earnings are even higher), we find that in 2022 that worker earned roughly $96,500. This is $42,000 more than the average income for a full-year, full-time worker with no education beyond high school, $33,000 more than a worker with some college, but no degree, and $29,800 more than a worker with an associate degree. The gap was slightly smaller, though still substantial, for workers early in their careers ($22,700, $19,700, and $17,030 respectively), but is massive by mid/late career: for those between 55 and 59, the gaps were $52,900, $41,200, and $38,900 (see Chart below).

But maybe this is backward looking, one might argue. Some claim that a four-year degree may still provide an earnings bump today, but will not in the years ahead. Wrong again. According to a new report from the Georgetown Center on Education and the Workforce, in 2021 there were nearly 73 million “good” jobs, defined as those that pay a median of $74,000 to workers ages 25-44, and $91,000 to workers ages 45-64. Nearly 43 million of those jobs (roughly 60%), require a four-year degree. These researchers project that by 2031, the number of good jobs will grow to nearly 88 million, and roughly 58 million (roughly 66%) of those jobs will require a four-year degree. Only 200,000 good jobs requiring a sub-BA credential will be added over that time period, and the number of good jobs requiring no education beyond high school will decline by 600,000. Meanwhile, the number of good jobs requiring a four-year degree will grow by 15.6 million. This means that of the good jobs added to the economy between 2021 and 2031, nearly all will require a four-year degree.

Pursing and completing a four-year degree is also the most dependable route towards economic mobility in our society today. Below is a great chart from a Brookings analysis of Opportunity Insights data, a massive data set that charts economic outcomes across generations. What they found was that, in general, a parent’s income rank was highly correlated with their child’s income rank; in other words, if a child grew up poor, they were likely to remain poor as adults. Unless they got a four-year degree. A child who grew up in the poorest fifth of households but earned a four-year degree was, on average, vaulted to the top half of earners as an adult. If that child found their way to an elite college, they jumped to the top third of earners.

But beyond any chart or graph I can show you, we should be preparing all young people in Michigan to pursue and complete a four-year degree because to do otherwise would be to close off opportunity to some segment of the population. Preparing students to attend and succeed at a four-year college education represents our best chance to ensure all young people are equipped with a broad-based education that enables them to pursue a range of potential careers, the landscape of which will inevitably shift over the next fifty years, just as it has in the previous fifty.

Writers and thinkers who care about racial and socioeconomic equality have long understood the necessity of a broad-based education, equating it not only with improved economic prospects, but with a sense of power and agency in one’s life. The famed sociologist and civil rights icon W.E.B. DuBois, writing in the early to mid 20^th century, when the modern “knowledge” economy was still more than half a century away, advocated fiercely for a broad-based, liberal education for all, because he knew that advanced education equaled opportunity. University of Wisconsin education professor Matthew Hora writes, “For W.E.B. DuBois, the freedom to pursue a liberal education was essential for racial equality, ensuring that African Americans had as many opportunities to become doctors, politicians, scientists, and lawyers as whites did. But DuBois was not arguing for the creation of a class of black elites. For him, a liberal education was the key to a liberated mind and to men and women who knew ‘whither civilization is tending and what it means.'”

The data-driven case for pursuing and completing a four-year college degree is rock solid. Pursing a four-year degree is worth it, and then some. But you also don’t need any charts or graphs to tell you that. Education has always been the gateway to agency and opportunity, and it still is today. And we owe it to young Michiganders to provide them with an education that enables them to pursue any opportunity they set their hearts to.

So that’s the case. That is why we believe we need an education system that is set up to prepare all young Michiganders to pursue and complete a four-year college degree. The previous thirteen posts I wrote for this series provide some ideas for how we can go about doing that, though its only a start, and, as always, much of the real work is in the details. But we would love your thoughts, and we hope some of these ideas can serve as a starting point from which we can build a world-class K-16 education system here in Michigan.

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