Lecture 24 - Michigan Allen C. Goodman, 2015 With thanks to Charles Ballard, MSU.

Lecture 24 - Michigan

Allen C. Goodman, 2015

With thanks to Charles Ballard, MSU

Calendar

• Monday – April 13 – Michigan• Wednesday – April 15 – Detroit 1• Monday – April 20 – Detroit 2• Wednesday – April 22 – Extra Credit –

Those who wish to earn up to 20 points can present their research papers

• Monday – April 27 – Wrap-up, SET• Friday – May 1 – Final Exam Friday,

from 1:20 pm to 3:50 pm

Michigan’s Economy:Past, Present, and Future

Presented to:Oakland University

Economics Advisory Board Lecture SeriesNovember 13, 2014

Charles L. BallardDepartment of EconomicsMichigan State University

East Lansing, [email protected]

Good News: Employment in Michigan has been growing for nearly five years.

Not-so-good News: Still, we are more than half a million jobs below the all-time peak in 2000.

The Worst

The recent recession is BY FAR the worst since the

Great Depression, and the recovery continues to be long and slow.

Recovery has been slow

BAD, but we got out

of it quickly.

BAD, but we got out

of it quickly.

BAD, but it’s taken a

while.

BAD, but it’s taken a

while.

Almost1,000,000

Good News: Adjusting for Inflation, Per-Capita Income in Michigan is Higher Than It Has Ever Been.Not-so-Good News:

(1) Michigan Remains Well Below the U.S. Average.

(2) The Benefits of Growth Haven’t Reached Everyone.

Migration to Michigan

Migration to Michigan Migration

from Michigan

Migration from

Michigan

Manufacturing’s Share of the Economy Has Shrunk Dramatically

Fundamental structural changes in the U.S. economy have created big problems for the Michigan economy for a very long time– not just in the last decade.

Is Michigan now poor?

Despite our struggles, Michigan is not a poor place.

Michigan Has Big Regional Differences in

Per-Capita Income (2011)

1. Oakland County $53,297 2. Leelanau County $43,978 3. Midland County $43,446

U.S. Average $41,560 4. Washtenaw County $40,821 11. Kent County $36,589

Michigan Average $36,264 14. Clinton County $35,926 16. Macomb County $35,717 19. Ingham County $34,450

20. Wayne County $34,012 27. Calhoun County $33,541 43. Genesee County $31,057 73. Kalkaska County $27,137 83. Luce County $24,492

Also, although Michigan is not a poor place, our economy has not grown as fast as the national average.

Ratio = 1Ratio = 1

Trend lineTrend line

Right to Work is unlikely to make much difference.

For better or worse, the strength of labor unions has already diminished greatly.

Per-Capita Personal Income, 2011:

• Right-to-Work States:$38,046

• Non-RTW States:$44,515

Many of the states with the highest incomes have high levels of educational attainment.

Some Examples

Education IncomeState Rank 2010 Rank 2010

Massachusetts 1 2

Minnesota 10 10

Michigan 34 39

Mississippi 49 50

Are we OVERTAXED !!!!

Potential Sources of Tax Revenue for Michigan:

• Extend the sales tax to services and entertainments.

• Establish a graduated income tax, or at least raise the flat rate of the current income tax.

Although Michigan is not a poor place, there are poor people in Michigan (and other states).

Incomes are distributed much more unequally than they were 35 years ago.

In most parts of the country, the increase in income inequality was NOT spread evenly through the income distribution:

The top pulled away from the middle, but the middle did not pull away from the bottom.

Less So in Midwest