News Story

State Government Has Poor Record Predicting Jobs

State government agencies have a long history of making bad decisions about which companies should get select tax breaks from Michigan.

But that hasn't stopped them from making extravagant job predictions. That was routine during the eight years Jennifer Granholm was governor. And some still want to know how many jobs specific policies will create.

MLive political commentator Tim Skubick chastised Gov. Snyder recently for not giving an estimate on how many jobs the right-to-work law would create in Michigan.

In February 2012, Skubick also criticized Gov. Snyder for not predicting how many jobs would be created by the governor's tax cuts.

Skubick's criticisms come despite the repeated failure of governments to accurately predict actual job creation numbers and the outright falsity of government claims of "jobs saved" or "jobs announced." 

Those announcements rarely pan out. More than 600,000 jobs left Michigan during Granholm's eight years in office.

Michigan has done well under Gov. Snyder. While it hasn’t generated a lot of media attention, University of Michigan Economist Don Grimes found the state had remarkable job creation in the private industry in 2011. 

Grimes found that in 2011, Michigan ranked second in the nation in terms of private-sector job gains behind North Dakota. Michigan had 32,528 job gains due to the "competitive effect," which is the difference in employment growth for a specific industry between a local area and the national average. Grimes said it was a great improvement from the 2001 to 2009 period when Michigan was at the bottom of states in terms of "competitive" employment gains.

Grimes broke down Michigan employment data and compared it to national trends at a detailed industry level. The analysis drilled down to the specifics of the industry using the North American Industry Classification System at the six-digit level. For example, it wasn't just food manufacturing, but the kind of food such as cookie and cracker manufacturing or cheese manufacturing that was analyzed. Grimes said the factors that influence the competitive effect are much broader than public policy, but public policy plays a factor.

"Job providers don't ask for state approval to add jobs, nor do they report to state bureaucrats about why they change their staffing levels," said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. "But state policy influences those decisions regardless. Snyder should be commended for improving the rules that influence broad sectors of the economy."

The state's accuracy for predicting job creation has been questioned in the past.

A report from Michigan's Auditor General found that just 28 percent of the new jobs the Michigan Economic Development Corp. projected actually came to fruition.

And the legislature is currently debating a bill extending the 21st Century Jobs Fund which made dozens of specific promises about job numbers that did not come to be.

MIRS News reported that under under Gov.Granholm's tenure, her administration reported that the MEDC claimed to have created 1.4 million jobs, or 29 percent of the state's entire labor force. That was being reported at the time Michigan led the country with the highest unemployment rate.


See also:

Despite Lack Of Jobs and Repeated Brocken Promises, Legislature Proposes Extension Of Corporate Welfare Program