by Rick Haglund

Foundation and other philanthropy executives aren’t generally known as firebrands. But veteran foundation leader David Egner recently served up a scorching assessment of Michigan’s protracted economic decline and why it happened.

“All indicators are that other states like Wisconsin and Ohio are surpassing Michigan on a number of measures,” Egner said in a recent webinar.  “Our ability to stay competitive in comparison to other states is in serious jeopardy. Unfortunately, it’s becoming more attractive to live in other places than it is in our beloved Michigan.”

Egner, who heads the Ralph C. Wilson Foundation in Detroit, continued, “Michigan’s “challenges are complex. They’re not simple, and they result from years of ignoring the facts. In many respects we’re victims of our own success; 75 to 100 years of unparalleled economic success.

“And as conditions changed, we sought to protect our position instead of adjusting to the circumstances,” he continued. “Then we blamed others for our fall. And we stubbornly called for a return to the glory days by repeating the actions that stopped working. And that’s how we’ve spent the last few decades.”

Egner’s harsh assessment of Michigan’s competitive position came in an online discussion about one of the most comprehensive studies of the state’s standing in recent memory, produced by the nonpartisan Citizens Research Council of Michigan and Altarum, an Ann Arbor-based research group.

“Michigan’s Path to a Prosperous Future: Challenges and Opportunities” is a five-part series of reports on Michigan’s demographics, economy and workforce, infrastructure, environment and public services.

Egner didn’t cite specifics, but they’re not much of a mystery to those of us who have lived in Michigan for a few decades.

We’ve stubbornly clung to the hope that we can somehow recreate a 1960s manufacturing economy by subsidizing new factories, while other, more successful states have adapted to an increasingly knowledge-based, services economy. 

That’s not to say manufacturing is no longer important — it is — and United Auto Workers-represented workers recently achieved gains in a new labor contract with Detroit automakers that will restore a middle-class lifestyle for many of them.

But it’s unlikely that manufacturing will again employ nearly 1 million workers, as it did more than 30 years ago. Currently, there are about 600,000 manufacturing workers in the state, only about 14% of the state’s total employment.

Meanwhile, we’ve ignored or short-changed investments in the things other states have done to grow their populations and economies, including improving K-12 education, building transit and making communities more attractive to new residents.

During the past 30 years of mostly Republican control of the Legislature and governor’s office, tax cuts and improving the business climate were the centerpieces of Michigan’s efforts to grow jobs and population.

Those policymakers were successful in the first part of the equation. Michigan residents benefit from the fifth-lowest state and local tax burden in the country, according to the conservative Tax Foundation.

But being a low-tax state hasn’t prompted people to flock here or boosted incomes of its residents above those living in competing states.

Michigan’s population has been stuck at about 10 million people for more than 20 years. And the state has fallen from 11th in the country in personal per capita income in 1950 to 39th last year, according to the CRC/Altarum study and census data.

Michigan’s low-tax strategy “has not been a winning proposition,” said CRC President Eric Lupher.

Gov. Gretchen Whitmer’s administration has been working to change the script with a new strategy that focuses on increased support for education and local governments, and protections for the environment, abortion rights and LGTBQ+ people.

Yet some continue to believe that more tax cuts are the path to a larger population and increased prosperity. 

The West Michigan Policy Forum, a group of West Michigan business leaders, has proposed eliminating the personal income tax to boost the state’s population. And a group called “AxMITax” is trying to put a measure on the November 2024 ballot that would abolish all property taxes in the state. 

What’s that cliché about doing the same thing over and over again and expecting a different result?

Michigan instead needs to take difficult, and likely unpopular steps to grow and restore its economic fortunes.

There are a lot of troubling trends in Michigan’s population demographics. Too many young people are leaving the state, which is getting older and less able to support the state’s economy.

In 2020, there were 4.5 working-age people per retiree in that state. Over the next 12 years, the ratio is expected to fall to 2.5, according to the CRC/Altarum study.

But there is some good news, should we choose to see it as that. The one component of the state’s population that is growing is international immigration, projected to add 22,000 jobs a year through 2050. Michigan can build on that growth by becoming a more welcoming state.

Policymakers, in promoting growth policies, must deal with the fact that Michigan is becoming more diverse and regard it as a positive. By 2050, 40% of the state’s working population will be people of color, according to the CRC/Altarum study.

“Now is the time to be relentlessly inclusive,” said Javon Dobbs, communications manager at the W.K. Kellogg Foundation, who is African American and adds he’s seen too many of his college friends and family leave Michigan for better opportunities and an improved quality of life.

And state leaders need to face reality in crafting a new approach to revitalize the state, Egner said.

“Until we can build a coalition that actually believes and accepts the facts and realities of where Michigan is, we won’t be able to build solutions that work,” he said.