Guest Column

Work to reverse the Great Decoupling

The need for Michigan to adopt a new economic agenda is clear.

May 5, 2017
| By Lou Glazer |
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The need for Michigan to adopt a new economic agenda is clear. In the seventh year of a national economic expansion — and an even stronger rebound from near bankruptcy of the domestic auto industry — too many Michigan households are struggling. Michigan’s substantial economic challenges clearly are structural.

After 25 years of analysis of the state’s economy, Michigan Future Inc. has released its first state policy agenda, which is available at michiganfuture.org.

Our motivation in doing this is a sense of urgency that across the political spectrum we need a different set of policy options. We need ideas not about how we can turn the clock back and make the old economy work again, but rather ideas about how we can position all Michiganders for economic success in an economy being constantly altered by smarter and smarter machines taking over work traditionally done by humans.

We agree with U.S. Sen. Ben Sasse, R-Nebraska, when he said: “We are not talking about the underpinnings of all of that, which is the transformation in the economy and the nature of work from stable, lifelong jobs to unstable, occasional, part time, flex jobs, where everyone is going to have to become a lifelong learner. … And we are not wrestling with any of those questions and neither political party has a response.”

In good times and bad, far too many Michigan households are experiencing declining or stagnant incomes. Over the last decade and a half — no matter who was in control in Lansing and Washington — Michigan has moved from being a high-prosperity to a low-prosperity state.

The pre-eminent challenge of our times is figuring out how to reverse what is being called the Great Decoupling, where even when the economy is growing — as it has been in Michigan since the end of the Great Recession — only those at the top are benefiting from that growth.

To meet this challenge requires the transformation of state economic policy. It should now be clear having a growing economy, or a low unemployment rate, or being business friendly — all of which have been the goals of state policymakers now and in the past — does not lead to an economy that benefits all. Michigan policymakers need a new mission statement that drives their actions.

The goal of state economic policy should be raising household income for all Michiganders. Michigan should become once again a place with a broad middle class where wages and benefits allows one to pay the bills, save for retirement and the kids’ education, and pass on a better opportunity to the next generation.

The key to accomplishing that is to have an economy aligned with reality. Work today is different than it was 50 years ago — or even 20 years ago — when someone without much education could take a position in an auto factory and expect to experience 30 years of good paying, relatively steady employment.

And the good-paying, 40-year careers of tomorrow will look even more different:

  • Increasingly unstable. Smarter and smarter machines are accelerating the creative destruction of jobs, occupations and even industries. So, your job and occupation today are less secure than yesterday and will be even less secure tomorrow than today.
  • Increasingly contingent. Far more of us will be working for ourselves, where we are responsible for our employment, salary and benefits.
  • An increasing proportion of jobs that are not high skill and, therefore, will not be high paid. That is the fundamental shift that has occurred in our economy over the past several decades. The high-paid, low-education-attainment jobs that were the backbone of Michigan’s mass 20th century middle class are gone forever.

The only path back to a high-prosperity Michigan is state policies that are aligned with — rather than resisting — these new realities of work.

Our research has led us to conclude that by adopting policies that transform education from birth through retirement and investing in it, the state can best help all Michiganders have the skills necessary to have good-paying, 40-year careers. By creating regions across the state with the quality of place where talent from across the planet wants to live and work, the state can retain and attract high-wage employers and entrepreneurs that start high-wage businesses. And by establishing and investing in policies that help those not in high-wage work to work more and earn more, we can share prosperity widely.

This is the recipe for a 21st century Michigan, where each of us can pay the bills, save for our retirement and the kids’ education, and pass on a better opportunity to the next generation.

We understand that some will not agree with this recipe. We hope those who don’t agree will propose alternatives of how to increase the household incomes of all Michiganders that are aligned with today’s economic realities. That is the debate Michigan needs, rather than pretending there is some magic elixir that can recreate Michigan’s high-prosperity 20th-century economy.

Lou Glazer is president of Michigan Future Inc.

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