MichEconomy.com

Despite upbeat media reports, Michigan's April jobs report not so hot

2013-05-16T11:13:00.000-04:00

Yes, the employment trend in Michigan is headed in the right direction. But April's jobs report, released on Wednesday, wasn't nearly as upbeat as some of the media headlines suggested.

In fact, had the national labor market mirrored Michigan's performance in April, it would have been widely viewed as a disaster.

The jobless rate fell to 8.4 percent from 8.5 percent in March. There were 19,000 more people were working in April than in March, according to the government's household survey. And the labor force grew by 2,000, the first year-over-year increase since 2006.

But wage and salary jobs, based on a survey of businesses, tell a different story. Those are the job numbers you see released for the U.S. economy at the start of each month and the ones economists generally rely on to gauge the health of the job market.

Michigan lost 4,000 payroll jobs in April after losing 3,000 jobs in March. Those numbers were downplayed in many media reports, if they were mentioned at all.

The U.S. economy added 165,000 payroll jobs in April and 138,000 jobs in March.

Still, the job trend line is heading up in the state. But the monthly ride has been bumpy, reflecting the sluggishness of the recovery. Michigan has added a net 32,000 payroll jobs over the past 13 months, but has lost jobs in seven of them. (Jobs in April 2012 were down from March 2012, not shown in chart below.)

Michigan Department of Technology, Management and Budget

Leelanau County commissioners: we don't want more jobs and economic development

2013-05-06T12:25:00.000-04:00

Leelanau County is a bucolic peninsula of rolling farmland, vineyards and picturesque small towns that juts into Lake Michigan, forming the western shore of Grand Traverse Bay.

It's the quiet, northern Michigan playground of celebrities and high-level government officials, including chef Mario Batali, actor Tim Allen, and Health and Human Services Secretary Kathleen Sebelius. Gangster Al Capone once owned a getaway south of Leland.

And apparently Leelanau County is an economic utopia.

While most public officials in the state, from Gov. Rick Snyder on down, put jobs and economic development at the top of their priority lists, Leelanau County officials say they have no need for either.

Last month, the county board of commissioners abolished the county's economic development board and rejected a partnership with the Traverse Bay Economic Development Corp. to develop a new jobs strategy, according to a story in Sunday's Traverse City Record-Eagle.

Several county commissioners said government shouldn't get involved in the economy because Leelanau County has all the jobs and wealth it needs. Plus, they said, county residents are opposed to more growth. Said commissioner Melinda Lautner:

We can’t be health, wealth, happiness and prosperity. We are not that person. That’s not what we are elected to do. Interestingly enough, Leelanau County has health and wealth … that’s just a bonus. We are already there.

Yes, Leelanau is a wealthy and healthy county. It had per capita income in 2011 of $43,978, the second-highest among Michigan's 83 counties, according to a Bureau of Economic Analysis study. Oakland County ranked first with per capita income of $53,297.

Leelanau also ranks as the state's healthiest county, according to a University of Wisconsin study. Researchers said the county's top ranking was in part due to the wealth and education levels of its residents.

Nearly 39 percent of the county's adults have a bachelor's degree or higher, compared to 25.3 percent of all Michigan adults with college degrees, according to census figures.

But Leelanau's highly educated, big earners appear to be wealthy retirees and other adults with few, if any, children living in their households. The median age of a Leelanau County resident is 49.7 years, well above the state's median age of 38.5 years.

Mike Murray, superintendent of Suttons Bay Public Schools, told the Record-Eagle the county needs more jobs to attract young families. His school system has lost 40 percent of its students since 2001. He explained:

That’s due mainly to the outflow of young families who have to move because they can’t find employment. We are very interested in maintaining a balance of young, middle age, and senior citizens.

But county commissioner Debra Rushton said people living in her district don't want new residents and businesses moving into their northern Michigan Shangri-la:

“They are not interested in it. They are perfectly comfortable going down to the local gas station, pumping gas, picking up a gallon of milk, and going home to their quiet community. They don’t want growth.

I get that the locals may be worried about too much growth ruining the beauty of the area and its pace of life. My wife and I used to live in Traverse City, which has experienced tremendous commercial expansion over the past several decades. I've joked with my friends there that the Traverse City area has become Oakland County by the bay with its shopping malls, big box retailers and office towers.

But there's a conceit in Leelanau County commissioners who think they don't have to promote economic development because it occurs naturally there, as Rushton actually said during a commission meeting:

“People who want to do business will come to this community. Why did we come to this community? Why did many of you people come to this community? Because of the beauty. Because of the serenity.

That "you people" attitude may bite the county some day if economic conditions change, as they have a habit of doing.

There's a funny thing about economic development and jobs: they come and stay where they're welcome. Leelanau County just rolled up the welcome mat.

Let's stop comparing elected officials to Hitler

2013-05-04T08:56:00.000-04:00

This blog is supposed to be about Michigan's economy, but Oakland County Executive L. Brooks Patterson lit fire to an issue that has long bothered me: comparing elected officials to Adolf Hitler.

And, hey, this is my blog, so I'm going to write about it.

By now, many of you know that Patterson called fellow Republican and House Speaker Jase Bolger "Adolf Bolger" during an appearance Friday on WKAR's "Off the Record" public affairs program.

Patterson, who was seriously injured in a car accident last August, is peeved with Bolger over the way Republicans are handling hearings on legislation that would eliminate unlimited lifetime medical benefits to those injured in motor vehicle accidents. Michigan is the only state that provides such coverage.

Plus, Patterson said on the show, Bolger is getting too big for his britches:

'Adolf' Bolger, you mean? He's really become very arrogant and he's throwing his weight around up there. If he thinks he's going to be a candidate for governor, he better learn how to control his temper, he better learn to work with the consensus within his own party."

Patterson also put a black comb under his nose to emulate Hitler's mustache.

He isn't the first to compare an elected leader to the German fuhrer. Many who disliked former President George W. Bush called him a modern-day Hitler for invading Iraq. And President Barack Obama is regularly portrayed as Hitler by folks who think he's trying to seize control of the government by taking our guns and requiring citizens to have health insurance, among other things.

Maybe we've forgotten just how bad a guy Hitler, who died in 1945, really was. He started a world war, exterminated 6 million Jews and targeted other ethnic groups in his attempt to create a white master race. None of our elected officials can seriously be accused of doing anything that approaches those atrocities, thank God.

Patterson probably wasn't being serious when he equated Bolger to Hitler. He's long been known for his outrageous antics and statements. Republicans and Democrats are equal-opportunity targets for Brooks. He once demanded that former Republican Gov. John Engler spend more money to fix the roads by having himself photographed standing waist-deep in a giant, fake pothole and distributing the photo to the media.

A lot of people who hadn't been paying attention likely are now aware of the fight over reforming the state's no-fault insurance law as a result of Patterson's Hitler remark. But Brooks is a clever guy who could have come up with an equally effective way of drawing attention to the issue without making the tasteless Hitler comparison. He has since apologized.

Republicans weren't the only ones acting up last week. House Democratic Leader Tim Greimel expressed his frustration with Bolger and other Republicans by saying he would no longer "negotiate with terrorists."

The nastiness in Lansing got so bad that Daddy Republican Gov. Rick Snyder had to issue a statement late Friday telling the kids to knock it off.

Snyder, as we know, is all about relentless, positive action to create jobs and businesses, and using state government to better serve Michigan's nearly 10 million "customers." Our nerdy CPA governor views all this Hitler and terrorist talk as not being very helpful to his reinvention of Michigan.

Maybe this blog post was about the state's economy, after all.

Kentucky incentives keep pouring down on Toyota

2013-04-22T10:57:00.001-04:00

Toyota announced last week that it will begin building luxury Lexus vehicles at its huge manufacturing complex in Georgetown, Ky. This is a very big deal to those who follow the industry because it marks the first time Toyota has trusted American workers to produce vehicles carrying the inestimable Lexus badge.

The Japanese automaker will spend $360 million at the Georgetown complex, which will allow the company to manufacture about 50,000 Lexus ES 350 models a year. Building those cars will result in the addition of 750 jobs.

But Kentucky is paying a hefty price to get those jobs. The Bluegrass State has tentatively approved an incentive package for Toyota valued at $146.5 million. When I plug that number into my calculator and divide by the number of new Lexus jobs, I come up with $195,333 per job.

A 2008 study found that Kentucky and other mostly southern states have awarded nearly $3.6 billion in taxpayer-supported subsidies to foreign-owned auto plants in the United States.

And in case you're wondering, Kentucky is not a right-to-work state. Proponents of the new RTW law in Michigan say it's nearly impossible to attract manufacturing investment from another state or country without being a right-to-work state. Kentucky is a successful exception to that rule. The state is home to about 6,600 Toyota workers.

(Thanks to the late Eddie Rabbit and Dick Heard who wrote the Elvis Presley hit, "Kentucky Rain," for inspiring the headline on this blog post.)

Michigan income growth slowed last year

2013-03-27T12:58:00.000-04:00

Incomes grew in Michigan last year, but the rate of growth slowed from 2011, according to figures released today by the Bureau of Economic Analysis.

Personal income in the state grew 3.5 percent, down from 5.2 percent in 2011. Michigan's income growth rate was the same as the national rate of 3.5 percent. In 2011, Michigan's personal income growth was slightly higher than the national rate of 5.1 percent.

State per capita income grew 3.4 percent, from $36,264 in 2011 to $37,497 last year. That's down from 5.2 percent per capita income growth in 2011. However, the state's ranking rose slightly to 35th in per capita income from 36th in 2011.

Still, Michigan's per capita income last year was just 88 percent of the national average.

Perhaps slowing income growth last year helps explain why, according to a new poll, Michigan voters are dissatisfied with the state's economic performance.

Only 39 percent of state voters think Michigan's economy has improved over the past year, according to the poll released Tuesday by Marketing Resource Group in Lansing.

Michigan residents clustering in big metro areas and moving near water

2013-03-14T11:17:00.002-04:00

New census data out today shows that the Detroit and Grand Rapids metro areas continue to grow, while much of rural Michigan is losing population.

The state gained 6,559 new Michiganders, Michiganians or whatever you'd like to call them between July 1, 2011 and July 1, 2012, according to census estimates. But 57 of the state's 83 counties lost population in that time period.

Many were small, rural counties in the northern half of the Lower Peninsula and the Upper Peninsula.

But Wayne County, the state's largest, also contracted, losing 9,424 residents, mainly due to a continued population loss in Detroit. The city's population has fallen from 713,71 in 2010 to 678,000 in 2012, according to an estimate by the Southeast Michigan Council of Governments.

Still, metro Detroit grew slightly, gaining 4,094 people. Metro Grand Rapids also expanded. Ottawa County, which includes Holland and borders Lake Michigan, grew by 1.1 percent last year, the fastest growth rate in the state. Its next-door neighbor, Kent County, where Grand Rapids is located, ranked second in growth, expanding by 1 percent.

Michigan's small population growth was entirely due to a 0.56 percent "natural increase" (births minus deaths) between 2010 and 2012. More than 56,000 people left the state in that time period, resulting in a net migration rate of -0.57 percent.

The most attractive spot in the state for new residents was the Traverse City area. Grand Traverse County, located at the base of Grand Traverse Bay, had a net migration rate of 1.98 percent between 2010 and 2012. Grand Traverse was the only county in Michigan in which the migration rate rose by more than 1 percent over the past two years.

Much more new Michigan census data can be found here.

How to become a billioniaire in Michigan? Sell Amway, groceries and mortgages

2013-03-04T14:16:00.000-05:00

Twelve Michigan captains of industry are included in Forbes magazines' latest "Richest People on the Planet" list of billionaires, out today.

Heading the list of the state's wealthiest residents is 87-year-old Amway founder Rich DeVos, whom Forbes says is worth $5.1 billion. Amway, short for the American Way, is located in Ada, a Grand Rapids suburb.

Not far behind are the brothers Hank and Doug Meijer, worth a combined $5 billion. Their family business is Meijer Inc. a chain of grocery and general merchandise stores based in Grand Rapids.

Who's the richest person on the east side of Michigan? Forbes says it's Dan Gilbert, the founder of Quicken loans and a major investor in Detroit real estate. Gilbert has been buying buildings in downtown Detroit as if they were Monopoly properties. Forbes says he's worth $3.5 billion.

Gilbert, 51, also is the youngest Michigan billionaire.

Much of Michigan's wealth was created by the auto industry. But only two auto magnates remain on the Forbes' billionaire list. They are retired Ford Motor Co. executive William Clay Ford Sr., 87, and auto entrepreneur Roger Penske, 76. Ford is said by Forbes to be worth $1.25 billion, while Penske's wealth is reported to be $1.2 billion.

Detroit is owed half a billion dollars in unpaid taxes, court fees

2013-02-21T10:06:00.001-05:00

Detroit's two daily newspapers each had stories this morning revealing a problem that hasn't received nearly enough attention: a huge lack of revenue being collected by a nearly bankrupt Detroit.

The Detroit News weighed in with a package of stories reporting that half the city's property owners aren't paying their taxes. Detroit failed to collect $246.5 million in property taxes last year.

Over at the Free Press, we learned that the city's district court is owed $254 million. Chief Judge Kenneth King said the problem is compounded by widespread poverty and unemployment in the city. Trying to collect fines is like squeezing blood from a turnip, he said.

Detroit is a fiscal mess. The city's costs of providing service are too high and it's carrying more than $12 billion in long-term debt.

Gov. Rick Snyder is expected to soon name a financial manager to try to restructure the city's finances. But this morning's news stories make clear that Detroit also needs to find a way to create more jobs and economic growth so citizens can at least pay their taxes. Detroit won't be able to cut its way to prosperity.

How about Mitt Romney or Steven Rattner for Detroit emergency financial manager? (Or Mike Bloomberg?)

2013-02-18T07:49:00.000-05:00

Gov. Rick Snyder is expected to name an emergency financial manager for cash-strapped Detroit within weeks. Who will it be? Probably not Mitt Romney or Steven Rattner. But each of these two financial wizards would bring some uncommon talents to what will be a tough, nasty job.

Romney, as we all know by now, saved the scandal-ridden 2002 Salt Lake City Olympic Games from financial collapse. And Massachusetts mostly prospered during his years as governor, although not as much as he claimed during his failed presidential campaign last year.

Mitt is something of a Detroit homeboy, as well. He was born in the city and lived there in his early years until his family moved to Bloomfield Hills and enrolled him in the prestigious Cranbrook schools.

Romney as Detroit's emergency financial manager might also serve as a fascinating social/economic experiment. A television ad during his presidential campaign showed Romney driving around Detroit while blaming the liberals for destroying the city. So why not give Romney a shot and see if his conservative prescriptions can save Detroit?

Mitt, who is between jobs, also likes to fire people. He even threatened to fire Big Bird. That's a necessary skill because the mayor, the city council and a whole bunch of city employees will have to go when an emergency manager takes over.

The problem, of course, is that the rich, white Republican Romney would be even less popular in Detroit than former Gov. John Engler, who seized control of Detroit Public Schools in the 1990s. Snyder would have to call out the National Guard to protect Romney 24/7.

But maybe the Detroit citizenry would be more accepting of a rich, white Democrat who is tight with President Barack Obama and saved Detroit's automakers from extinction. That would be Steven Rattner.

Like Romney, Rattner knows how to fire people. Just ask former General Motors CEO Rick Wagoner.

Rattner could lead a different kind of economic/social experiment in Detroit.

Rescuing the city of Detroit would likely prove more unpopular than the federal bailout of Detroit's automakers. But Rattner might be able to convince Obama to help finance what could be billed as an unprecedented effort to transform the country's most troubled major city, showing the way for other distressed urban centers.

If he failed to get federal aid, Rattner has another resource. He manages the fortune of billionaire Michael Bloomberg, who is nearing the end of his run as New York's mayor.

Bloomberg has thought about how to revitalize Detroit. He once proposed the way-out-of-the-box idea of requiring all new immigrants to live in Motown. Maybe Bloomberg would be willing to spend part of his fortune implementing some of his ideas for resurrecting a once-great American city.

Or maybe Bloomberg, who seems to enjoy social engineering--he has banned trans fats in restaurants, Big Gulps and public smoking in New York--just might be interested in the job of Detroit emergency financial manager for himself.

Mackinac Center, staffed with college grads, says college is not that important

2013-02-16T09:05:00.001-05:00

There has been a lot of debate recently about whether a four-year college degree is worth the cost, which can top $100,000.

The Mackinac Center for Public Policy weighed in this week with an analysis carrying this provocative headline: Five Reasons the Government Shouldn't Subsidize Higher Education.

Its analysis, published in the Mackinac Center's Michigan Capitol Confidential newsletter, makes a number of claims that run counter to most research and data regarding the value of a college degree.

Mackinac Center research associate Jarrett Skorup says there is no evidence that state support for higher education produces economic growth and more jobs. And he disputes the claim, backed by a recent Census Bureau study, that having a degree is the reason college graduates earn much more during their careers than high school graduates. Skorup wrote:

Proponents of more funding for higher education almost always cite the same statistic as their main point: Overall, college graduates tend to make more money in their lifetime than those without a degree. But this assumes that the degree caused the higher earnings, rather than the fact that those who complete college are already more likely to be financially successful whether they attend university or not.

But it's worth noting that Skorup has a bachelor's degree, as do at least 22 of the 23 members of the Mackinac Center's policy staff. (One staffer doesn't list a degree in his bio.) Eight also have master's degrees, while one has a doctorate and four have law degrees.

The Mackinac Center is located in Midland, where 42.4 percent of the city's residents have a bachelor's degree or above, well above the state average of 25.3 percent.

Per capita income in Midland, home to the Dow Chemical Co. and lots of PhDs, was $32,185 in 2011, 26 percent above state per capita income of $25,482.

Can it seriously be argued that incomes in Midland, including the salaries and benefits of Mackinac Center employees, would be as high if none of these smart folks had a college degree?

State government subsidizes many things. Midland's wealth suggests subsidizing higher education is a wise investment.

States gain few jobs by poaching them from other states

2013-02-12T15:15:00.003-05:00

Governors love to go on business-raiding parties and then announce that they've convinced businesses in the target states to relocate to their states.

Michigan and Indiana have been trying to lure businesses and jobs from each other for decades, a battle some say was at the heart of Michigan following Indiana in becoming a right-to-work state last year.

Texas Gov. Rick Perry is in California this week, trying to convince businesses in the Golden State that they'd be better off moving to his Lone Star State.

Prior to his arrival, Perry bought $24,000 of television time in California to tout his state's favorable tax, regulatory and legal climate for businesses.

California Gov. Jerry Brown has fired back, saying Perry's ad campaign was an insignificant "fart."

Brown was on to something. States add very few jobs by stealing them from other states, several experts told the San Francisco Chronicle.

Don Walls, an Oakland, Calif. economic consultant who created a database of state-to-state job movements, told the Chronicle that relatively few jobs move across state borders. Said Walls:

This whole discussion over moving between states is much to do about nothing because the majority of moves occur within states.

This goes to the heart of what economic development is all about - these people who are involved in it are salespeople. They're real good about telling you about high-profile moves - but as a systematic activity, none of the states keeps track.

Walls and the Edward Lowe Foundation have created YourEconomy.org, which shows the various ways states add jobs. Their data show that most jobs are created by the growth of existing companies.

This interactive chart from YourEconomy.org show that Michigan gained or lost only a few thousand jobs a year by companies moving to or leaving the state between 1995 and 2009--a tiny fraction of overall job growth.

Yet states waste billions of dollars on subsidies to try to lure jobs from each other and keep companies from leaving, according to Good Jobs First, which calls the practice a "shell game."

Liberals, conservatives say Michigan socking away too much for a rainy day

2013-02-04T14:06:00.002-05:00

Michigan's improving economy has resulted in the rapid replenishment of the state's rainy day fund, which has grown to more than $500 million. And that has prompted folks from a broad political spectrum to agree: the state is banking too much money for future bad times.

But liberals and conservatives differ on what should be done with that money.

Gilda Jacobs, president of the Michigan League for Public Policy, told the Detroit Free Press that the state should spend at least some of the money to aid low-income families that are still struggling more than three years after the official end of the Great Recession.

Scott Hagerstrom, director of the Michigan chapter of Americans for Prosperity, told the Free Press that Gov. Rick Snyder's administration should not be making deposits to the rainy day fund while asking taxpayers for an additional $1 billion to fix the state's crumbling roads.

Snyder is expected to recommend an additional appropriation of $50 million to $100 million to the rainy day fund when he presents his fiscal 2014 budget to lawmakers on Thursday.

Michigan's rainy day fund balance swings wildly with the state's economic ups and downs. It held almost $1.3 billion at Michigan's previous economic peak in 2000, but was depleted when the state fell into a deep auto-led recession just three years later.

George Erickcek, senior regional economist at the Upjohn Institute for Employment Research, told me earlier this year that the state will need an especially large rainy day fund because Michigan's new business-tax structure is much more vulnerable to economic downturns. In a June Q & A with Bridge magazine, Erickcek said:

If you take a look at the change from the old MBT to the 6 percent Corporate Income Tax, the MBT taxed corporate income and sales revenues. Now it’s totally based on profits. A profits tax is one of the most cyclical forms of taxes available. It goes up and down with the business cycle. We’ve put a vulnerable tax system in place. The Corporate Income Tax looks like a very smart move in 2012. It should bring in surprisingly strong revenue. However, in the next downturn, I think the state will be sadly surprised to see how Corporate Income Tax revenues have disappeared. Back in the days of the Single Business Tax, which was designed by a bunch of economists and loved only by economists, we had a very stable tax. Businesses hated it because they had to pay it if their income was down. But the Treasury could depend on the SBT for a consistent revenue flow. My only advice to the state now is to get a rainy day fund going, because the state will need it when the bad times come.

Ford union workers to get $8,300 each in profit sharing

2013-01-29T15:46:00.000-05:00

I suspect most of Ford Motor Co.'s 45,800 U.S. hourly workers are glad they have a union today.

Ford announced this morning that it earned a pre-tax profit in North America of $8.3 billion in North America last year, resulting in profit-sharing checks averaging $8,300 for each hourly Ford worker in the United States. The profit-sharing arrangement is part of the automaker's contract with the United Auto Workers.

Those profit-sharing checks total more than $380 million, much of which will be pumped into the economies of Michigan and other states where Ford builds cars and trucks.

So here's a question: would Ford workers have gotten those checks had they not been represented by the UAW?

The short answer is no because their labor contract requires the payouts.

But I'm sure some would argue that if Ford didn't have to deal with a union, it would be even more profitable and its workers would earn even higher compensation. But would a union-free Ford share those profits with workers or would it reserve the money for greater capital investment and boost returns to shareholders?

What are your thoughts?

Canada won't try to recapture Detroit by using the proposed New International Trade Crossing bridge

2013-01-25T10:41:00.000-05:00

There hasn't been a lot of news about the proposed bridge linking Detroit and Windsor since a ballot proposal that would have required Michigan residents to vote on its construction was defeated in November.

But the project is moving along, according to Roy Norton, Canada's consul general in Detroit.

A waiver of the federal "buy American" requirement has been approved, allowing the contractor to use Canadian steel on the span. American steel also will be used. Rumors that Chinese steel will be used in constructing the bridge are untrue, Norton said.

The next step is approval of a presidential permit in Washington, which should be finalized in a few months.

"We don't anticipate any difficulty," Norton told me. "The process is taking its natural course."

Once that final permit is approved, Canada can start purchasing land where the bridge will connect in Detroit. Canada must buy the property, Norton said, because the project agreement requires Canada to pay all of the bridge costs.

But the gentlemanly Norton says that Canada is not treading on U.S. sovereignty by purchasing land for the bridge in Detroit.

"We are reconciled to the outcome of the War of 1812," he said. "We are not trying to take Detroit over again."

Norton said he expects construction of the bridge to start next year.

States waste billions of dollars stealing jobs from each other, Good Jobs First study says

2013-01-24T13:11:00.001-05:00

On Wednesday, the Michigan Economic Development Corp. announced it was giving $32.3 million in grants and other assistance to 14 companies that are investing more than $1.1 billion and promising to create 4,590 new jobs in the state.

The jobs and investment are great news for Michigan, which needs to add nearly 720,000 jobs just to get back to its employment level in April of 2000, the month before the state entered its "lost decade."

But a study released today by Good Jobs First says that Michigan and the rest of the states are wasting billions of dollars luring jobs from one another with costly economic development incentives. The nonpartisan research center for grassroots groups and public officials calls the practice a "shell game."

Virtually all of the new investments announced Wednesday by the MEDC are new operations or expansions of facilities in the state by Michigan-based companies.

The one notable exception is Whirlpool Corp., which is moving its refrigerator product development operation from Evansville, Ind. to Benton Harbor, where the appliance manufacturer has its headquarters. The company is expecting to add 180 jobs in economically depressed Benton Harbor, which is being run by an emergency financial manager.

Whirlpool is getting a $2.4 million Michigan Business Development Program grant to assist in the move and Benton Harbor is offering a 12-year tax abatement valued at $1.85 million. The MEDC said Michigan was chosen over competing sites in Iowa and Mexico.

But Whirlpool announced last August that it was moving the refrigerator operation to Michigan, making me wonder if the company was just playing the state for a cash sweetener.

MEDC spokesman Mike Shore told me in an email that state officials had been negotiating with Whirlpool since early last year on an incentive package to relocate the refrigerator product development operation to Michigan.

The deal was signed in July, Shore said, but just announced on Wednesday.

Will Michigan residents vote a sales tax hike to pay for roads?

2013-01-21T10:19:00.001-05:00

Michigan voters could be presented in May with two options to pay for road repairs, one of which would ask them to approve a 2 percentage point hike in in the 6 percent sales tax. Voter approval is necessary because the sales tax percentage is set in the state constitution.

Voters would choose between that plan and a proposed legislative plan to raise an additional $1.2 billion to fix Michigan's crumbling roads and bridges. You can read more details here.

A coalition of powerful business and labor groups, called Just Fix the Roads, has been formed to push for more road funding.

But getting voters to approve tax hikes has become extremely difficult. We've become conditioned to believe that taxes are too high and that government will just waste any increase in tax dollars we send to Lansing and Washington.

There doesn't appear to be any organized opposition to the plan being developed in the Legislature. But there no doubt will be. And the opposition could have a potent argument against boosting the sales tax that business groups used in defeating last year's ballot proposals on alternative energy and collective bargaining rights:

Hands off our constitution.

Michigan right-to-work law could boost union organizing efforts

2013-01-18T09:51:00.000-05:00

Supporters of Michigan's new right-to-work law have said it could make unions stronger by forcing them to work harder to keep their members and sign up new ones.

I've dismissed that argument, which certainly wasn't the intent of the legislation.

Under right to work, employees cannot be forced to pay union dues as a condition of employment.

But the law could give unions an unintended boost, according to Gary Klotz, a Butzel Long attorney who represents employers in labor issues.

In an article written for the Small Business Association of Michigan, Klotz said nonunion employers shouldn't just assume the RTW law will have no impact on them.

Klotz said the law could pump new life in to union organizing efforts because unions can offer "no-risk" organizing to nonunion workers. Workers could support the union during an organizing campaign, he said, but they wouldn't have to pay union dues if they are unsatisfied with the contract that the union negotiates.

Whether, in the new RTW environment, this “no risk,” “win-win” sales pitch will be an effective organizing tactic for unions remains to be seen. Non-unionized employees have many other reasons for not seeking union representation, and this new sales pitch may not change those reasons. But non-union firms should expect unions to use this sales pitch in future organizing campaigns. They should not ignore this likely union conversion of the RTW law into a tool for future organizing.

There is big risk to unions in using this strategy, of course. It doesn't make great financial sense to sign up a lot of members who don't pay union dues.

But it's similar to the sales pitch retailers have used for years to attract customers: no money down and six months to pay. The big difference is that the a worker doesn't have to pay union dues even a union contract puts more money in the worker's pocket.

Gov. Rick Snyder glosses over talent development in State of the State speech

2013-01-17T15:33:00.001-05:00

Many experts view talent as the most important element in building a vibrant economy. Former Gov. John Engler used to say that the state with the best-educated work force wins. And Gov. Rick Snyder has said he wants Michigan to lead the world in having the most talented workers.

But his annual State of the State speech last night was mostly devoid of an emphasis on talent. He proposed more funding for early childhood education, but did not say whether he supported restoring cuts to K-12 or higher education.

Snyder also announced an economic development conference in March to discuss connecting workers to available jobs in the state.

His major plea was to ask lawmakers to approve $1.2 billion in higher gas taxes and vehicle registration fees to fix Michigan's crumbling roads. A stronger transportation infrastructure also is critical to economic development.

Although Snyder didn't say much about talent, he has a habit of doing things that he hasn't talked much about, such as supporting right to work, shifting the tax burden away from business and trying to liberate Blue Cross Blue Shield of Michigan.

So I wouldn't be surprised to see some unexpected initiatives out of the governor's office on talent development this year.

But I wonder if this story in the New York Times gave Snyder pause when he arose this morning. China, the story said, is investing a staggering $250 billion a year to produce more college graduates and boost its economic competitiveness.

One of the industries China intends to exploit globally with better-educated designers, engineers and marketers is the auto industry. Says the Times:

Chinese automakers and policy makers have been preparing for years to follow the example of Japan and South Korea. But reaching that goal will require at least four big advances: designing more attractive cars and engines, improving reliability, developing local technologies that do not depend on patents leased from foreign automakers, and understanding overseas buyers and how to market to them. Chinese officials say that a big reason they are pouring billions of dollars into the development of electric and hybrid cars is that they hope to leapfrog the West and develop indigenous technologies before other countries do.

Game on.

Nearly a third of Michigan families having trouble meeting basic expenses, says Michigan League for Public Policy

2013-01-16T15:19:00.000-05:00

Most of Michigan's employment trends have been moving in the right direction since the state economy bottomed out in 2009.

The state's unemployment rate has fallen 5.3 percentage points from its most recent high of 14.2 percent in August of 2009 to 8.9 percent in December. Michigan's real per capita income grew 5.2 percent in 2011, exceeding the national growth rate of 4.2 percent.

But despite that progress, nearly a third of Michigan working families--some 308,000--are struggling to meet basic needs, according to new national report by the Working Poor Families Project. The state results were announced by the Michigan League for Public Policy.

In 2011, 32 percent of Michigan's families were considered working poor, up from 27 percent in 2007, the year before the Great Recession began.

Families here and across the nation are struggling with stagnant wages and the increasing costs of life's basics, including food, shelter and health care. Michigan's dashboard on per capita income says even though income is rising, "it has not kept up with inflation over the past few years."

Many families have cut expenses to the bone in an attempt to stay afloat. But even those who are better off might not be able to get ahead by becoming more frugal, journalist Helaine Olen wrote Sunday in the New York Times:

Even as the average household net worth plunged by almost 40 percent between 2007 and 2010, the cost of everything from health care to housing has risen for decades at rates well beyond that of inflation. Almost half of us are living paycheck to paycheck, barely able to save a penny. In fact, it’s long been known that the majority of bankruptcies result from health issues, job losses and fractured families, something no amount of cutting back can protect against.

America needs a raise!

Controversial right-to-work ad ignored quality work force as a business investment incentive

2013-01-11T09:47:00.000-05:00

Critics claim state officials have wrongly politicized the highly successful "Pure Michigan" marketing campaign by slapping its logo on a full-page newspaper ad touting Michigan's new right-to-work law.

The $144,000 ad ran Tuesday in the Wall Street Journal. Initially, the focus of criticism was on the ad's contention that right to work, tax cuts and streamlined regulations have created a "perfect storm" of opportunity for businesses looking to invest in Michigan.

As Ann Arbor blogger Mark Maynard put it, bad things usually happen in a perfect storm.

But now the outrage has shifted to the ad's use of the "Pure Michigan" logo. Critics say the ad has wrongly politicized the state's highly successful marketing campaign. Senate Minority Leader Gretchen Whitmer, a Democrat and possible gubernatorial candidate in 2014, called the ad "offensive." Said Whitmer:

Pure Michigan has always been about uniting our state around what makes us great: our natural resources, our communities and our people. It’s simply offensive that Governor Snyder would corrupt that message and use it to advance his own political agenda. I’m calling on the Governor today to answer to the people of Michigan who have overwhelmingly expressed their disapproval with what he’s done to the Pure Michigan campaign.”

The Michigan Economic Development Corp., which placed the ad, isn't backing down. MEDC President Mike Finney told MLive.com that the ad was targeted narrowly at CEOs and site selection consultants. Said Finney:

We view (right to work) as we do all the other business tools, programs, opportunities that we have, so we incorporated it into all of our business messaging. It’s one of many things that we’re communicating to the business community as a primary target.

The ad also mentions that Michigan has cut taxes and streamlined economic development incentives. But it makes no mention of a quality work force, which many business executives say is the most important thing they consider in location decisions.

Gov. Rick Snyder talked about this in a speech last fall to the West Michigan Policy Forum in Grand Rapids. This is what he had to say, according to Crain's Detroit Business:

My simple view of the world is we’re going to lead the world and North America in having the most talented people, and that’s more important than tax incentives or regulation or a whole bunch of other stuff.

But the state's Wall Street Journal ad seems to say otherwise. Here's the full text of the ad:

It’s a new day for business in Michigan. Michigan is the newest Right-to-Work state. This once-in a generation transformation has Michigan poised to become a preferred place to do business. Michigan has also redesigned incentive programs, streamlined regulatory processes, approved legislation to eliminate personal property taxes and launched a new flat 6% business tax, giving the state its most competitive position in decades. The perfect storm of opportunity, resources and passion is Pure Michigan.

What matters more: wages or the cost of living?

2013-01-10T09:37:00.000-05:00

Michigan Future President Lou Glazer has been a leading voice in the view that Michigan needs higher-paying jobs, which require that a bigger percentage of its citizens get college degrees.

His work has repeatedly shown that the states with the highest per capita incomes generally are those with the most highly educated workers. The major exceptions are states such as North Dakota and Wyoming that are profiting from the current energy boom.

But most of the states on Glazer's list also have high living costs. Glazer says people continually ask him if higher living costs negate higher wages.

I often hear this from my readers, as well. Some think Michigan would be better off if it looked like Alabama with a low educational attainment and low cost of living, rather than Massachusetts, which has a high percentage of college grads and high cost of living. Glazer's answer to this is: you get what you pay for.

(C)ost of living is only one half of the equation. The other half is what you get for your money. If costs were all the mattered we would all drive a Hyundai and none of us a Lexus. We start with a belief that consumers are rational, not dupes. They don’t over pay for housing or other basics when they choose a place to live and work. When they pay more they calculate what they are getting for their money.

And look at this issue in the context of where recent college graduates, which Michigan is trying to attract, are locating. The cost of living in places such as New York, Boston and Chicago is higher than in Detroit, Flint and Saginaw. But these young people are flocking to the higher-cost-of-living cities.

So the fact that housing costs in Michigan are far less than in Chicago and Manhattan doesn’t stop many of our recent college graduates from going to those vibrant cities. Why? Because they are buying the neighborhood, not just the housing. Central Park is worth something as is the access to world class arts, culture and night life. It is no different than middle class families with children paying more for the same house in a community with better schools.

Family A may prefer to live in low cost Mississippi and family B may prefer to live in high cost Massachusetts. But when both decide where to live they think not just about cost but about what they are getting for their money.

Michigan promotional ad in the Wall Street Journal sent an unintended message

2013-01-09T08:43:00.000-05:00

A full-page ad yesterday in the Wall Street Journal was designed to let the business world know that Michigan has become a friendlier place for investment now that it has become the nation's 24th right-to-work state.

The ad was purchased by the Michigan Economic Development Corp. and carried the "Pure Michigan" logo.

Right to work, tax cuts, fewer regulations and new investment incentives have created "the perfect storm of opportunity, resources and passion" in Michigan, the ad said.

Huh? As Ann Arbor blogger Mark Maynard pointed out, a perfect storm "isn't generally considered a good thing." Says Maynard:

I’ve actually read The Perfect Storm. The book is about a desperate sea captain, who, in hopes of making a big financial score, heads his ship into a colossal storm front in search of elusive swordfish, putting the lives of his crew on the line. And, guess what? There were no survivors!

That certainly isn't the image Michigan intended to create in its Wall Street Journal ad.

But the political climate in the state is likely to be stormy for some time, thanks to Republicans who rammed a right-to-work bill through the Legislature's lame-duck session last month.

A group called We Are Michigan was planning to hold a "Walk of Shame" to welcome lawmakers back to Lansing this morning. It also planned to deliver "broken cookies for broken promises" to lawmakers that voted in favor of right to work.

Michigan League for Public Policy says state's tax system is broken

2013-01-07T15:12:00.000-05:00

The Michigan League for Public Policy (formerly the Michigan League for Human Services) today released a study on Michigan's tax system, which it says is unfair, doesn't raise enough money to provide for essential government services and investments, and will hurt the state's economy if it isn't changed.

Tax cuts, especially those to businesses, have put a severe strain on state and local government budgets, the study says.

Other changes have made the state's tax structure more regressive, meaning that low-income households are paying a larger share of their income in taxes than higher-income households. That has occurred because of the loss of deductions and credits, such as the earned income tax credits, for low-income taxpayers.

The study says:

As the state’s economy has struggled and evolved, its tax system has not kept pace. The result has been more than a decade of budget deficits and cuts and an erosion of Michigan’s competitive advantage in the national and global economies.

The league says the state must boost taxes to make needed investments in education, transportation systems, environmental protection and other quality-of-life areas.

Its report calls for hiking the rate on the new 6 percent corporate income, expanding the sales tax to selected services, enforcing the sales tax on Internet sales, annually reviewing the effectiveness of tax breaks and restoring the earned income tax credit to its original level of 20 percent of the federal credit.

Here's the problem: Gov. Rick Snyder and the Republicans who are largely responsible for what the league views as a broken tax system think the actions they took have actually fixed it.

They would argue it's a good thing that the state's general fund revenue in 2010 was 15.5 percent less than in 1968, when adjusted for inflation. To them, the smaller the government, the better.

I'd bet they are pleased that corporate income taxes will comprise less than 2 percent of total tax revenue when the business tax cuts are fully phased in. After all, the Republican economic strategy is to cut business taxes as much as possible and watch the benefits trickle down those who are paying more to support those tax cuts.

(To be fair, Democrats, including former Gov. Jennifer Granholm have also drunk the tax-cut Kool-Aid.)

Republicans aren't much interested in investments, either, as evidenced by the Legislature's refusal to approve a new Detroit-Windsor border crossing or raise taxes to fix our roads.

The predominant view in Lansing is that our colleges and universities need to curb their spending, that public school teachers and administrators are over-compensated and that local governments just need to live within their means, which the state keeps shrinking.

I have heard many conservatives and Republican lawmakers say that Michigan is generating all the tax revenue it needs; the money just needs to be spent more wisely.

As you can tell, I'm not confident that the league's study will get much traction in Lansing. But it is an important report that makes a good case for restructuring a tax system that isn't meeting the needs of a 21st century knowledge economy.

The League's study also is an excellent primer on where the state gets its money and where it spends it. Michigan's citizens should read it for that reason alone. I think they would conclude some changes are needed.

Michigan, workers win in big Ford investments

2012-12-27T10:41:00.000-05:00

In signing a bill earlier this month making Michigan the 24th right-to-work state, Gov. Rick Snyder said unions must provide value for their members' union dues if they are to remain relevant.

That's exactly what the United Auto Workers has done at the Ford Motor Co. Ford announced today that it will invest $773 million in six southeast Michigan plants, adding 2,350 hourly jobs.

The new jobs and investment are a result of improving auto sales and the introduction of new products by Ford, requiring the automaker to upgrade aging facilities.

But the UAW's negotiating savvy also played a role in Ford's expansion plans. Its 2011 labor contract requires Ford to make $6.2 billion in U.S. capital investments and add 12,000 jobs by 2015.

Ford can't keep those promises in the absence of a healthy market, of course. But the UAW is working to ensure workers get their piece of the pie.

That's the kind of "value for money" the governor should be able to appreciate.

Michigan population, jobs and income rise

2012-12-20T11:01:00.000-05:00

There was a lot of state economic news this week, most of it positive, but providing a mixed picture of Michigan's health. Here are the highlights:

Population. Michigan added 6,559 new residents this year, the first annual population growth since 2004, according to an estimate released this morning by the Census Bureau. That's the good news. The bad news is that Michigan has slipped one place behind Georgia and is now the ninth largest state in the country. Said Michigan state demographer Ken Darga:

If recent rates of growth continue in the Sunbelt, Michigan will be passed by North Carolina in 2014. Michigan had been the eighth largest state since being passed by Florida in 1979. Michigan's held its highest ranking (seventh) from the 1920 Census until 1979.

Jobs. The state's unemployment rate fell to 8.9 percent in November from 9.1 percent in October. Michigan added 10,000 payroll jobs during the month, but half of those were in the retail sector as employers ramped up temporary hiring for the holiday season.Said Rick Waclawek, director of the Bureau of Labor Market Information and Strategic Initiatives:

Although there has been improvement this year over 2011 in the state’s labor market, Michigan’s progress in 2012 has been modest. In November, the only significant job gain was in retail trade; however seasonal holiday hiring by retailers this fall was somewhat later than usual.

The monthly household survey found the state's labor force, at 4,650,000 workers, contracted by 24,000 workers in November. But the labor for in November has grown by 14,000 over the past 12 months.

Income. Michigan income rose 0.6 percent in the third quarter of the year, according to the Bureau of Economic Analysis. But overall income has slowed since the first quarter of 2012, when it rose by 1.3 percent.

Cars. There was much hoopla on Wednesday over General Motors Co.'s announcement that it was shifting production of the sporty Chevrolet Camaro from Oshawa, Ont. to Lansing. However, it was unclear how many jobs, if any, will accompany the Camaro when it moves to Lansing, probably in the fall of 2015.

And, by the way, GM says its decision to start building the Camaro in Lansing had nothing to do with Michigan becoming a right-to-work state.