For nearly two decades we have recommended that Michigan make Minnesota the model for its economic policy. We chose Minnesota because year after year after year it is the most prosperous Great Lakes state. It not only is a neighboring state, it also is a cold weather state and a non-costal state.

The recently released 2023 state per capita income data makes clear once again that Minnesota has the economy Michigan should want to have. Michigan is 39th in per capita income at $61,144, 12.4 percent below the national average. Minnesota is 12th in per capita income at $72,557, 3.9 percent above the national average. All a Great Lakes state best.

The two Great Lakes states that policymakers of both parties almost always compare Michigan to––Ohio and Indiana––are also low-prosperity states. Ohio is 37th in per capita income at $61,495, 11.9 percent below the national average. Indiana is 38th in per capita income at $61,243, 12.3 percent below the national average.

Minnesota also is the Great Lakes state with the highest proportion of adults with a B.A. or more. It is 11th in the nation. Michigan is 34th, Ohio is 37th, Indiana is 42nd. The proportion of adults with a B.A.or more is probably the best predictor of a state’s per capita income. Because college-educated talent is the asset that matters most to high-wage employers.

What has Minnesota done to become the Great Lakes’ most prosperous state? In 2014 we asked Rick Haglund to answer that question. His report, State Policies Matter: How Minnesota’s Tax, Spending and Social Policies Helped it Achieve the Best Economy Among Great Lakes States, is as valid today as it was a decade ago. Yes the data in the report needs updating, but Rick’s description of the path Minnesota has taken for more than five decades is still accurate today.

Rick’s conclusion:

Lawmakers and governors in many states, including Michigan, have focused primarily on cutting taxes and shrinking the size of their governments as the path to prosperous economies. As this report has shown in detail, Minnesota has traveled a different path. There is no question Minnesota is a high tax state—as stated earlier, its residents paid $2,309 (updated for 2023) more than Michigan residents in state taxes alone.

But it has largely invested that additional revenue in services and investments that matter in a knowledge-based economy. An educated workforce, efficient transportation systems, vibrant cities and metropolitan areas, and a secure safety net for those making the transition to a global economy all matter in creating a prosperous state.

Minnesota has made those necessary investments and enacted policies making the state welcoming to all. It really shouldn’t be surprising, then, that it has the strongest economy in the Great Lakes region and one of the most vibrant in the country.

Maybe most important is what isn’t part of the Minnesota playbook:

• Minnesota did not lower taxes. In fact as Rick documents, in 2013 when Michigan was slashing business taxes, Minnesota raised taxes on companies and the wealthy. In 1980 Minnesota had the 6th highest state taxes per capita in the country. Michigan ranked 13th. Minnesota’s state taxes per capita were 122 percent of Michigan’s. In 2023 Minnesota had the 8th highest state taxes per capita in the country. Michigan ranked 34th. Minnesota’s state taxes per capita were 162 percent of Michigan’s.
  
• Minnesota did not slash its safety net. As Rick wrote: “Many states have cut benefits to the poor and unemployed in the belief that these payments dissuade people from looking for paid work. Minnesota takes a different view. It has created one of the strongest safety nets in the country, spending generously on benefits to help those who have lost jobs or been stricken by poverty get back on their feet. That protective net has not trapped Minnesotans and turned them into a bunch of government-dependent slackers. Far from it.”
  
• Minnesota does not offer big incentives for economic development projects. Read the Minnesota Economic Development Resource Guide and you will not find any big incentive program like SOAR, Michigan’s new billions of dollars business incentive program.
  

Michigan has, of course, done the exact opposite. On a bipartisan basis accepting that high taxes, particularly on businesses are job killers, the state has anchored its economic development playbook on cutting taxes for at least three decades. And, also on a bipartisan basis, enacting one version after the other big economic development incentive programs. As well as slashing the state’s safety net in part on the belief that a more generous safety net discourages people from working.

At its core the Minnesota playbook for economic success has been higher taxes used for public investments to compete for talent by offering good schools from birth through colleges and
creating places where people want to live by offering high quality basic services, infrastructure and amenities.

Minnesota focus on making public investments in education from birth through college and creating high quality of living communities combined with being welcoming to all is the foundation for its economic well-being success. Minnesota has developed a policy playbook that makes preparing, retaining and attracting talent its economic development priority one. That is exactly what is needed in today’s economy where talent attracts capital.

The post Michigan in 39th, Minnesota is 12th appeared first on Michigan Future Inc..

A decade ago in a column for Dome we made the case that Indiana’s low tax economic strategy was a failure and would continue to fail going forward. We wrote:

The Mackinac Center for Public Policy on Monday is hosting an event with Indiana Governor Mitch Daniels as the featured speaker. This is a continuation of a decades-long tradition of inviting Indiana governors — mainly Republican — to tell us the policies they have pursued to grow the Indiana economy, so we can learn from them what to do.

One problem: Indiana is today, and has been for decades, the poorest and least educated Great Lakes state. That’s right. Even after Michigan’s awful so-called lost decade, Indiana is poorer than we are.

What Indiana is best at among the Great Lakes states is adherence to the low tax/small government policies advocated by conservatives as the magic elixir to grow the economy. In the 2011 state rankings by the well-respected conservative Tax Foundation, Indiana is the highest ranked Great Lakes state on both overall state business climate (10th) and corporate tax index (21st). The latter is the lever the Snyder Administration has argued is the most important to growing the Michigan economy.

But for the vast majority of Michiganders who care about whether they have a job and a good income to raise a family, Indiana doesn’t look so good. Indiana’s per capita income, proportion of households with incomes of $75,000 or more, poverty rate and proportion of adults with a four-year college degree are all the worst among Great Lakes states.

Fast forward a decade an important new report from Michael Hicks, director of The Center for Business and Economic Research at Ball State University and professor of economics in the Miller College of Business, chronicles the failure of Indiana’s low tax economic development strategy over the past decade. Hicks writes:

The ten-year span of 2009-2019 saw the longest economic expansion in U.S. history. Indiana began this recovery period behind the nation in almost every important economic metric and then fell farther behind throughout the decade.

Indiana’s weak recovery saw the state perform much worse than the nation in measures of job creation, GDP growth, population growth, productivity growth, and personal income growth. The causal factor in this decline is the state’s relatively declining levels of educational attainment.

Hicks attributes this much worse than the nation economic performance to the state’s low tax economic strategy in an economy where college attainment––specifically four-year degree attainment–-is the defining characteristic of prosperous states. Hicks writes:

… Since 2010, in real terms, state and local governments have spent an additional $5 billion on business tax incentives, but added only $17 million to the budgets of colleges and universities. The intent of this funding shift was to ensure Indiana remained a low-tax state. Proponents believed the supply-side effects of this environment would attract new businesses and boost employment opportunities, wages, labor productivity, and overall economic growth. This approach enjoys widespread political support, but there is little to no empirical support.

By employing data on GDP growth and the Tax Foundation’s data on total state tax burdens, we see the elusive nature of this relationship. From these most basic data there is no statistically or economically meaningful relationship between tax rates and growth.

In the wake of these policies, the Indiana economy grew slowly and the job growth that occurred was clustered at the low end of the skill and income distribution. The productivity of Hoosier workers (average product of labor) lagged significantly, and the incomes declined relative to the nation as a whole. Business growth plummeted and measures of economic wellbeing across many domains languished. In short, the low-tax, policies pursued from 2010 through 2019 failed to produce broad economic growth.

Hicks analysis is important to those of us in Michigan because Michigan has for decades been following the same low tax economic playbook as Indiana with the same poor economic results. One can make a strong case for the past two decades Michigan’s decline compared to the nation is worse than Indiana’s. The chart below shows per capita income from 2000-2021 for the U.S., Michigan and Indiana.

In 2000 Michigan’s per capita income was one percent below the nation’s. Indiana was eight percent below. By 2009––the depths of the Great Recession––both Michigan and Indiana had per capita income 13 percent below the nation’s. In 2021 Michigan per capita income is 12 percent below the nation’s. Indiana’s is 11 percent below.

Both states are now structurally low prosperity. Michigan ranks 34th, Indiana 33rd in per capita income. This despite Michigan ranking 12th in the Tax Foundation’s 2022 State Business Tax Climate Index. Indiana ranked 9th. As Hicks says “From these most basic data there is no statistically or economically meaningful relationship between tax rates and growth.”

In the 2011 column we identified talent as the asset that mattered most to state and regional prosperity. We wrote:

Our basic conclusion is that what most distinguishes successful areas — such as Minnesota, which has all of those attributes — from Michigan is their concentrations of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship. Quite simply, in a flattening world where work can increasingly be done anyplace by anybody, the places with the greatest concentrations of talent win.

States and regions without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, and they are less likely to be the place where new knowledge-based enterprises are created. The knowledge-based economy is now the path to prosperity Michigan must pursue.

Pursuing that path means preparing, retaining and attracting talent is economic development priority #1. If we do everything else well that we call economic development and we don’t get younger and better educated, Michigan will continue to get poorer compared to the nation.

Michigan has lagged in its support of the assets necessary to develop the knowledge-based economy at the needed scale. Building that economy is going to take a long time and require fundamental change. But the data show it is the only reliable path to regaining high prosperity.
There are no quick fixes. The Michigan economy is going to continue to lag the nation for the foreseeable future. But there is a path back to high prosperity. The framework for action is:

• Build a culture aligned with (rather than resisting) the realities of a flattening world. We need to place far higher value on learning, an entrepreneurial spirit and being welcoming to all.
• Creating places where talent — particularly mobile young talent — wants to live. This means expanded public investments in quality of place with an emphasis on vibrant central city neighborhoods.
• Ensuring the long-term success of a vibrant and agile higher-education system. This requires a renewed commitment to public investments in higher education — particularly the major research universities.
• Transforming teaching and learning so that they are aligned with the realities of a flattening world.
• Developing new private and public sector leadership that has moved beyond both a desire to recreate the old economy as well as the old fights. Michigan needs leadership that is clearly focused, at both the state and regional level, on preparing, retaining and attracting talent.

The world has changed fundamentally. The choice we face is this: do we do what is required to build the assets needed to compete in a knowledge-based economy or do we accept being a low-prosperity state?

Michigan decided to stay the low tax course. And got the anticipated results: becoming structurally a low-prosperity state. A decade later the choice the state faces is the same: do we make preparing, retaining and attracting talent economic development priority #1 or do we accept continuing to be a low-prosperity state?

The post Indiana’s failed low tax economic strategy appeared first on Michigan Future Inc..

We have explored frequently that those with a four-year degree or more over a forty-year career work more and earn more than those with less education attainment. One of the reasons being that those with a B.A. or more tend to keep their jobs during downturns and if they lose a job get back to work quicker following a downturn.

This post explores whether that pattern held true in the pandemic labor market. Did workers with a B.A. in 2020 work more and earn more than those with less than a B.A.? The data comes from the U.S. Census Bureau’s table on money earnings from all work by education attainment.

The data allow us to look at what workers earned from all work in 2020: Where some worked full time, year round in one job, but also some worked less than full time, while other work more than full time. Some worked more than one job. Some worked in gig jobs. Some were self employed. Some earned overtime pay and others got bonuses from work.

We looked at data for U.S. workers 25 and older. We used $52,500 as the the threshold for being a middle class household of three. Our findings are displayed in the table at the bottom of this post.

Before we dive into the data here are the two headlines: In the nation’s pandemic labor market those with a B.A. worked more and had higher money earnings from work than those without a four-year degree. And the labor market was two-tiered with nearly six in ten (57 percent) who worked in 2020 had money earnings from work less than our three person household middle class threshold.

Let’s start our look at the data with how much people worked in 2020 by education attainment. As you can see in the table, the higher the education attainment the higher proportion of those who worked at all in 2020. Ranging from 57.4 percent for those with a high school degree to 74.2 percent for those with a four-year degree or more. The same pattern holds true for those who defied the odds of a pandemic labor market and worked full time and year round: the higher the education attainment the higher the proportion of those who worked full time and year round. Ranging from 36.2 percent for those with a high school degree to 55 percent for those with a B.A. or more.

Now let’s look at money earnings from all work in 2020. We look at money earnings by education attainment in four ways: proportion of households that did not earn enough to meet our middle class of three household threshold, proportion of workers with work earnings of at least $100,000, median work earnings, and average work earnings.

On each of these four measures the higher the education attainment the more you earned. With the most significant gap being between those with a B.A. or more and those with an associate degree or less. Median money earnings from work ranged from $34,540 for those with a high school degree to $66,423 for those workers with a four-year degree or more. Average money earnings from work ranged from $42,563 for those with a high school degree to $87,315 for those workers with a four-year degree or more.

Nearly six in ten (57 percent) workers earned less that what is needed for a household of three to be middle class. For those without a B.A. it was nearly three quarters (72 percent). More specifically:

• For all 146 million workers 57.4 percent had cash work earning of less than $52,500;
• For those with a high school degree it was 75.3 percent
• For those with some college, no degree it was 67.4 percent
• For those with an associate degree it was 62.8 percent
• For those with a B.A. and more it was 38.0 percent

Conventional wisdom has it that there are lots of jobs that pay six figures that don’t require a B.A. The reality is that in the pandemic labor market those earning six figures overwhelmingly (77.2 percent) had a B.A. or more:

• For all workers 16.1 percent had cash work earning of $100,000
• For those with a high school degree it was 5.5 percent
• For those with some college, no degree it was 8.3 percent
• For those with an associate degree it was 9.1 percent
• For those with a B.A. and more it was 28.8 percent

The data are confirming of the reality that Michigan has a two-tier labor market. One where the dividing line is primarily whether someone has a B.A. or not. It is not that you can’t earn a middle class wage if you don’t have a four-year degree. A little less than three in ten workers without a B.A. made at least $52,500. Nor is having a B.A. a guarantee of earning a middle class wage: almost four of ten workers with a B.A. made less than $52,500. That said the reality is that the most reliable path to middle class jobs and careers, in good and bad economies. is by having a B.A. or more

The post How much workers made in the pandemic labor market appeared first on Michigan Future Inc..

It was only after our interview that I realized the almost perfect alignment of this framing to influential research by the UChicago Consortium on Schools Research. “Teaching Adolescents to Become Learners” explains there are four key student mindsets that help a student to identify as a “learner.” These are: relevance, belonging, competence, and a growth mindset. Midnight Golf started doing this work some years before that CCSR paper was released, but it’s built on the same foundational ideas. The magic in Midnight Golf is the intuitive but extremely strategic leadership of Dave and others on his team, who believe all of their students have brilliance to unleash.

By understanding their students in a personal way, celebrating their unique strengths, and helping them navigate college and career, Midnight Golf’s 6-year college graduation rate is 70%. That’s remarkably high. We hope you enjoy Dave’s wisdom in this week’s What Now? video interview.

Dave’s interview is a part of our What Now? video interview series on education.

What Now? asks: how should we navigate through this pandemic, and ensure a more prosperous Michigan in our recovery? Click the icon for other videos in this series.

Check back next week for our upcoming interview with Craig Carmoney, the Superintendent of Meridian Public Schools, the only district in Michigan to offer early college for every student.

The post Purpose, Belonging, Value, Trajectory: Student Success at Midnight Golf: What Now? Ep. 5 with Dave Gamlin appeared first on Michigan Future Inc..

The Federal Reserve in its Report on the Economic Well-Being of U.S. Households in 2019 measures well-being by education attainment. What they found is those with a B.A. or more value their education more than those with lower education attainment.

Specifically they asked survey respondents who ever attended college “Overall, how would you say the lifetime financial benefits of your most recent educational program compare to its costs?” The response: 31 percent with some college or technical degree thought the benefits of their education was greater than the costs; 48 percent of those with an associate’s degree; and 69 percent of those with a bachelor’s degree or more.

B.A. holders valuing their education the most is, of course, consistent with the data we have frequently explored that those with a four-year degree or more work more and earn more over a career than those with lower education attainment.

What it is not consistent with is the story we are told year after year that getting a four-year degree is no longer worthwhile. Those with a B.A. don’t buy that story at all!

When asked about changes they would make to earlier education decisions only five percent of those with a B.A. or more said they would not attend college or get less education. 35 percent said they would have completed more education.

This compares to 69 percent of those with an associate’s degree who said they would have completed more education. And 76 percent of those with some college or technical degree. So large majorities of those who attended college but without a B.A. say they did not get enough education. They also don’t believe the oft-told story that pursuing more education is no longer worthwhile.

What about those who took out students loans to fund their post-secondary education? One of the reason given for a four-year degree not being worthwhile anymore is perceived high debt loads. 18-39 year old B.A. holders who ever took out a student loan don’t believe that.

Of those 18-39 who have paid off their student loans 93 percent of those with a B.A. or more say that they are doing at least okay financially. Compared to 71 percent of those 18-39 with some college or a technical or associate’s degree.

For those 18-39 still paying off a student loan 76 percent with a B.A. or more say they are doing at least okay financially compared to 53 percent of those with some college or a technical or associate’s degree.

The economic well-being report provides data on why those with a four-year degree or more value their education more than those with lower education attainment. They have higher income: 43 percent of those with a high school degree or less; 58 percent of those with some college or a technical degree; 67 percent with an associate’s degree; and 84 percent of those with a B.A. or more had household income in 2019 of $40,000 or more.

So it is clear that those with a four-year degree or more value their education more than those with less education. Their life experience is that they are better off financially because they have a B.A. including those who took out a student loan.

And they are giving that message to their kids. The report finds that 72 percent of those 22-29 with at least one parent with a bachelor’s degree have a B.A. This compares to 35 percent with a B.A. of those 22-29 with at least one parent with some college but neither with a bachelor’s degree and 19 percent of those with both parents having a high school degree or less.

The post B.A. holders value their education most appeared first on Michigan Future Inc..

When broad economic prosperity is your goal–when you want to see all households growing in income and financial stability–what you measure really matters. Michigan Future has put together a very clear set of up-to-date data that paint the picture of Michigan families’ economic well-being. It’s not pretty. In our first post on this data, I went over four important measures–where Michigan is in the bottom half, and in some cases, the bottom third in the nation. You can click here to review that post, and here’s a summary:

Too many people are out of work, too many people are in low-wage jobs, and too few people have the college degree they need to qualify them for higher wage work. Today, we’re going to get into the relationship between education and work. The next graphic is based on data from employers on jobs in Michigan.

Of the 4.2 million jobs in Michigan, 56 percent of the jobs in Michigan are in occupations with median wages less than the national median ($37,690). Only 22 percent are in occupations with median wages between the 50th and 75th percentile for the nation. Only 23 percent of the jobs in Michigan are in occupations with median wages more than $61,110. We find that many people are really surprised that such a large percentage of jobs in Michigan are low-paying.

Now, let’s look at the educational requirements for those jobs.

This chart is a smidge more complicated, but stay with me. Each bar represents the number of jobs available in Michigan at each of the wage ranges we used earlier (based on the median wages of those jobs). The colored segments within the bar show the proportion of jobs in that range that require different levels of education. For example, jobs in navy blue require a bachelor’s degree or more; jobs in orange require some post-secondary education less than a BA. Skilled trades certificate holders and those with some college or an associate’s degree are qualified for these jobs.

It probably doesn’t surprise anyone that more of the high-paying jobs require more education. But what people do tend to find surprising in this chart is the relative smallness of the number of good-paying jobs that don’t require a BA. Only 8 percent of jobs that require some post-secondary education but not a B.A. will earn an employee $61,110 or more (this doesn’t include jobs that are based on being promoted). The total number of jobs that pay at least the national median ($37,690) or more and require some college but not a BA (and aren’t based on experience) represents 11 percent of total jobs in the state.

And for people who use anecdotal evidence to claim that a BA isn’t a guarantee of a good-paying job–well, nothing is a guarantee–but it’s as close as you can come. 75 percent of jobs that require a BA (75 percent of the jobs in blue, above) pay in the highest range.

And now, looking more closely at just that segment that represents those higher-wage jobs–23 percent of jobs in the state–it’s easy to see why the number of Michigan residents with a college degree is so important to our economic well-being. The large majority of jobs that pay $61,110 or more require a BA–or more. (For more on the BA premium, check out Lou’s post from last week.)

Taken all together, these figures make it pretty clear why so many Michigan households are struggling. The United Way just released a 2019 update (with 2017 data) to its ALICE report, which measures financial hardship, particularly among working people. In its last report, United Way showed that 40 percent of Michigan households can’t afford basic necessities. This year, it’s up to 43 percent.

It’s interesting to check out the list of ALICE rates by county, which will dissolve any notions that it’s a problem, “over there, but not in my community.” That list is on page 5 of the new report (p.12 of the PDF). No county in Michigan has an ALICE rate lower than 30 percent. Some counties are topping 60 percent.

When you measure the right things, the conclusion is clear: Michigan families are struggling, it’s structural to the economy, and it’s getting worse. The solutions, unfortunately, aren’t dead obvious. So let’s start by understanding the gravity and dimensions of the problem.

You can download the entire set of graphics as a slide deck here.

Occupational data in this post from the Bureau of Labor Statistics, Occupational Employment Statistics, 2017, compiled and analyzed by Don Grimes for Michigan Future.

The post The economic well-being of Michiganders is getting worse: Part 2 appeared first on Michigan Future Inc..

Median household income in the Twin Cities of $73,231 was the seventh highest among the 53 metro areas with a population of 1 million or more in 2016, according to American Community Survey figures. (Detroit ranked 38th and Grand Rapids 29th.)

Unemployment hasn’t reached double-digit levels in at least the past three decades. The highest annual jobless rate since 1990 in metro Minneapolis was 7.7 percent in 2009 at the depth of the national Great Recession. Just 2.7 percent of the Twin Cities’ workforce was unemployed in April 2018, the fifth-lowest jobless rate among the 50 largest metro areas in the country. (Metro Detroit, with a jobless rate of 3.6 percent, ranked 31st.)

Economists attribute much of the metro area’s economic vitality to its diverse mix of industries, including food processing, health care, medical device manufacturing and financial services, and to its highly educated workforce.

“It’s very clear that the quality of our workforce is a key element in our success,” said Art Rolnick, a senior fellow at the University of Minnesota’s Humphrey School of Public Affairs and a former economist at the Minneapolis Federal Reserve. “It’s been a big payoff in this economy.”

A roster of highly educated, mostly home-grown workers and managers is a major reason why Minnesota hosts the largest number of Fortune 500 companies per capita in the country, said Myles Shaver, a management professor in the University of Minnesota’s Carlson School of Management. And most don’t leave.

“Metro Minneapolis doesn’t attract people well,” he said, citing a climate he says many equate with the Arctic. “But it’s been able to build a strong workforce because it retains so many talented people. Retention rates here are extreme.”

Minnesota was home to 18 Fortune 500 companies in 2017, the most per capita of any state. All but one are located in metro Minneapolis. Paced by metro Minneapolis, the state’s largest metro area, Minnesota also has long ranked as one of the top knowledge economies in the country.

The Washington, D.C.-based Information Technology and Innovation Foundation ranked Minnesota 12th in its 2017 State New Economy Index, which uses 25 indicators to measure how well state economies are “knowledge-based, globalized, entrepreneurial, IT-driven, and innovation-oriented.” Michigan ranked 15th, up from 34th in 1999.

Its broadly educated workforce also has helped metro Minneapolis grow new industries as old ones fell away.

The Twin Cities became a center of supercomputing in the late 1950s. (The CDC 6600, introduced in 1964 by Control Data Corp. in suburban Minneapolis, is considered the world’s first supercomputer.) But as the computer industry gradually moved to west to Silicon Valley, local computing engineers, scientists and others shifted to the expanding medical device industry.

While the conventional wisdom is that low taxes are key to economic growth, metro Minneapolis—and the rest of the state—has taken the opposite approach.

Twin Cities’ residents and businesses pay some of the highest taxes in the country. Minnesota regularly ranks as among the worst states in the Tax Foundation’s Business Tax Climate Index, which includes corporate, personal income, sales, unemployment insurance and property taxes.

Minnesota ranks 46th in the Tax Foundation’s 2018 study in which a lower number indicates a better rank.

Gov. Mark Dayton and the then-Democratic controlled Legislature raised taxes on the wealthy in 2013, boosting the top individual rate in its progressive income tax system from 7.85 percent to 9.85 percent.

On top of high state taxes, Twin Cities’ residents pay additional special levies to support regional government (the Metropolitan Council), public transit and other amenities, such as parks.

Rolnick said he doesn’t think economic growth is necessarily predicated on low or high taxes. It’s how the money is spent.

“If you’re investing well, you get great infrastructure and great education,” he said. “That’s what you need for a thriving economy.”

The Twin Cities’ diverse economy is somewhat serendipitous. Companies in different industry sectors, such as General Mills, Target and United Healthcare, were born there. But none dominated the economy in the way the auto industry, which is subject to wild cyclical swings, did in Detroit.

Local experts say the key to maintaining that healthy diversity and the wealth it engenders is a continued focus on education and infrastructure.

Metro Detroit and the rest of Michigan could copy that formula for success if policymakers can muster the political will to do it.

Check our new report, Regional Collaboration Matters, How Metro Minneapolis has forged one of the wealthiest and most livable metropolitan regions in the United States, for more stories and lessons from the most successful state in the Great Lakes.

The post Education and infrastructure investments drive Twin Cities’ economy appeared first on Michigan Future Inc..

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.

The post The Governor is right that talent is a big issue. He’s wrong about how to solve it. appeared first on Michigan Future Inc..

Keep in mind that in my last post, I shared data that show that, for the most part, women and men are performing comparably in educational achievement, including college and advanced degree attainment, when you look at this table.

Table. Median income, 2016 ACS, population 25 and over with earnings.

Yes, you are reading that right: men with only some college tend to make more than women with a bachelor’s degree, and men with a bachelor’s degree make more than women with an advanced degree.

ALICE’s household survival budget for a family of four is just over $56,000. This means that more than half of women with a college degree couldn’t support their household alone at a survival level. They don’t reach that level of income security unless they have a graduate degree. (Of course, that’s still significantly better than the alternative–as you can see, lower education levels equal significantly lower pay.)

In other words: no wonder single female-led households can’t achieve financial security for themselves and their children.

Again, as you read, keep in mind the almost identical levels of educational achievement. In the three occupations with the highest annual median earnings in Michigan (according to BLS), women range from being underrepresented to what I like to call “woefully underrepresented” (architecture and engineering occupations at 13.3 percent—I’m looking at you!). On the other end of the spectrum, in the two lowest-paying occupations in the state, women are overrepresented. And unfortunately, some of our lowest-paying occupations are also the most common. For instance, in the service occupations, where Michigan’s women have 60 percent of the jobs, the ALICE report tells us that only five of the top 20 most common occupations pay enough to meet the ALICE threshold. ALICE also tells us that the most common occupation in Michigan, retail salespersons, make an hourly wage of only $10.06. If working full-time (not all are), a person earning this figure would make $20,120 annually. I.e., “These jobs fall short of meeting the family Household Survival Budget by more than $36,000 per year.”

9.7 percent of employed Michigan women are living below the federal poverty line (the number is 41 percent for unemployed women, compared with 6.7 percent and 35.1 percent of men, in the respective categories).

Health

Moving on to a different area—I found the United Health Foundation’s America’s Health Rankings, released in 2016, which organizes a ton of data (primarily from the CDC) on women and children’s health, by state (their online tool is great if you are curious). I picked a couple of key indicators based on data points I’d seen in other reports: having adequate health insurance, maternal mortality rates, substance abuse, and public funding of women’s health services. The one bright spot in Michigan’s data is health insurance, where Michigan ranks 13^th in the nation, with 78.7 percent of women covered.

Women’s substance abuse is at troubling levels: we are ranked 37^th in drug deaths and 40^th in women’s excessive drinking. Michigan is 33^rd in maternal mortality. And we are 45^th in the public funding of women’s health services. (I didn’t go looking for this stat—but I couldn’t help but note that we have the 44^th worst rate of intimate partner violence, with 41.8 percent of Michigan women experiencing it over their lifetime. Not good.)

Leadership

Finally, just for grins/frowns, I counted the number of women in Michigan’s state house and senate. This may not surprise you, but the percentage in the house is less than 30 percent. That’s better than the state senate, where only 13 percent of the chamber are women.

Summary

So, we get paid less and are more likely to be living in poverty or just barely getting by, our health outcomes aren’t pretty, in only six other states would we have worse odds of being abused by a domestic partner, and we aren’t being elected as leaders. At least we have health insurance.

While I don’t get into policy in this post—and this is an area where there is a lot of disagreement about what the role of policy even should even be—our shared prosperity recommendations are relevant for improving the lives of all families living near or below the ALICE threshold.

I can’t imagine anyone arguing that we should be content with the status quo.

The post How are Michigan’s women doing? Not great. (Part 2) appeared first on Michigan Future Inc..

For my answers, I turned first to one of our favorite data sources: the Michigan Association of United Ways’ ALICE report. The reason this report has become such a reliable source of interest for us is that it provides an important look at people and families who are not living in poverty—but who are nevertheless struggling to afford basic necessities. ALICE stands for Asset Limited, Income Constrained, Employed. In other words, the report provides a rich, data-filled description of the families who are both working and on financially precarious footing. The most recent ALICE report was released in April 2017. While ALICE doesn’t break down most of its analysis by gender, I was able to use it as a context and a lens for looking at 2016 census data. I also consulted a 2013 report on the State of Women from the Center for American Progress for ideas about other data points to look up (to be clear, I looked for updated figures using U.S. Census and Bureau of Labor statistics data).

The general contours of the ALICE report are startling. 40 percent of Michigan households are either below the federal poverty line, or fit the ALICE definition. Which makes sense when you consider that 60 percent of Michigan’s jobs pay less than $20 per hour, and around 40 percent of jobs pay less than $15 per hour. Meanwhile, costs of living have risen significantly since 2007. And while there are differences across the state, a significant portion of the population in every county is living below the ALICE threshold. The number is below 30 percent in only three counties, and many counties have near 50 percent. In other words, there are people struggling around the state, not just in certain communities.

The ALICE report does look at the discrepancies between households with children that are led by a married couple, vs. single-family households led by women or men. Married households with children, which are more likely to have two incomes, are doing far better than non-married. The worst-off are the single-family households headed by women. Only 20 percent of those households are living above the ALICE threshold of meeting basic needs, and over half of those households are below the poverty line. There are also many more of them than there are single-family households headed by men—260,000 to 88,000. Doing the math, Michigan has 130,000 households with children that are headed by a single woman that are not able to meet their basic necessities.

In the ALICE household survival budget, childcare for two children accounts for 24 percent of the budget, provided that parents choose the least expensive daycare option. The expense of childcare is a huge strain on the possibility for Michigan’s women to achieve any savings or financial stability.

Education and Employment

One area where Michigan women are doing well compared to men is in education. They are roughly on par with men, and in some areas outperform them, in educational attainment. According to American Community Survey’s 5-year estimates for 2016, 16.6 percent of men have a bachelor’s degree; 16.8 percent of women do. A greater proportion of women than men have associate’s degrees (10.3 percent vs. 7.9 percent). Unfortunately, Michigan’s college attainment lags the nation, so the fact that we are somewhat equal essentially means we are equally low-performing.

And of course, in the areas of educational attainment, we see stark racial disparities persisting. While white women are on par with white men, with the exception of Asian Americans, every other racial subgroup is earning college degrees at lower rates. While over 28 percent of white women have bachelor’s degree or higher, only 19.3 percent of black women do (and the percentage is lower for Hispanic, American Indian, and other ethnicities). Interestingly, while white women are achieving degrees at about the same rate as white men, there is less parity in other racial groups—often with women achieving at higher rates than men.

Yes despite women’s educational achievements, Michigan has a staggering wage gap. On Friday, I’ll pick this topic back up with a table that compares income by educational attainment for men and women.

The post How are Michigan’s women doing? Not great. (Part 1) appeared first on Michigan Future Inc..