Bloomberg BusinessWeek Analyzes “Job Creation” Snyder-Style: Service Industry Jobs That Create More Working Poor

Legend has it that Helen of Troy had a face that launched a thousand ships. Michigan Governor Rick Snyder, on the other hand, has a  “job creation” strategy that has launched a recall effort. It’s a strategy that has resulted in Snyder having approval ratings of just 30 percent, and a popularity problem that already has national political pundits worried that Michigan’s Republican governor could kill any possibility of a Republican presidential candidate taking Michigan in the 2012 election. Just as jokes circulate that have the Chair of Michigan’s Democratic Party, Mark Brewer, smugly taking credit for Snyder’s win, it’s possible that a few months from now those same jokes will circulate with the punch line changed to have Snyder smugly taking credit for Barack Obama’s re-election.

According to Michigan’s Governor, “it’s all about job creation.” However, there are the kinds of jobs that employers, such as Google, want to “create” that pay $40,000 per year, and then there are the kinds of jobs Michigan residents need in order to support their families.

Over the past eight years Washtenaw County has lost about 8,000 jobs. Two U of M economists recently predicted that Washtenaw County could see job growth between 2011-2013 that would almost completely reverse this job loss. On the surface, this is welcome news—the kind of news politicos like to trumpet. However, as always, the devil is in the details. Those 8,000 jobs lost were, in part, high-paying jobs at Pfizer, for instance, as well as manufacturing jobs. According to the study released on March 10, 2011, almost 50 percent of the jobs lost over the past eight years are predicted to be replaced with jobs that pay $45,000 or less. In short, the unemployed in Ann Arbor will choose from among opportunities that are lower-paying; the U of M researchers predicted thousands of the jobs created will pay $38,000 or less. The study’s authors write:

Washtenaw County’s unemployment rate came in at 8.6 percent for both 2009 and 2010, uncomfortably high despite being lower than the U.S. rate and much lower than the Michigan rate.  Much of the discontent among residents over economic conditions is focused on the unemployment situation.  We anticipate that healthy job growth over the forecast period will trigger a systematic reduction in the jobless rate, falling to 7.2 percent in 2011, 7 percent in 2012, and 6.7 percent in 2013, as shown in figure 11.  The return of additional job seekers to the labor market by 2011, drawn into the labor force by improving job opportunities, acts as a counterweight and keeps the jobless rate from falling as much as it otherwise would.

A job is better than no job, right? Yes and no. People employed in Washtenaw County and earning salaries that make it impossible for them to purchase a house (average price $222,000), rent (average $900 per month), or pay property taxes ($3,900 per year) in the county, simply take their income and invest it elsewhere. Tom Gantert, writing for the Michigan Capitol Confidential reported on June 5, 2011 that residents of Washtenaw County pay the highest property taxes in the state.

Ann Arbor experienced net job loss (along with the rest of Washtenaw County) despite politicos and local business leaders aiding and abetting Ann Arbor SPARK in a scam to skim millions from the Ann Arbor Public Schools in the form of a TIF scheme that funnels money to a Financing Authority (LDFA) that, in turn, “contracts” with SPARK for “services.” The Detroit Free Press published an exposé in May 2010 that showed the Michigan Economic Development Corporation’s 21st Century Jobs Fund, which had funneled almost $140 million dollars to start-ups in Ann Arbor, as well as to Ann Arbor SPARK, had created fewer than 950 actual jobs. When Governor Rick Snyder was the head of Ann Arbor SPARK, he signed off an Annual Report in 2008 that claimed SPARK had created and retained over 12,000 jobs. The report was a work of fiction, and Snyder campaigned for governor based, in part, on his job creation “successes” at Ann Arbor SPARK. Researchers at the Mackinac Center characterized the MEDC’s work as, “creating more job announcement than real jobs.”

It’s the stuff of political thrillers: a would-be pol builds a political CV based on carefully crafted deceptions and bogus “data.” The secrets are kept by underlings, who are subsequently rewarded.

One person at Ann Arbor SPARK who knew Snyder’s Annual Report was a giant fabrication was then Director Michael Finney. In January 2011, Snyder appointed Finney to head the Michigan Economic Development Corporation at an outsized salary ($275,000) and with a similarly outsized benefit package. Finney took along several Ann Arbor SPARK staff to work with him in Lansing.

Mr. Finney joined Ann Arbor SPARK in 2005 and was promoted to CEO in May 2009, when SPARK released its 2008 Annual Report signed by Snyder. That Annual Report alleges that between 2006-2008 Ann Arbor SPARK created 7,054 new jobs and retained 5,740 jobs. To read more about the Ann Arbor SPARK boondoggle, click here. Needless to say, SPARK created some jobs—for the people who work at the SPARK office. The women who worked at SPARK in 2008 for Snyder, then Finney, were paid 54 cents for every dollar men in the same management positions earned. Arguably, under Rick Snyder, Ann Arbor SPARK practiced wage discrimination, the same kind of discrimination the Lilly Ledbetter Fair Pay Act of 2009 was meant to discourage by giving women a longer statute of limitations for filing equal-pay lawsuits.

Michigan’s economy is in serious trouble and has been for a decade, and the result is that our state has large numbers of working poor. On June 1, 2011 Bloomberg BusinessWeek published a piece about the fact that because jobs being created are ones that pay relatively low wages, Michigan families are finding it increasingly difficult to manage. The Bloomberg piece presents a sobering picture of “job creation” in Michigan:

A single parent with a preschooler and school-age child would have to earn about $52,000 a year — or three times Michigan’s minimum wage — along with benefits to be economically secure, according to the report released Tuesday by Wider Opportunities for Women and the Michigan League for Human Services.

The study defined economic security as being able to cover child care, housing, health care and transportation while establishing a savings and preparing for retirement.

“Sadly, far too few Michigan families are living in economically secure households, with most workers unable to stretch their incomes over basic expenses and build savings,” WOW Executive Director Joan Kuriansky said in a release.

Michigan’s greatest job growth through 2018 is expected to be for those working as retail clerks, home health aides and food service workers, state officials said. Many of those positions pay minimum wage or something close to it. The league says the fact that tax credits for low-income workers were decreased for the budget year that starts October 1, 2011 and that 124,000 lower-income children have lost a clothing allowance that helped them buy back-to-school clothes will make it even harder for many families to reach economic security.

University of Michigan economist George Fulton recently estimated the state will gain 182,800 jobs over the next three years. The majority of those jobs, alas, will pay $40,000 per year or less, a full $12,000 per year less than the Michigan League for Human Services says a parent with two children would need to be economically secure.

WOW Executive Director Joan Kuriansky also said, “The American Dream of working hard to support your family is being rewritten by the growth of low-paying industries, rising expenses and reduced public support.”

Rick Snyder is cramming his “job creation” agenda down the throats of Michigan taxpayers via a budget that takes from the poor and gives to business in the form of $1.8 billion in tax breaks. However, fostering the creation of jobs in low-paying industries through MEDC tax credits and business tax breaks could, in fact, greatly exacerbate Michigan’s economic woes.