High-education, high-wage jobs key to economic prosperity, as Michigan lags nation ⋆
Michigan Future Inc. a nonprofit seeking to improve the state’s prosperity is rereleasing a report from 2004 arguing Michigan should focus its economic development efforts into knowledge based fields.
In the 20 years since the report has been released, not much has changed, said Lou Glazer, the president of Michigan Future Inc.
Donald Grimes (left) and Lou Glazer (right) discuss the reissue of their 2004 report, which pushes for Michigan to expand its knowledge-based industries. | Screenshot
“Everything we wrote in 2004 is true in 2024. If Michigan does not become concentrated in the knowledge economy and does not concentrate young talent, we’re going to get poorer compared to the country than we are now,” Glazer said.
Compared to the rest of the nation, Michigan ranks 39th in personal income per capita, according to the report. According to Glazer and Donald Grimes, a research specialist at the University of Michigan who co-authored the report, this is due to a lack of high-paying, knowledge-based jobs, as well as the state lagging in attracting 25-to-34 year old adults with bachelor’s degrees.
“Two-thousand and four was sort of, for us, the light bulb going off moment,” Glazer said. “After 30 years of analyzing data, it became pretty clear to us that high-prosperity states and regions were no longer over concentrated in manufacturing. In fact, by 2004, most of the states that were over-concentrated in manufacturing were below the national average in per-capita income, including Michigan.”
While manufacturing is still important to the economy, the report found the industry was no longer driving growth or prosperity, arguing Michigan needs to concentrate more on knowledge-based industry and attracting young professionals.
At a Monday press conference, Glazer and Grimes outlined the seven major industries that make up the knowledge economy: chemical manufacturing, computer manufacturing, transportation manufacturing that excludes motor vehicles, information, finance and insurance, professional and technical, and company management.
“All of these industries employ a lot of people with a bachelor’s degree. All of them pay over $100,000 a year,” Grimes said.
During a Monday press conference, Donald Grimes, a research specialist at the University of Michigan, compared the metrics of high-wage, high education industries to the motor vehicle industry. | Screenshot
This is compared to the auto industry, where 13% of jobs require a bachelor’s degree, and the average worker makes $73,000, $3,000 more than the average across all industries in the United States, Grimes said.
“The auto industry is neither a high-education attainment industry, nor is it high-paying. It’s a middle-paying job,” Grimes said.
There are other knowledge economy jobs, including government and medical care industries, but these are middle-paying industries, employing some people at a higher salary level and others at a lower level, Grimes said.
While other experts cite the collapse of the auto industry as the reason Michigan is lagging behind, the state has also failed to make gains in the high-education, high-wage industry group, Grimes said.
And while the state’s Strategic Outreach and Attraction Reserve (SOAR) fund, aimed at attracting and retaining critical industries in Michigan is a good thing for manufacturing, it’s not enough to boost wages in the state, Grimes said.
“SOAR is playing defense,” Grimes said. While playing defense can save the industries the state has, the state will need more than the SOAR fund, he added.
Donald Grimes, a research specialist at the University of Michigan, compared the | Screenshot
As far as attracting young, college-educated individuals and knowledge-based industry, creating places where people want to live is essential, Glazer said.
“There’s a whole bunch of states, but mainly metropolitan areas, that have made central city revitalization, largely driven by transit, sort of a high priority to attract young people,” Glazer said.
However, that factor has been missing in Michigan.
“In most states and regions, the push for central city revitalization and transit has been led by the business community, which is missing here, as well, so that would be high on our list,” Glazer said.
When you have large concentrations of young, college educated adults, these tend to be the people who create new, high-wage industries, Glazer said.
Grimes also applauded Gov. Gretchen Whitmer’s decision to create the state’s population growth council and appoint the state’s first chief growth officer focused on growing the state’s economy. However, these steps need to play a bigger role for Michigan moving forward, he said.
“That has to be a big focus … how do we grow the population; how do we add people with college degrees? And so, you know, make sure that becomes a permanent focus and not just a one-year, temporary effort,” Grimes said.
While President Joe Biden has advocated for growing the economy from the middle, Michigan needs to expand at the top, Grimes said.
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However, this approach does present a conundrum, he said. While promoting high-paid jobs for college graduates will improve the state’s prosperity, it could create a gap in income distribution between college grads with high-income jobs and people without a degree working in middle-to low-wage industries.
“If Michigan becomes a more prosperous state, we have to be very careful that that does not create an income distribution problem,” Grimes said.”We’re aware of that. But you also have to realize that the only way to get to be a high prosperity state is to have a lot of people making a lot of money.”
“We need affluent people, people with high pay households with high income and that’s what’ll drive up the personal income on a per-capita basis. And then once you’re more affluent, then the government foundations have more resources to try to handle any inequality problems that that will cause — and it will cause inequality problems,” Grimes said.
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authored by Kyle Davidson
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