For years we ended our presentations with a slide that said, “Either Michigan gets younger and better educated or we will get poorer.” Younger meant a place where Michigan was retaining those who grew up here and attracting mobile young talent from any place on the planet. And better educated primarily meant increasing the proportion of adults — particularly young adults — who had a four-year degree or more.
We did neither and we did get poorer. We fell from attaining 99% of the national per-capita income in 2000 to 90% in 2020. This dropped us from 18th in per-capita income to 33rd in 20 years. If Michigan had just stayed at the 99% mark, it would have meant another $5,656 in income per person in 2020.
Maybe more concerning is this from a 2020 Automotive News article: Rivian CEO RJ Scaringe “believes California is a cool place to be and Detroit has an old technology image,” a former Rivian executive told Automotive News. “He thinks California represents tomorrow and Detroit is all about yesterday.”
I’m pretty sure when he references Detroit, he’s talking about the entire region and the automotive industry, not just the city.
Another way of saying this is California is young, Michigan is old. Yes, old means the average age of residents, but it’s more about our communities and economy. Michigan is over-concentrated in neighborhoods of drivable suburbanism and under-concentrated in neighborhoods of walkable urbanism. The state’s economy is over-concentrated in declining sectors and under-concentrated in the growing, high-wage, knowledge-based sectors.
Michigan’s fundamental economic problem is that we do not have enough young adults — new entrants into the labor market — to replace retiring baby boomers. And of the young adults we do have, too few are high-skilled and too many lack four-year degrees.
Using the Rivian CEO’s framing that California represents tomorrow, here is what the ratio of 20-to-29-year-olds compared to 55-to-64-year-olds looks like: in the United States, it’s plus-4.3%; in California, it’s plus-15.9%; in Michigan it’s minus-2%.
If Michigan had the same ratio as the U.S., there would be 85,000 more 20-to-29-year-olds in Michigan today. If we had the same ratio as California, there would be 243,000 more 20-to-29-year-olds in Michigan today.
In terms of young adults with a four-year degree or more in 2019, 37.1% of the nation’s 25-to-44-year-olds had a B.A. or more. By comparison, California was at 38.2% and Michigan was at 34.4%. Michigan ranked 31st nationally.
What is particularly worrisome is Michigan was doing worse on both measures in 2020 compared to 2010, which is commonly referred to the end of the so-called “lost decade.” In 2010, Michigan’s 20-29 vs. 55-64 age ratio was 100%; in 2020, it was 98%. In terms of 25-44 with a four-year degree or more, Michigan trailed the nation in 2010 by 2.2 percentage points compared to 2.7 percentage points in 2019.
If these realities don’t change, the state’s economy cannot grow much. Not having enough young adults is the path to slow growth. Not having enough young talent is the path to low prosperity.
More than two decades of research has taught us one fundamental lesson: Talent equals economic growth. Michael Bloomberg, at the time the mayor of New York City, got it right when he wrote in a Financial Times column:
“Many newly successful cities on the global stage — such as Shenzhen and Dubai — have sought to make themselves attractive to businesses based on price and infrastructure subsidies. Those competitive advantages can work in the short term, but they tend to be transitory. For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent. I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent.”
Creating a place where people want to live and work becomes even more important as Michigan goes through at least a decade and a half where the number of older workers leaving the labor market will exceed younger workers entering the labor market. Regions without the quality of place that mobile talent is looking for will be at a substantial disadvantage.
To create those places will require five fundamental shifts in Michigan’s approach to economic policy:
- Shift from an emphasis on being a low-cost state to a state that develops, retains and attracts human capital as its core strategy for economic success.
- Shift from intolerance to welcoming all people from any place on the planet.
- Shift from an economic strategy based on low taxes to one that recognizes taxes must be balanced with the need for public investments in education from birth through college and in creating places where people want to live and work.
- Shift from state limitations that prevent cities and regions from controlling their own destinies to giving them the flexibility to develop, finance and implement their own quality of place strategies.
- Shift from accepting a crumbling 20th century infrastructure to providing a world-class 21st century infrastructure.
Only then will we move forward as a state that can create its own momentum.
Lou Glazer is president of Michigan Future Inc.