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The state of Mott’s home state
By MAGGIE I. JARUZEL
With foreclosure signs dotting the landscape nationwide, job growth slowing and gasoline prices rising, the entire U.S. may be heading into a recession. Some say it’s already here.
But for Michigan, this is old news. For several years, the home state of former heavyweight boxing champion Joe Louis has been facing its toughest fight since the Great Depression. Factories are closing, college graduates are fleeing, and unemployment remains the worst in the nation.
Experts agree that Michigan has suffered more body blows from globalization than other states because it has been more dependent upon manufacturing jobs to produce not only automobiles, but also furniture, household appliances and parts for various industries.[1]
As the overall percentage of jobs in manufacturing has declined nationally, the state has suffered disproportionately because of its high number of vanishing positions in the automotive field. Since 2006, Michigan has been at or near the highest unemployment rate in the U.S. In January 2008, the state’s rate of 7.1 percent was the worst in the nation yet again.[2]
The very attributes that drew job seekers to Michigan for decades and helped create the nation’s middle class — good wages, working conditions, health benefits and pensions — are causing a steady stream of manufacturers either to close their doors for good or move to other states and/or countries where production costs are lower.
“We make our workers less competitive because their employers are held hostage by these costly benefits,” said John Austin, newly named executive director of the New Economy Initiative for Southeast Michigan.
“Michigan and the industrial Midwest created this system with its legacy costs. Because our big industries have been around awhile, they have staggering obligations. They have to charge hundreds of dollars extra per car just to pay for health care. Factories elsewhere don’t have those built-in costs.”
The state’s three major automakers — Chrysler LLC, Ford Motor Co. and General Motors Corp. — have made huge cuts in their payrolls. From 2006 through February 2008, they reduced their combined workforces by 80,000 nationally through early retirements, buyout packages and other incentives. Many of those came in Michigan. And another round of buyout incentives is ongoing.[3]
The good news is these staff reductions could allow the automakers to hire up to 36,000 new hourly and salaried employees collectively in Michigan by 2011 to replace a portion of those who already have left their payrolls, or will do so soon.
But replacement workers hired for the hourly, non-assembly jobs would be paid half the wages of those who did the same jobs previously ($14 vs. $28 per hour), and they would receive fewer benefits. All these measures, negotiated by the UAW and automakers in 2007 contracts, are designed to improve the automakers’ bottom lines.[4]
Clearly, today’s economic situation is far different from those in the past, when the competition from foreign automakers and globalization wasn’t as fierce. In years past, Michigan bounced back from cyclical bouts of high unemployment. After several months or even years of economic downturn, manufacturers recalled laid-off workers and hired new staff to replace retirees at comparable wages.
This time, there has been no rebound because the latest downsizings at U.S.-owned automotive companies and other manufacturing firms appear to be permanent. In addition, the state has been generating non-manufacturing jobs slower than the national growth rate.[5]
Michigan at the crossroads
Consequently, the nation’s eighth most populous state[6] is at a pivotal point in its history.
Not since the 1930s has Michigan sustained a longer period of job losses.[7] According to state statistics, Michigan has lost 415,000 jobs since 2000, with about 280,000 of those losses — roughly one in three — in manufacturing. In the past year alone, from February 2007 to February 2008, about 62,000 jobs disappeared. Of those lost jobs, 37,000 were in manufacturing; 17,000 were private, non-manufacturing jobs; and 8,000 were government jobs.[8]
The thousands of cuts from the state’s workforce beginning in 2006 extended beyond the automakers to other large employers, including Pfizer Inc., a multinational pharmaceutical company; Comerica Inc., the state’s biggest homegrown banking institution; and AB Electrolux, a refrigerator manufacturer that closed its doors in Greenville.[9]
And more cuts are still to come. About 51,200 jobs are expected to be lost in 2008 alone, according to a forecast by University of Michigan economists.[10]
While the rest of the country seemed to recover from the 2001 recession, the Great Lakes State never did, says Louis Glazer, president and co-founder of Michigan Future Inc., a nonpartisan, nonprofit organization in Ann Arbor.
As a result, Michigan is trying to lessen its overdependence on manufacturing, and reinvent itself as a leader in the new, knowledge-driven, entrepreneurial-based, global economy.
Increasingly, technology has made it possible for work to be done anywhere in the world, so the state’s recovery and future economic success now are tied to its ability to prepare, retain and attract people who are lifelong learners and innovators, Glazer says.
Michigan needs talented people because “talent trumps everything.”
“Career success in the old economy was like climbing a ladder. It was linear and predictable,” he said.
“In the new economy, career success is more like rock climbing: People need to be resourceful and continuous learners. It requires a whole different set of skills, and we’ve got a long way to go to get people in Michigan prepared with these new skills.”
So far the progress has been slow. Michigan’s Transition to a Knowledge-based Economy: First Annual Progress Report, released in February 2008, describes the lack of advances the state has made in implementing the economic development priorities and strategies highlighted in a June 2006 report, New Agenda for a New Michigan. Both reports were commissioned by Michigan Future and funded by the Frey, Hudson-Webber and Mott foundations.
In the original report, the authors recommended investing in higher education, aligning K-12 education with a knowledge-based economy, building vibrant communities, attracting export-based business investment, and developing and strengthening regional leadership.
If anything, the incentives-to-leave packages announced by Michigan’s automakers since the 2006 report was released confirm that the study’s prescribed paths for change are the right ones, Glazer said.
“Seeing these new $14-an-hour wages for autoworkers is a clear sign that the past practice of having high-wage/low-skill jobs cannot be recreated.”
According to Michigan Future’s 2008 report, the state’s success no longer can be measured by its unemployment rate alone, because several areas of the country have low unemployment but also low incomes.
Instead, the report says, Michigan’s success should be measured by its prosperity level, which directly correlates to the percentage of adults aged 25 and older with four-year college degrees. For example, the report showed that from 2000 to 2006, the state fell 10 places in per capita income, from 16th to 26th place, while it remained 34th for adults with bachelor degrees.
But even with the per-capita drop and the highest unemployment in the nation, Michigan still is ahead of 24 other states in per-capita income, so things are not as bleak as they may appear to some, said Charles Ballard, professor of economics at Michigan State University.
If Michigan substantially increases its proportion of adults with four-year college degrees — particularly in bigger metro areas such as Detroit, Grand Rapids and Lansing — like other states have done, it could increase its per-capita income, according to the 2008 report.
For many years, studies at the Center for Automotive Research (CAR) in Ann Arbor found signs that an economic and fiscal crisis was brewing in the state, said Sean McAlinden, CAR’s chief economist.
“I don’t want to sound pessimistic, but more than four years ago I warned that the economic equivalent of Hurricane Katrina was coming,” he said. “Since 1999, we have watched Toyota and Honda build new plants in other states every couple of years. Their factories were opening, and ours were closing.”
McAlinden’s colleague, Kristin Dziczek, who is senior project manager of the Economics and Business Group at CAR, says that as late as 1986, Detroit automakers dominated the industry, claiming 72.5 percent of the U.S. market.
But not any more. In 2007, the trio’s combined market share dropped below 50 percent for the first time, to 49.6 percent.[11]
“We don’t even call them the ‘Big Three’ any more, because they’re not,” Dziczek said. “We call them the ‘Detroit Three.’”
Coupled with its declining automotive market share, Michigan is also losing spinoff jobs, she said. In the past, every job in a Michigan automotive facility supported six other jobs in the state, but recent studies show that number has slipped to five, partly because more and more supplier parts are being made outside the state and the nation.
Troublesome rankings
Some people find it hard to believe that this is the same state that once attracted new residents by the thousands with one of the highest standards of living in the world because of its automotive-related, unionized factory jobs that sparked the rise of the middle class.
Now, based on 2007 statistics of United Van Lines, Michigan is ranked No. 1 on the list of states for the highest rate of residents moving out.[12]
In addition, a survey commissioned by WDIV-TV and the Detroit Free Press, and published in April 2007, found that two-thirds of undergraduates from MSU, the University of Michigan and Wayne State University plan to leave the state after graduation to find jobs.[13]
While the departures are sobering, many people say the economic picture for those remaining is equally troubling.
For example, Michigan was third in the nation for housing foreclosures in 2007, with 19.5 foreclosures per 1,000 households in 2007. Nevada was first with 33.8 foreclosures per 1,000 households and Florida was second with 20.0. Worse yet were metro Detroit’s housing foreclosures. With 4.9 percent of all metro households in some stage of foreclosure in 2007, it was almost five times the national average.[14]
Even in Oakland County, which ranks as the 20th highest county in income per capita in the country, foreclosure notices were on the rise. From May 2006 to May 2007, the foreclosure rate increased 140.6 percent.[15]
Additionally, the National Association of Realtors reported that sale prices for existing houses dropped in all of Michigan’s major cities. The state’s capital, Lansing, led the nation in the final quarter of 2007 with the average sale price dropping by $25,000 when compared with 2006.[16]
The 2007 KIDS COUNT Data Book, released by the Annie E. Casey Foundation, confirms that pockets of poverty are increasing in Michigan. The percentage of state children living in poverty rose from 15 percent in 2001 to 19 percent in 2005, the report found. Also, the percentage of children living in families where no parent has a full-time, year-round job rose from 31 percent in 2001 to 35 percent in 2005.
“The huge gap between the top 5 percent and the bottom 95 percent is widening. This is the biggest economic story of my lifetime, and we see it clearly here in Michigan,” MSU’s Ballard said.
“The state of Michigan is not a monochrome painting. It’s more like a mosaic, with some very bright spots and some very dark spots.”
A tale of two cities
Many analysts illustrate the vast economic differences Ballard refers to by pointing to two cities within the state. They say Flint, the largest city in Genesee County, is the poster child of the old economy while Ann Arbor, in Washtenaw County, is a portrait of the new economy.
Throughout the 1940s, ‘50s and ‘60s, Flint served as an economic engine for the state and the nation, because it was the home to so many GM plants. Ranked as the world’s largest private employer for five decades, GM once provided paychecks to 80,000 workers in the county. Today, there are fewer than 10,000 left on the payroll.[17]
Although the Flint area is home to three large medical centers, and four public and private colleges and universities, the jobs in these knowledge-based industries have not offset the GM losses.
Just one hour south of Flint, but a world away economically, is Ann Arbor. Home to UM and its world-renowned medical center, the city has become a bastion of new ventures in life sciences, information technology, and automotive research and design.
But even Ann Arbor is showing signs of the state’s economic hardship. The city’s biggest private employer, Pfizer, announced in January 2007 plans to close the doors of its research and development facilities. As of March 2008, 1,750 of the 2,100 jobs at the 177-acre campus have been eliminated, and all will be gone by the end of the year. An additional 50 jobs at Pfizer’s nearby Plymouth Township operations were eliminated when that facility closed, along with 250 slots at a company research center in Kalamazoo.[18]
The bulk of net job losses in Ann Arbor could be recouped by the 1,000 employees eventually expected to work for Internet giant Google. The headquarters for Google AdWords, the company’s main advertising unit, opened downtown in fall 2006 and today has more than 150 employees. Google officials said they have found “terrific talent” in the Ann Arbor area and plan to add another 850 workers by the end of 2011.[19]
Fundamental changes required
Statewide, there is an increasing sense of urgency to address Michigan’s lack of economic diversity and to accelerate the training of people who will be globally competitive.
Glazer of Michigan Future is not alone in saying that how decisions are made in the coming months will determine whether the bulk of the state, and not just small pockets, will be a full participant in the global marketplace or be left behind.
Ensuring public participation in addressing the state’s challenges is a goal of Michigan’s Defining Moment Public Engagement Campaign, a statewide initiative launched in fall 2007 by the Center for Michigan, a nonprofit, self-described think-and-do tank based in Ann Arbor. The center has launched a project to “ignite a citizen movement for a new, better Michigan that helps make far-reaching economic and political reforms.”
MSU’s Ballard is author of Michigan’s Economic Future and co-author of Michigan at the Millennium. He says state residents better get interested soon in what’s happening.
“As a state, we’re standing on the train trestle, and the locomotive is coming straight at us. And we’re staring at it, saying, ‘Look, it’s a train!’
“I’m really hoping it doesn’t take something drastic to get our attention, but there is a very real possibility that in the next few years some counties, school districts, cities and townships will go into receivership. That will get our attention.”
But it doesn’t have to be that way, Ballard says.
A century ago, Michigan was one of the first states to transition successfully from being a primarily agricultural society to a manufacturing one.
Today’s economic shift is similar in size and scope, he says. As more Michiganians acknowledge the need for change — dramatic, fundamental change — and take steps in that direction, the state can stave off a bleak and bankrupt future, Ballard predicts.
“In spite of all of the problems of recent years, we still have per-capita incomes that are 25 percent higher than those of the lowest state,” he said.
“Sometimes, to hear the national news media talk about us, you would think that we in Michigan have to walk barefoot through the snow because we can’t afford a pair of shoes. However, we aren’t Bangladesh or Bolivia. In spite of several decades of slow growth, we still have lots of affluence.”
The new Big Three
Business and community leaders, educators, politicians, researchers, and philanthropists are trying to transform the state from a leader of the old, manufacturing-based economy to a leader of the new, knowledge-based economy.
Increasingly, when media outlets refer to the Big Three today, they don’t always mean Chrysler, Ford and GM. Instead, they point to MSU, UM and WSU — world-class research schools that created “The University Research Corridor” (URC) in November 2006.[20]
Today, the three — individually and jointly — are driving the state’s economy into diverse areas.
For example, WSU’s campus is home to TechTown, a 12-square-block research and technology park designed to serve as an incubator for innovation in Detroit. Its founding partners include GM and Henry Ford Health Systems.
In another private/public venture, Pfizer donated a vacant, $50-million research and development facility to MSU in May 2007.[21] Since then, nearly $5 million has been pledged in public and private support to the Community Foundation of the Holland-Zeeland Area to establish Michigan’s first bio-economic research center on the 46-acre campus. The center is expected to open in 2008 and could employ up to 100.[22]
The new Big Three does more than produce educated, creative and entrepreneurial adults. The three also annually provide new jobs in universities and spin-off companies from the more than $1.3 billion in research and development they secure from public and private sources — about the same as Harvard, MIT and Tufts University combined, according to a May 2007 study.[23]
The study, conducted by the East Lansing-based Anderson Economic Group and commissioned by the URC, found that the three pump more than $6.5 billion annually into the state’s economy from operational expenditures alone.
A 2008 MSU report found that between 2001 and 2005, URC members received 632 patents, resulting in 79 start-up companies. In all, the report said, the three institutions helped create 68,803 Michigan jobs and produced $12.8 billion of net economic benefit in 2006.[24]
Michigan’s research institutions also are serving as magnets that attract start-up and existing companies whose executives and employees choose to locate near college communities that invite diversity and support a variety of arts and cultural activities, Glazer says.
Added to the value of these research institutions are several training, re-training and entrepreneurial initiatives at community colleges, including those in Auburn Hills, Battle Creek, Flint, Grand Rapids and Lansing.
Other public and private institutions of higher education also are partnering with industry and government in research and development ventures.
Central Michigan University’s Smart Zone in Mount Pleasant includes the Center for Applied Research. SmartZone is one of 12 technology-oriented centers located throughout the state that link universities, industry, research institutions and government.
There also is ongoing nanotechnology research at the public, Houghton-based Michigan Technological University, and applied research being conducted in several fields of study at the private, Flint-based Kettering University.
Jobs of tomorrow
Statewide, economic revitalization projects are being funded by public, private and philanthropic institutions.
When combined, these efforts create a blossoming economic landscape, said David Hollister, president of Prima Civitas Foundation, a Lansing-based regional nonprofit organization established in 2006. Its staff works to increase jobs and generate a more diversified economy in the middle of Michigan’s Lower Peninsula.
As a member of the State House of Representatives from 1973 to 1993, Hollister learned the value of building partnerships among the public, private and nonprofit sectors. Those partnerships are evidenced today by Prima Civitas’ diverse list of supporters, such as local governments, public and private colleges and universities, and foundations, including Mott.
Promoting economic development is nothing new for Hollister. He served as the mayor of Lansing, the state’s capital city, from 1993 to 2003. He is credited with helping revitalize the overall central city, including construction of a downtown stadium for a minor league baseball team and successfully negotiating with GM to build two new, state-of-the-art automotive manufacturing facilities in the Lansing area.
Hollister rattles off a long list of businesses that have moved to the state recently, are just starting up or are thriving because they are in hot, high-paying fields.
“There are niches out there doing very well, as I discovered when I visited 20 IT [information technology] companies over a period of two months. I was surprised by the vitality of this growing sector,” he said.
Prima Civitas, the Michigan Department of Labor and Economic Growth, and another state agency conducted a joint study that identified more than 300 IT companies in mid-Michigan. All were growing at an average rate of 20 percent annually, paying wages 75 percent above the regional average and searching for more employees, Hollister said.
The public often hears media reports about job losses that range from 100 to 3,000 workers. But additions at smaller companies are less likely to be announced, Hollister says, primarily because new workers are being hired in batches of five to 10 per employer, instead of the multiple hundreds, as in days gone by.
The state’s strengths
While the state faces formidable obstacles, many business and community leaders point to Michigan’s strengths, including an abundance of engineers and skilled-trades workers.
For example, one of every three skilled-trades workers in the nation is located in Michigan, says CAR’s McAlinden. The same is true for tool-and-die foundry workers. Also, one of the world’s largest clusters of engineers is found in southeast Michigan.
In addition, many experts say Michigan is well poised to be a serious player in the global economy because of its strong public system for higher education, several top-notch research hospitals, and many philanthropic institutions. Three private foundations rank in the nation’s list of 20 largest: W.K. Kellogg in Battle Creek, Kresge in Troy and C.S. Mott in Flint.[25]
Additionally, the state has an effective infrastructure for transportation by air, sea and land. The latter includes Interstates 75 and 69. These interstate highways, which intersect near Flint, crisscross the country. They provide easy access to the nation’s northern neighbor of Canada and southern neighbor of Mexico, partners in the North American Free Trade Agreement (NAFTA), which became effective in January 1994.
While many U.S. factory workers attribute their personal job losses to NAFTA, McAlinden says the agreement has opened up new markets for Michigan businesses and will continue to do so. The state’s two largest export markets are Canada and Mexico. Canada alone receives 59 percent of the state’s exports.
Michigan’s merchandise exports in 2006 totaled $40.4 billion, ranking the state sixth in the nation. From 2002 to 2006, the state’s exports increased $6.6 billion, or 20 percent. Of that increase, $4 billion was to Canada and $446 million was to Mexico.[xxvi]
One of the fastest-growing stretches of those NAFTA highways, McAlinden says, is I-69 west of the Blue Water Bridge, which connects Port Huron to Sarnia, Ontario. The tunnel and bridge connecting Detroit to Windsor, Ontario, are even busier.
Michigan accelerated its push to diversify its economy when it established the 21st Century Jobs Fund, a $2-billion, 10-year initiative administered by the Michigan Economic Development Corporation (MEDC).
Other financial vehicles for attracting businesses to Michigan include state money earmarked for economic development, such as the $109-million 21st Century Investment Fund and the Venture Michigan Fund. The latter fund must be invested directly in companies located in Michigan, significantly increasing the availability of capital for growing technology businesses in the state.
As of March 2008, there were at least 15 venture capital funds that have offices in the state and that are estimated to have more than $225 million available for investment. Also, Michigan-based funds represent more than $550 million in capital under management.[26]
One of the fastest-growing stretches of those NAFTA highways, McAlinden says, is I-69 west of the Blue Water Bridge, which connects Port Huron to Sarnia, Ontario. The tunnel and bridge connecting Detroit to Windsor, Ontario, are even busier.
Michigan accelerated its push to diversify its economy when it established the 21st Century Jobs Fund, a $2-billion, 10-year initiative administered by the Michigan Economic Development Corporation (MEDC).
Other financial vehicles for attracting businesses to Michigan include state money earmarked for economic development, such as the $109-million 21st Century Investment Fund and the Venture Michigan Fund. The latter fund must be invested directly in companies located in Michigan, significantly increasing the availability of capital for growing technology businesses in the state.
As of March 2008, there were at least 15 venture capital funds that have offices in the state and that are estimated to have more than $225 million available for investment. Also, Michigan-based funds represent more than $550 million in capital under management.[27]
Although the funds’ combined total of $204 million might be smaller than funds in some other states, it does send the message that Michigan is ramping up its efforts to make new capital investment money available, says James Epolito, MEDC president and CEO.
“Before, many venture capitalists thought Michigan was a fly-over state, but we’re not. Competition between states for new investments and jobs has never been more heated than it is today, and the more funding sources we can generate, the better we can compete.”
Regaining global leadership
In March 2008, Epolito pointed to four broad “competitive-edge technology areas” — alternative energy, bio-medicine and health care, advanced manufacturing, and homeland security/defense — that could help move Michigan out of its recession just as the rest of the country is increasingly concerned about a slowing economy.
Michael Shriberg, director of Environment Michigan Research & Policy Center in Ann Arbor, agrees that one of the state’s possible future roles is to become the “alternative energy state.”
“We’ve got both brains and brawn here. Michigan is the state that put America on wheels, so why not be the state that develops the next energy source to fuel our future?” he asked.
“The time is as ripe as it is ever going to be. We’re a state searching for an identity in the 21st century, so why not move toward being a leader in renewable energy?”
Events in the past year around the state make it appear as if Michigan is moving in that direction.
For example, in May 2007, Hemlock Semiconductor Corp. (HSC) officials announced they would invest $1 billion to expand operations at their Saginaw County facilities and add 500 employees to the current workforce of 1,050 people.[28]
HSC is the world’s largest supplier of polysilicon, an indispensable material for the semiconductor industry. Solar cells also are made from either polysilicon or single-crystal silicon that can convert solar energy into electricity.
“This is a huge deal for the state of Michigan,” said Gov. Jennifer Granholm during the formal announcement ceremonies.
“We are re-branding Michigan as the alternative energy capital of the world.”
More than 1,000 construction workers are busy with the early phase of Hemlock’s expansion, which is expected to be completed in 2012.[29]
In July 2007, the Massachusetts-based Mascoma Corp. announced that it would build a cellulosic ethanol plant in Michigan, making the state a front-runner in producing commercial-scale ethanol from wood chips and other non-food crops.[30]
Company officials said they chose Michigan as the site for their new, renewable fuels plant because of the state’s vast supply of forestry and agricultural materials, and also the opportunity to link with two universities — MSU and Michigan Tech — and tap their expertise. Another plus was the financial incentives offered from the state’s 21st Century Jobs Fund. This package will be determined once the final site has been selected.
In October 2007, DTE Energy Co. announced that it had purchased more than 30,000 acres in the Thumb region for what would be the state’s largest wind-energy project.[31]
And in February 2008, the University Research Corridor announced an agreement to invest a combined $900,000 so faculty members could research alternative energies together.[32]
Currently, Michigan pays $20 billion annually to other states and countries to meet the bulk of its need for coal, oil and natural gas. Even if it costs the same amount to generate a comparable amount of energy from wind, sun, landfill gases, and carbon and wood waste, Shriberg says, Michigan would be better off, because the money would stay within the state.[33]
In addition, Michigan is broadening its reputation as a leader in bio-medicine. It will host the First Midwest Conference on Stem Cell Biology & Therapy in May 2008. The three-day conference is sponsored by Beaumont Hospitals and Oakland University. Organizers said they expect to attract more than 200 researchers from the U.S., Canada, Czech Republic, Sweden and elsewhere.[34]
Downtowns investing millions
Because cities anchor metro areas, experts agree that suburbs need strong center cities; their fates are intertwined. And there are signs around Michigan that progress is being made in improving central cities.
For example, the hope is that the metro Detroit region will benefit as ground is broken in the city for riverfront housing projects and as plans move forward for what is being called “the single largest retail development in Detroit history” — $90 million in development and improvements along Eight Mile Road and adjacent to the Michigan State Fairgrounds.[35]
In January 2008, New York developers announced plans for two, 24-story towers to be constructed as part of a $150-million project planned for the heart of the Motor City. Cadillac Centre is expected to house residents, retailers, a multiplex cinema, parking structure and more.[36]
Downtown development is also occurring elsewhere in the state, including Michigan’s second most populous city of Grand Rapids. There, the stage is being set for what has been called “a health mecca.”
If all goes as planned, by 2010 the city’s prominent families, philanthropists and medical institutions will have invested almost $1 billion to construct a new medical school; a children’s hospital; and medical research, treatment and office facilities. This expansion of an area currently known as Health Hill should add 2,500 jobs to the community.[37]
There also are several health-care developments under way throughout Oakland County, including a $600-million McLaren Health Care project in Clarkston, Henry Ford Health Systems’ $310-million project in West Bloomfield and Novi’s $200-million St. John project.[38]
Education and the future
When it comes to education, the state ranks below the national average of 27.7 percent of residents age 25 or older who hold at least a bachelor’s degree. For Michiganians, the percentage is 24.4.[39]
There also is cause for concern in many of the state’s high schools, where dropout rates are high — more than 50 percent in four of the state’s 10 largest school districts.[40]
The Detroit school district made national headlines after a MSU study found that just 24.9 percent of the city’s ninth-grade students had earned diplomas after four years, although school officials dispute the study’s findings.[41]
Statewide, about 45,700 Michigan students did not graduate with their classmates in 2006, potentially costing the state more than $11.9 billion in lost wages, taxes and productivity over their lifetimes, according to a June 2007 report by the Alliance for Excellent Education, a national policy, research and advocacy organization based in Washington, D.C.[42]
Those figures trouble educators, including Mike Flanagan, state superintendent for public instruction. He reasoned that students would stay in school and graduate if they had fewer lectures from textbooks and more lessons that used hands-on, experiential learning.
Others agreed and worked successfully to pass legislation in 2006 that raised state high school graduation standards.
“I don’t accept the current dropout rate,” Flanagan said. “If kids are challenged and see that the lessons are relevant, they will stay in school, graduate, and then be better able to compete globally.”
Added Maxine Berman, director of special projects for the governor’s office in southeast Michigan: “Gone for good are the days of graduating from high school and going straight into a factory job like your father and grandfather had. Sure, we said that same thing 15 years ago in Michigan. But now those jobs really are gone, and they’re not coming back.”
The tougher graduation requirements are applauded by Glazer of Michigan Future as a concrete example of ways to move the state toward a more knowledge-based economy. A proposal to raise the state’s mandatory high school attendance age from 16 to 18 is another step in the right direction, he says.
Many people, including Bill Martin, also applaud the proposal to reward colleges and universities for high graduation rates, saying it could be another step in Michigan’s move toward a knowledge-based economy.[43]
As a trustee for Western Michigan University, a board member of the Michigan Chamber of Commerce and CEO of the Michigan Association of Realtors, Martin views the state’s situation from several vantage points.
He regularly sees the state’s good, bad and ugly — and from his multidimensional perch, Martin is both realistic and optimistic about Michigan’s future.
“If we get the economy back and going strong, we will be a well-positioned state. There is one good thing about being a state in crisis: It gives us an opportunity to challenge the notions we’ve held for so long. It gives us the chance to make dramatic reforms,” he said.
“Michigan has way too many resources to not make it. I believe this state is going nowhere but up. But — and it’s a big ‘but’ — it isn’t going to be an easy climb.”
Endnotes
[1] Ballard, Charles L. Michigan’s Economic Future, 2006: 3.
[2] Gallagher, John. “Michigan unemployment rate dips to 7.1%.” Detroit Free Press, March 5, 2008, online edition.
[3] Vlasic, Bill. “GM offers buyouts to 74,000.” The New York Times, Feb. 13, 2008, online edition. Vlasic. “Ford is pushing buyouts to workers.” The New York Times, Feb. 26, 2008, online edition.
[4] Higgins, Tim. “Detroit 3 near $14-an-hour hiring blitz.” Detroit Free Press, Feb. 20, 2008, online edition.
[5] Ballard. pg. 14.
[6] U.S. Census Bureau, 2006 State and Metropolitan Area Data Book (2006), Table A-1. July 2006:3.
[7] Report of the Emergency Financial Advisory Panel for Office of the Governor. “Michigan’s Defining Moment,” Feb. 2, 2007:5.
[8] State of Michigan Department of Labor & Economic Growth news release, “Michigan’s February jobless rate edges upward.” March 26, 2008, online edition.
[9] Yung, Katherine. “Bracing for life without Pfizer.” Detroit Free Press, June 11, 2007, online edition; Bodipo-Memba, Alejandro. “Comerica moving HQ to Dallas.” Detroit Free Press, March 6, 2007, online edition; Darrow, Robert. “Despite rubble, there’s hope in Greenville.” Grand Rapids Press, July 6, 2007, online edition.
[10] Associated Press, “Michigan economy expected to continue to struggle in ‘08.” Battle Creek Enquirer, Dec. 13, 2007, online edition.
[11] Dziczek, Kristin, Center for Automotive Research. Interview with author, March 10, 2008.
[12] United Van Lines media release, “Great Lakes region sees more people leaving; West, Southeast welcome residents,” Jan. 3, 2008.
[13] Shamus, Kristen Jordan. “Graduates of big state colleges won’t stick around, poll shows.” Detroit Free Press, April 29, 2007, online edition.
[14] Veiga, Alex. “Metro Detroit had highest foreclosure rate in 2007.” The Detroit News,Feb. 13, 2008, online edition.
[15] Hurst, Nathan. “Metro home foreclosures surge in May.” The Detroit News, June 13, 2007, online edition.
[16] Carmody, Steve. “Existing home sale prices slide.” Michigan Radio News, Feb. 14, 2008, online edition.
[17] Shriner, Dan, General Motors spokesman. Interview with author, May 11, 2007.
[18] Chambers, Rick, Pfizer spokesman. Interview with author, March 6, 2008.
[19] Cornell, Jenn, Google spokeswoman. E-mail interview with author, March 7, 2008.
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