Michigan’s economic growth continued to outpace most other states during 2017. Our growth has begun slowing, however, and our absolute results against most economic measures remained average or below. It is more important than ever for Michigan to be aggressive with fresh, bold strategies that help us outperform the competition and become a “Top Ten” leader.
Where our economy is concerned, complacency remains the enemy.
Despite reaching a 10-year low, Michigan’s annual unemployment rate still lags the average of peers and “Top Ten” states. Private sector employment has exceeded the average growth in “Top Ten” states for three out of the last four years, but Michigan's labor force participation rate, while improved over the last year, remains below the “Top Ten” and peer state averages.
Michigan’s per capita personal income levels continue to grow, but remain well below peers and “Top Ten” states. Michigan per capita income growth has outpaced the average of “Top Ten” states in recent years, but Michigan's 2017 per capita personal income level remained more than $4,000 less than the peer state average and over $10,000 less than “Top Ten” states.
Michigan’s per capita GDP levels, while still growing, remain well behind those of peer and “Top Ten” states. Michigan per capita GDP growth has generally outpaced both the peer and “Top Ten” averages in recent years. However, the average per capita GDP of peer states in 2017 was over $5,000 higher than Michigan’s, while “Top Ten” per capita GDP was more than $12,500 higher.
Michigan’s population has stabilized, but peers and the “Top Ten” are growing faster. After losing population in 2009, 2010 and 2011, Michigan has had six straight years of positive growth. During that same period, however, peer and “Top Ten” average population growth has been as much as 10 times higher than Michigan’s.
Input - Cost and Value
In 2017, Michigan was improving or holding steady in 37 (nearly 70 percent) of the 54 indicators used to measure the cost of locating here and the value provided. However, Michigan's overall ranking remained in the bottom half of states on nearly 60 percent of the measures.
Michigan—Competitive on Costs
Michigan‘s average ranking on cost factors compares favorably with “Top Ten” and peer states, and is stronger than both where tax and government measures are concerned.
The perception of Michigan's overall business climate has been holding steady, but requires improvement. Michigan’s business climate was considered the worst of all 50 states in 2009. In 2017, Michigan’s average ranking among the major business climate indices was 24—the same as during the prior year.
Michigan’s tax climate is among the best in the nation. Michigan’s corporate tax climate continues to be ranked among the 10 best in the U.S., and the overall business tax climate is ranked 12th.
State and local government in Michigan is generally smaller and more affordable. State and local government taxes increased slightly during 2015, but remain lower than the “Top Ten” average and on par with the peer state average. Michigan has fewer government employees per capita and lower government payroll spending than nearly all “Top Ten” and peer states.
However, unfunded OPEB liabilities remain a problem. Michigan's unfunded other post-employment benefit (OPEB) liabilities are nearly 16 percent higher than peers and more than 24 percent higher than the “Top Ten.”
Trends: Cost and Value Indicators 2016-2017
Michigan—Lagging on Value
Michigan’s average ranking is well behind both the “Top Ten” and peer states on factors measuring talent, infrastructure, and place.
Michigan must continue to focus on workforce development. In 2017, Michigan ranked in the bottom 10 of all states with respect to career and college readiness, the number of students enrolled in career and technical education classes, and the number of out-of-state students enrolled at our colleges and universities. Michigan also ranked in the bottom half of states for the percentage of 4th and 8th graders testing proficient in reading and math, respectively, the number of critical skills degrees and certificates awarded by our colleges and universities, and the percentage of working age population with an associate's degree or higher.
Several aspects of Michigan’s infrastructure ranked near the bottom of all states. Michigan ranked 30th for the percentage of households with high-speed internet. We ranked 39th for the percentage of bridges and urban roads in poor condition.
Innovation shows strength as well as areas for improvement. Michigan ranked among the top states for the value of goods exported (6th) and research and development investment by universities (6th). On the other hand, we rank only 30th for the share of population 25–34 with a bachelor’s degree or higher.
Absolute Rankings: Cost and Value Indicators 2016-2017