Michigans Outbound Migration Continues

January 20, 2006
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GRAND RAPIDS — Michigan is a “high outbound” state in terms of people packing up and moving elsewhere, according to a 2005 migration study by United Van Lines.

The state’s emigration trend has dangerous implications, states the MackinacCenter for Public Policy in Midland in a follow-up essay, “Demography is Destiny.”

The household moving company’s latest report indicates that 63.9 percent of its interstate moves involving Michigan customers were outbound, giving Michigan the dubious distinction of having the second highest outbound flow of residents among the 48 contiguous states in the study. In 2004 the Michigan figure was 3 percent less, at 60.9 percent.

According to the MackinacCenter, the new study indicates Michigan citizens “are voting with their feet.” Michael LaFaive, the center’s director of fiscal policy, and the center’s Adjunct Scholar Michael Hicks, an econometrician, analyzed and compared the United Van Lines data with federal Bureau of Economic Analysis migration statistics and concluded that the United data is “very highly correlated” with actual American migration patterns.

As LaFaive and Hicks see it, Michigan government has put in place policies that dissuade businesses and people from moving here — and encourage people to move away — compared to policies in other states.

“…Michigan is hemorrhaging its people — the lifeblood of economic phenomena,” they stated. “People start cutting-edge businesses, invent new products, build infrastructure and consumer goods and services.”

United classifies each state in one of three categories: “High inbound,” which means 55 percent or more of moves were into a state; “high outbound,” which means 55 percent or more of moves were out of a state; or “balanced” in terms of incoming and outgoing households.

The United survey recorded Michigan’s highest-ever outbound rate at 67 percent in 1981, a year when the state unemployment rate averaged 12.5 percent.

Last year, both the Midwest and Northeast regions saw an increasing outflow of residents, based on United’s data of the 226,353 interstate household moves the company handled. Midwest and Northeast states actually made up 80 percent of the high outbound category. According to United, over the years its annual study has been shown to accurately reflect general migration patterns and relocation trends in different regions of the country.

Michigan has been considered an “outbound” state since United began tracking annual shipment patterns on a state-by-state basis in 1977. In the 2005 study, Michigan jumped to “high outbound” status.

Both LaFaive and Hicks are critical of state efforts to subsidize jobs with additional government programs. They recommend “bolder” changes in public policy, such as ending the Single Business Tax and passing right-to-work legislation, which would ban the requirement of union membership as a condition of employment.

LaFaive observed that between 1947 and 1996, states with right-to-work legislation saw their manufacturing employment expand 150 percent. During the same time period, states without right-to-work laws saw manufacturing employment expand zero percent.

In the Mackinac Center’s estimation, Lansing politicians have responded to Michigan’s crisis with “more of the same bad policies,” including tax hikes and new economic development programs — such as the 21st Century Jobs Fund that Gov. Jennifer Granholm touted  in Grand Rapids last week.

The jobs fund will provide money for applied research and development and commercialization efforts, which are expected to stimulate economic growth in Michigan. The $1 billion fund comes from selling or “securitizing” a portion of the annual revenue the state receives as its share of the 1998 tobacco settlement. Securitization allows the state to exchange future revenue streams for a lump sum today.

A total of $1 billion in grant and loan subsidies is to be allocated over 10 years, some $400 million of it in 2006-2007.

Neither LaFaive nor Hicks think much of the initiative. As far as they’re concerned, the 21st Century Jobs Fund is another good example of “economic gimmickry born in Lansing.” LaFaive also questions how citizens will know whether central planners in Lansing are smart enough to make the right research and development calls. What if planners place bets on research and development that doesn’t pan out?

“History is replete with the failures of central planners to pick winners and losers accurately in the marketplace,” he noted.

“We would suggest there are superior alternatives to this kind of gimmickry,” LaFaive told the Business Journal. “If they’re going to securitize tax revenue at all, we would recommend using it to change Michigan’s structural budget nature overall — pay down debt, which we’ve recommended in the past, or stave off other tax hikes, which are job killers.

“In broader terms, the MackinacCenter has for years recommended lowering the overall cost of doing business in Michigan. There is some empirical evidence showing that tax policy has a major role to play in migration patterns because it creates economic growth in states that draw people to the jobs.” 

The other high outbound states in the 2005 survey were North Dakota with the highest rate (67.8 percent), Louisiana (57.9 percent) and California (55.7 percent).

During 2005, United’s data shows that many people packed up and moved to the mountain West, Northwest and the Southwest. Oregon, for instance, has been on a high inbound trend for 18 years running. Last year, it had a 63.6 percent inbound migration rate, the highest of all states in the study. Runners-up were Idaho at 61.9 percent inbound, and Nevada and Arizona, both with 60.1 percent inbound movement.

In the Southeastern region, the top inbound migration states were North Carolina (61.3 percent), South Carolina (59 percent) and Alabama (58.9 percent). Two Southeastern states — Georgia and Tennessee — experienced their highest new resident arrival percentages in years, with 55.2 percent and 58 percent, respectively.    

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