In 2005, Michigan Gov. Jennifer Granholm launched a project intended to stimulate the state’s economy: the 21st Century Jobs Fund. At the time the state had not yet recovered from the 2001 national recession and was suffering the country’s highest unemployment levels.
After a tough political battle to establish the program and after making a number of compromises, the 21st Century Jobs Fund was created. The program was to be funded from 2006 to 2015, and in the 2013-14 legislative session, under a new governor and Legislature, it was extended until 2019 and provided with $75 million in continued annual funding.
After ten years of existence, this program has received little attention and its effectiveness has never been measured. All government programs should be reviewed regularly, and it is time for a close look at the 21st Century Jobs Fund.
This review finds several fundamental problems with the structure and operations of the 21st Century Jobs Fund. These problems include:
- It may violate Michigan’s constitutional ban on state investment in private companies.
- It has no clear objectives or overall guiding strategy, which has led to economic development decisions being made for political purposes rather than economic ones.
- It does not hold to any clear and consistent performance benchmarks.
- It regularly fails to meet its legislative reporting requirements.
A complete review of the 21st Century Jobs Fund program would include a thorough study of its economic impact. Unfortunately, this would be impossible because the program does not provide consistent records that would be required to conduct such an analysis. However, based on the available information, it is highly unlikely that the 21st Century Jobs Fund has had a meaningful impact on Michigan’s economy. Consider these facts:
- The program has spent hundreds of millions of dollars since its inception, but could report having created only 6,549.3 new jobs.
- The 6,549.3 new jobs resulting from spending by the 21st Century Jobs Fund amount to just 0.15 percent of the state’s total current workforce.
- From 2005 through 2015, the total amount of economic activity in Michigan was valued at $4.5 trillion, and the total the 21st Century Job Fund invested, awarded or leveraged over that period was $4.85 billion. Even assuming that all of that investment was productive and would not have happened without state support, it still only amounts to 0.08 percent of the total economic activity over the period.
Given the problems stated above and the lack of demonstrable economic impact, policymakers should consider discontinuing the 21st Century Jobs Fund. Taxpayers should not have to pay for a government program that lacks clear objectives, fails transparency requirements and cannot demonstrate how it benefits the public. If policymakers choose to continue this operation despite its obvious shortcomings, they should, at a minimum, enforce the requirement that the program report regularly and consistently on its entire activity so that a full economic analysis can be conducted.