The Michigan Economic Growth Authority yesterday approved its latest batch of tax credits to lure large business projects to Michigan.
Despite the press release, these big business projects are just not that consequential to Michigan's total economy.
That's because the state's economic development programs are involved in the bulk of business news stories, but an incredible minority of the state's job creation.
Yesterday's MEGA release claimed 2,790 future new jobs (and a bigger number of jobs headline based on a questionable multiplier analysis). On average, only 29 percent of announced jobs actually show up.
Yet even though no ground has been broken, no jobs are yet available and these projects have poor records of results, the release got stories in the Detroit Free Press, The Detroit News and The Flint Journal, among others.
Any job creation from these projects is a good thing, but there are costs to the incentives. An empirical look at MEGA's results found a negative effect on the state.
And they just don't account for a large part of the economy. There are published figures on the total job creation and loss in the economy. Even if all of these jobs were created as announced, they would account for only 0.4 percent of the total annual job creation. Indeed, considering that there were 778,025 jobs created last year, there was an average of around 2131 jobs created every day in Michigan, meaning that there is more job creation in the economy every day than is heralded by the state's monthly announcements.
The economic development programs do nothing to address the reasons why other Michigan businesses are losing jobs. These losses are why Michigan's total employment is falling.
Most of the changes to the state's economy come unheralded. They involve smaller decisions from entrepreneurs and managers for whom the state does not issue press releases. And it's the total of these small decisions that add up to Michigan's current economic state. State legislators should recognize that by enacting broad tax and regulatory reform instead of practicing press release economics.