News Story

State Economic Development Group Has Little To Do With Job Success

Analyst: 'Right-to-work’s success will be determined by Michigan’s overall economic performance'

John Austin, president of the Michigan State Board of Education, said he doesn't believe companies are calling Michigan because of the state's new right-to-work law.

In an MLive column, Austin, a Democrat from Ann Arbor, wrote: "And despite protestations to the contrary, I am not convinced the phones at the Michigan Economic Development Corporation have been ringing off the hook with new firms eager to come to Michigan since the law passed." 

In an email, Austin said he was referring to comments Gov. Rick Snyder made to The Detroit News in which the governor said: "The phone's already been ringing at the MEDC since we passed that legislation. People are starting to look at Michigan." 

However, even if the phones are ringing with companies asking about locating in Michigan thanks to state becoming the 24th labor freedom state in the nation, Mackinac Center for Public Policy fiscal analyst James Hohman warned that the MEDC has little say in how successful right-to-work will be in Michigan.

"Right-to-work's success will be determined by Michigan's overall economic performance," Hohman said. "That has nothing to do with the activities of the MEDC."

Companies opening in a state or relocating to a new state look at numerous factors — including right-to-work — when making their decisions.

However, jobs from companies linked to state economic development agencies pale in comparison to overall job movement. There can be as many as 200,000-plus jobs added in any quarter in Michigan.

For example, in the second quarter of 2012, the state added 210,000 overall jobs and lost 195,000 jobs, according to the U.S. Bureau of Labor Statistics. By comparison, the MEDC announced in March 2013 that the companies it hands out incentives to were projected to create 763 jobs. Projected jobs don't always translate into actual jobs. The Michigan Auditor General reported in 2010 that only 28 percent of direct jobs announced by the MEDC eventually came to fruition.

Similar correlations between right-to-work laws and jobs from economic development agencies have been made in other states, as well.

University of Oregon Professor Gordon Lafer did a study on right-to-work that included only jobs announced by the state of Oklahoma. In a press release from the state, Lafer’s analysis stated that 31 firms announced they were open in Oklahoma. However, the U.S. Bureau of Labor Statistics stated that 14,405 firms opened and employed workers that year, far more than the state of Oklahoma had reported in press releases.


See also:

Michigan Capitol Confidential Coverage of Right-to-Work