DETROIT –– Just a few years ago, Doug Rothwell could look at various bits of Michigan’s economic data and see few paths that led to the state becoming a “Top 10” state.
Flash forward to the end of 2017 and the landscape has changed somewhat, even though Rothwell, the president and CEO of Business Leaders for Michigan, freely admits there’s still significant work remaining.
For Michigan to join the ranks of top states in the areas of jobs, personal income and a healthy economy, the state’s business stakeholders –– corporate, government, philanthropic and institutional –– have to double down on their work of growing the state, Rothwell said.
It’s an effort they’ve been working at since Michigan began climbing out of the Great Recession in the late 2000s.
“Today I’m pleased to report that not only are we back on our feet, we’re really scoring some punches –– if you pardon the pun –– against the competition,” Rothwell said at BLM’s annual CEO Summit in Detroit in early November. “But to be a champion, to be a top 10 state, we can’t be satisfied with just being a contender. We’ve got to be willing to continue putting in the work (that got us here) and to kind of improve on areas where we still lag other states.”
Data released last Tuesday by the Bureau of Economic Analysis show that Michigan outperformed most other states in terms of real gross domestic product (GDP) growth for the second quarter. Michigan ranked fourth nationally with real GDP growth of 5.5 percent, driven by growth in the durable goods manufacturing sector, which accounted for more than 3 percent growth on its own.
Real GDP in Michigan grew at a rate of more than double the other Great Lakes states, including neighboring Wisconsin (2.5 percent), Illinois (2.2 percent), Ohio (2 percent) and Indiana (1.7 percent), according to the BEA data.
While Business Leaders for Michigan’s latest Economic Competitiveness Benchmarking Report shows the state continues to make improvements in the areas of jobs, income and productivity, it’s still greatly lacking in several other economic factors.
Perhaps most notably, Michigan ranks 29th and 30th, respectively, in the areas of “college and career readiness” and “educational attainment.”
Only 23 percent of high school graduates are considered “college-ready,” according to American College Testing (ACT) results. Compare that to the top 10 states, where an average of 36 percent of graduates are college-ready, Rothwell said.
The state also ranks lower than middle of the pack in terms of college and technical enrollment, 4th grade reading proficiency and out-of-state enrollment.
BLM’s data regarding general readiness for education largely matches with a November report from First Steps Kent, a Grand Rapids-based nonprofit advocating for more resources for early-childhood services.
The First Steps Kent report found that fewer than one in five children considered “economically disadvantaged” has access to preschool by the age of three. Additionally, “thousands” of Kent County families lack the ability to pay for quality child care, which costs an average of $8,000 per year, according to statement released on behalf of the organization.
“Our analysis shows that we can do better as a community to ensure all children and their families have access to vital early childhood services and programs,” Annemarie Valdez, president and CEO of First Steps Kent, said in a statement. “When we invest early, babies are born healthy, families are strengthened and children are developmentally on track. Investing in early childhood services removes barriers to success and helps make Kent County more equitable and prosperous.”
INCOME GROWTH SLOWING
On a more positive note, the BLM report states that incomes in Michigan continue to be on the rise.
While that’s true, a recent analysis of data from the Bureau of Economic Analysis (BEA) finds that growth tapered off significantly last year.
The BEA data show that from 2015 to 2016, per capita personal income grew across West Michigan, but the rate of growth generally fell by more than half, dipping from roughly 5 percent to around 2 percent in Grand Rapids.
Economists attribute the slowdown to older workers retiring and to younger workers — who tend to make a lower wage — taking their place.
“So that overall wage bill goes down, and I think that demographic churn right now we’re seeing in the labor force is holding these aggregate wage numbers down,” Robert Dye, chief economist of Comerica Inc., said in a previous report. “If you track the individuals through the workforce, the individual Millennials, then the wage growth looks higher.”
For his part, BLM’s Rothwell acknowledges all of the challenges associated with making the state competitive nationally and globally.
The BLM Benchmarking report posits that given the deep hole in which Michigan found itself in the wake of the Great Recession and the automotive industry implosion, its progress will likely be slow.
“While we have a long way to go in absolute terms, our progress is unmistakable and gives us every reason to expect we’ll be able to overcome our remaining challenges,” Rothwell said in a statement to reporters after the release of the November report. “What’s needed now are collaboration, consistency, and competitive backbone.”