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Trapped in the 20th Century

Michigan sinks as leaders cling to old formulas

March 18, 2006 | By Keith Schneider
Great Lakes Bulletin News Service


When gas was cheap, autos and Michigan prospered. But the state’s refusal to confront changing times is upending its once vibrant economy.

MOUNT PLEASANT— To an astute observer of recent history and economics, the phrases "Michigan" and "recession" seem so closely aligned that they are almost indistinguishable. Except for an all too brief period in the 1990s, when auto and truck sales soared and the state’s manufacturing sector employed 908,000 people, Michigan has, since the late 1970s, been steadily sinking like a waterlogged towel. The state is now drawing close to Louisiana, West Virginia, Mississippi, and the Dakotas at the bottom of the national heap. 

Why this is happening is a story of wasteful patterns of spread out development, reckless neglect of cities, foolish disregard of the new economic factors driving the 21st century, and political gamesmanship, especially in Lansing, our state capital. For all intents and purposes Michigan is writing a modern narrative of distress and decline. The state is a vivid warning to the rest of America about the consequences of desperately defending in the 21st century the obsolete cars-fuel-highways-parking lot-drive-through economic development strategy that propelled the 20th.  

As you might expect, Michigan’s 10 million residents are experiencing enormous pain. Some 325,000 jobs, most of them in manufacturing, have vanished since 2000, according to state and federal employment figures, more than any other state. Unemployment, now just over six percent, is higher than all but 3 other states and would be worse except more than 150,000 people, most of them workers, have left. The growth in personal income over the last six years, adjusted for inflation, has increased a little more than 1 percent, which is to say that wages are flat or declining. The percentage of students graduating from high school is below the national average and dropping.

Michigan’s economic profile also includes the highest rates of racial and class segregation, highest rates of obesity, the largest state budget deficit, and was one of the seven states that experienced increasing rates of poverty since 2001, according to the U.S. Census Bureau.

Getting Out Of Town
But among these and other serious results of Michigan’s deepening economic stress, arguably the most notable and important is the effect it is having on the state’s best and brightest young adults. Since 1990, Michigan has been a national leader iin the number of 18 to 34 year-old men and women leaving to build the new economies of other states. It turns out that talented young people -- not cars or grain or timber -- are Michigan’s most significant export. And the trend is growing more severe.

As part of my work as a writer and public interest advocate, I periodically have the chance to talk to students about why Michigan, unlike so many other states, has been unable to respond in any meaningful way to the new and powerful market factors that are driving the 21st century economy. Students don’t have the accumulated knowledge about the causes or the solutions to Michigan’s developing emergency. But they are instinctively aware, dude, it ain’t good.

How do I know? I always ask this question: “How many of you plan to pursue your career in Michigan?”

Just this month, on a bright late winter day, I queried 30 Central Michigan University undergraduates here. The response was virtually identical to those expressed by students I’ve spoken with at Wayne State in Detroit, Michigan State in East Lansing, the University of Michigan in Ann Arbor, and Northwestern Michigan College in Traverse City. Just two hands go up, and neither were raised with enthusiasm

It’s not that business leaders, academics, and the political elite of both major parties are ignoring Michigan’s peril. In 2005 Democratic Governor Jennifer M. Granholm engineered a rare pact with the Republican-led Legislature to spend $1 billion over the next decade to encourage job growth, some of it to promote renewable energy and other emerging industrial sectors. This year she helped Democratic legislators pass a measure to significantly increase the minimum wage.

New Problems, Same Old Answers
It’s hardly enough. Ms. Granholm, who this year is running for a second term, has distanced herself from the sprawl-fighting, Smart Growth economic strategy that helped get her elected in 2002.

Her Republican opponents, meanwhile, are wedded to their conventional answer to every policy issue: reduce taxes and deregulate. Neither is working. Tax cuts since 1992 have drained $5 billion annually from Michigan’s budget, according to a University of Michigan analysis. Michigan’s per capita tax burden is lower than half of all states. Yet the state’s prospects are getting worse.

For their part, citizens don’t expect much more from state lawmakers. That’s because a more important problem is that Michiganders are understandably reluctant to either recognize or respond to the authentic cause of the state’s decline. It’s almost too much to ask inventors to repudiate their own creation. But that is precisely what Michigan faces.

Here’s why: The principal factors that propelled America’s 20th century economy were mobility, cheap fuel, cheap land, rising family incomes, government-financed infrastructure investments (particularly for highways), and steady demographic expansion. Michigan is the state that mastered those trends, turned out the vehicles, engineered the first concrete highways, built the first malls and suburban cul-de-sac subdivisions, and filled them with factory workers prosperous enough to own two cars and second homes and put their kids through college. For much of the 20th century Michigan was at or near the top in nearly every measure of economic, social, and cultural well-being – wages, home values, health, education, employment.

New Factors Fuel Economy
But over the last generation, and particularly in the years since the start of the 21st century, all of these factors have flipped. Traffic congestion mugged mobility. Fuel prices are soaring out of sight. Land isn’t cheap anywhere except in the Great Plains. Family incomes have remained static or fallen for five straight years, according to the US Census, the first time that has ever occurred in the United States. Tax cuts have drained public revenue and governments no longer can afford to build new highways or fix the ones we already have. And the United States is experiencing the highest population growth in history. By the middle of the century 420 million people will live in America, 120 million more than today.

During the same period much different and equally powerful new market forces emerged to influence the national economy – globalization, networking, speed, accessibility, energy efficiency, natural resource conservation, and knowledge.  Across the country, some states and many metropolitan regions anticipated the transition and developed a new economic development strategy to take advantage of the new trends.

North Carolina is building new rapid transit lines, and encouraging downtown development in its large cities. Oregon approved a land use planning and economic development program in the 1970s that conserves farmland, invests in cities, replaced highways with rapid transit, and prizes natural resource conservation.

Denver is building its 21st century economy around the new stops and stations of a 150-mile regional rapid transit system, miles of protected open space, and new downtown housing. Colorado in 2004 also approved the most significant state renewable energy conservation law in the country.

Chicago gathered its neighboring communities and all of them agreed to a development plan that puts environmental conservation and energy efficiency at the very top of the list of goals to pursue for regional economic prosperity. It’s working. The number of high-wage jobs, downtown homes, and new businesses is steadily increasing in a modern globally-connected metropolis that is thriving because it is cleaner and greener.

Some Promise In Michigan
Still, there are reasons not to lose hope for Michigan. A number of cities – Ann Arbor, Grand Rapids, Traverse City, Ferndale, and Royal Oak, among them – have set aside partisanship and conservative convention to pursue new economic strategies that reject 20th century trends in favor of the 21st century.

Ann Arbor residents established a greenbelt to conserve open space around the city, invested heavily in public transit and housing, and are weighing proposals to significantly increase the number of residents able to live downtown.

Grand Rapids invested $2 billion in public and private funds to rebuild its downtown, modernize its water treatment system to protect the new developments along the Grand River, build new parks, and encourage new loft and other housing in what were marginal neighborhoods. Twice in the last six years Grand Rapids residents, among the most conservative in the state, raised their taxes to pay for better public transit service, and are now weighing constructing a new streetcar line.

Traverse City rejected a $300 million highway bypass, restored its Great Lakes shoreline, preserved a magnificent wild river valley as a public park, and modernized its master plan and zoning to make way for new homes, more families, and knowledge-based businesses. Employment outside of manufacturing has risen, incomes have increased, neighborhoods have improved. Traverse City has joined others in and outside Michigan in proving that an economic development strategy based on 21st century market factors actually works.  

Keith Schneider, a journalist, is the Michigan Land Use Institute’s editor and director of program development. Reach him at keith@mlui.org

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