Prosperity is driven by education attainment
Business Journal editor Carole Valade titled a recent editorial “Michigan: a state of impoverishment.”
Unfortunately, that is an accurate assessment of Michigan today; it’s one of the nation’s poorest states.
Valade cites data from the Michigan League for Public Policy’s 2015 Kids Count in Michigan data book, which shows a 35 percent increase in Michigan child poverty over the last six years. Kent County shows a 40 percent increase in the same period of time.
The Kids Count findings are aligned with the Michigan Association of United Ways’ “Asset Limited, Income Constrained, Employed” report, which found that 40 percent of Michigan households earn too little to provide for basic needs. In Kent County, 39 percent of households earn too little to provide for basic needs.
These high levels of low-income households and children are a direct consequence of the state falling from 18th in per capita income in 1999 to 37th in 2013. For most of the 20th century, Michigan was one of the most prosperous places in the country (and the planet). No more. Now we are structurally one of the poorest.
And the current economic recovery has not changed that fact. In 2007, the year before the Great Recession, Michigan ranked 37th. We fell to 38th in the depths of the Great Recession in 2009. But we have hardly rebounded at all since then.
Maybe more significant is that in per capita income, not counting government transfer payments, Michigan is a bottom 10 state today with a ranking of 41st. This has hardly changed from a low of 42nd in 2009.
All of these statistics result from a combination of Michigan ranking in the bottom 10 in the proportion of adults working and falling median wages. For those 25 and older, real median wages have fallen from $36,673 in 2007 to $32,886 in 2013.
In 2007, Michigan’s median wages were near the national average — about $900 less. Today, Michigan is more than $2,700 below the national average.
Fewer adults working and those who are working and earning less results in low per capita income, high childhood poverty and high proportions of households not able to meet basic needs.
The questions, of course, are “why?” and “what can be done about it?” The answer to both involves education attainment.
The most prosperous places around the country, with very few exceptions, are those with both the highest proportion of adults with a four-year degree or more and the largest concentrations of employment in the fast-growing and high-wage knowledge-based sectors of the economy. The two go hand in hand.
A large pool of managers and professionals — the occupations dominated by four-year degree graduates — is the asset that matters most and is in the shortest supply to knowledge-based enterprises.
Michigan is a laggard in both. Both Michigan as a state and West Michigan as a region have low college attainment and a low concentration of employment in knowledge-based industries.
Michigan Future defines private knowledge-based services to include private health care and social services; finance and insurance; information; professional services; and management of companies. If you include government, education would be included as a knowledge-based service.
Valade concludes her editorial with: “No matter how many positive proclamations Snyder makes, the state will remain in the bottom 10 without an orchestrated effort to affect education; it is the most effective method to declare war on poverty.”
Exactly! It’s a lesson our policymakers need to learn quick. Prosperity is now education-attainment driven. That requires state policy that makes education and retaining and attracting talent its top economic development priorities.
We need state policy that sets high academic standards for all children, holds all education institutions accountable for meeting those standards for all students and increases public investments in education from early childhood through college.
And, since talent is increasingly mobile, it requires state policy that creates places where recent college graduates want to both live and work.
What drives prosperous places now is where college graduates choose to live and work, not where they go to school. That means increased public investments in quality of place, particularly in our central cities where young professionals are concentrating.
Lou Glazer is president of Michigan Future Inc.