New
figures released Tuesday by the Bureau of Labor Statistics show that Michigan is
again the national leader in job loss and unemployment rate. Michigan lost 1.5
percent of its employment from 2006 to 2007. The state’s unemployment rate went
up from 6.9 percent in 2006 to 7.2 percent in 2007, the highest average annual
rate the state has seen since 1993. The state’s current 7.1 percent unemployment
rate is the highest in the nation.
Michigan
also started off 2008 by shedding an additional 3,900 nonfarm jobs, although
that change was not statistically significant, according to the BLS, and the
state unemployment rate dipped from a high of 7.4 percent.
Since
2002, Michigan has lost 5 percent of its total nonfarm employment. Overall,
national employment over the same period increased 6 percent. The only other
state to lose jobs over this period was Ohio, which lost 0.4 percent of its
employment.
Michigan’s decline has been deep and broad. Since 2002, Michigan lost 19 percent
of its manufacturing jobs, 17 percent of its construction jobs, 12 percent of
its natural resources and mining jobs, 11 percent of its information jobs, and
lesser losses in financial activities, professional and business services and
government.
However,
the auto workers that remain appear to have growing wages. Between 2001 and
2006, average wages at auto manufacturing plants increased by 27 percent,
according to the Quarterly Census of Employment and Wages. Compensation is now
over $88,000 annually. These figures do not include benefits packages.
Michigan
policymakers are largely abstaining from implementing policies that would
improve Michigan’s situation. Lansing is currently discussing how to promote
fringe industries in alternative energy, and reregulating Michigan’s electricity
generation. Not only do such diversions ignore the fundamental problems Michigan
faces, but they take policy further away from a competitive market.
There is
one area where pending legislation could improve Michigan’s business structure.
A bill introduced by State Rep. David Agema, R-Grandville, would prevent the
Department of Environmental Quality from
enacting environmental rules that are more stringent than federal policies.
This would decrease the regulatory burden on businesses while maintaining
safety measures that meet federal guidelines.
But
what’s lacking in Lansing is a serious discussion of labor and tax reforms that
would improve Michigan’s economy and help deliver it from the current
stagnation. We can no longer afford arguments for the status quo that might
benefit one group at the expense of the state as a whole. The state should
consider a
right-to-work law and eliminate one of Michigan’s major taxes — sales,
income or business — if it wants to reverse its precipitous economic decline.
Unless there is transformational change in Lansing, we can expect further
depressing numbers from the BLS.
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James M. Hohman is a
fiscal policy research assistant with the Mackinac Center for Public Policy, a
research and educational institute headquartered in Midland, Mich. Permission to
reprint in whole or in part is hereby granted, provided that the author and the
Center are properly cited.
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