Unemployment, Migration Statistics Underscore Failure of MEDC, Says Mackinac Center Economist

State unemployment increases to 15.2 percent; 70 percent of United Van Lines Michigan traffic is outbound

For Immediate Release
Monday, July 20, 2009

Contact: Michael D. LaFaive
Fiscal Policy Director

MIDLAND — Figures released last Friday show that Michigan has led the nation in unemployment for 40 straight months, confirming the fact that state legislators should eliminate the Michigan Economic Development Corp in favor of bold, across-the-board policy changes, Mackinac Center Fiscal Policy Director Michael D. LaFaive said today. Michigan's unemployment rate is now 15.2 percent, 5.7 percentage points above the national average.

This unemployment data comes shortly after United Van Lines — the nation's largest mover of household goods — reported that through June 30 of this year, 70 percent of its Michigan-related business was outbound.

"The MEDC's mission was to create new and retain existing jobs in Michigan. These unemployment figures are just another stark reminder that the MEDC has failed and should be shut down," said LaFaive. "The MEDC's work amounts to 'press release economics.' Michigan is probably getting more job announcements from this expensive government bureaucracy than real jobs. It's no wonder legislators and others are demanding more transparency from the agency."

According to LaFaive and adjunct scholar Michael Hicks, unemployment rates and migration are intertwined. A high home state unemployment rate advertises a lack of opportunity, while a state with a lower rate advertises relatively more opportunity. Past migration research conducted by the pair found that for every 1 percentage point increase in Michigan's unemployment rate, an additional 900 people leave Michigan every year thereafter.

"People continue to vote with their feet and they aren't voting for Michigan," said Hicks. "That speaks volumes because the financial and psychological costs of leaving are considerable."

Michigan's economic woes are not a recent phenomenon. While discouraging, a quick recap of the statistics behind Michigan's decline is instructive:

  • Since 1995, when the state began "investing" more aggressively in economic development departments and programs, Michigan has dropped to 50th among the 50 states in employment growth. Ours is the only state to lose jobs over that term.
  • Puerto Rico's unemployment rate — 14.5 percent — is lower than Michigan's, the first time it has been lower than any state since 1976, save for one month after Louisiana was hit by hurricane Katrina.
  • From 2002 through 2007 — roughly the period of America's last economic expansion — Michigan experienced negative growth as measured by real state Gross Domestic Product (-1.7 percent).
  • Since the creation of the MEDC in 1999, Michigan's state GDP rank has fallen from 16th highest in the country to ninth worst. Per-capita personal income has tumbled from 16th to 34th place.

"The state's department of Corporate Welfare and Discriminatory Tax Policy — the MEDC — has presided over one of the most significant declines in economic performance in Michigan history," said LaFaive. "Does anyone really believe the Great Lakes State would be worse off if it were not for their taking resources from a lot of taxpayers and giving them to a few?"