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 Series November 13, 2014 Charles L. Ballard Department of Economics Michigan State University East Lansing, MI

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 it’s taken a while.

Almost 1,000,000

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 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, Leelanau County $43, Midland County $43,446 U.S. Average $41, Washtenaw County $40, Kent County $36,589 Michigan Average $36, Clinton County$35, Macomb County $35, Ingham County $34, Wayne County $34, Calhoun County$33, Genesee County $31, Kalkaska County$27, Luce County $24,492

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

Ratio = 1 Trend 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 EducationIncome StateRank 2010Rank 2010 Massachusetts 1 2 Minnesota1010 Michigan 3439 Mississippi 4950

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