Region’s employment earnings lag national average

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Support is mounting for emphasizing four-year college degrees in Michigan.

In a Crain’s Detroit Business op-ed, Glenn Stevens Jr., executive director of MICHauto, and Britany Affolter-Caine, executive director of Michigan’s University Research Corridor, write: “The most successful strategy to ensure Michigan’s long-term competitiveness and economic prosperity is to increase the number of workers with college degrees and with digital skills in professions at all levels and across all industries in Michigan, while making our communities attractive places to live and work.

“Michigan won’t be the prosperous state we envision together without these deeper and more long-term investments. Short-term incentives, while important in the moment, are not going to be enough to get us to where we need to be. Pursuing manufacturing jobs is important, but Michigan also must compete for knowledge-based jobs, which are the ones that are growing in today’s economy. To win knowledge-based jobs, we need to re-invest in higher education, move more university discoveries to market, increase people trained in high-tech at all levels, retain them, and invest in our communities so they are attractive places to live, work and play.”

Exactly! Incentives to retain and attract manufacturing jobs cannot be the core strategy to return Michigan to high prosperity. Big incentives are the icing on the cake, not the foundation of recreating a Michigan economy with a broad middle class. That is because, as Stevens and Alffolter-Caine note, knowledge-based occupations are now the growing, high-wage occupations.

Michigan has a two-tier labor market: one tier of occupations where fewer than 10% of the jobs require a bachelor’s degree and a preponderance of jobs that pay below what it takes to be middle class; and a second tier for occupations where more than 65% of the jobs require a bachelor’s degree and a preponderance of jobs that pay more than what is required to be middle class.

These high-wage occupations are:

  • Architecture and engineering
  • Arts, design, entertainment, sports and media
  • Business and financial operations
  • Community and social service 
  • Computer and mathematical
  • Educational instruction and library
  • Health care practitioners and technical
  • Legal
  • Life, physical and social science
  • Management

Combined, they account for 33.7% of the nation’s payroll jobs in 2020, which is up from 28.1% in 2000. By contrast, production (blue-collar factory) jobs have declined from 9.6% of the nation’s payroll jobs in 2000 to 6.1% in 2020.

Nationally, the 10 knowledge-based major occupations, with the exception of community and social services, have average wages above the national average of $56,310 for all jobs. Most are substantially above that number. Production has an average wage that is 25.9% below the average for all jobs.

The knowledge-based occupations are 32.8% of Michigan’s payroll jobs. By comparison, they are 42.3% of Massachusetts’ payroll jobs. Massachusetts is the prototypical high-prosperity/high knowledge-based economy state: second in per capita income and first in the proportion of adults with a bachelor’s degree or more.

The knowledge-based occupations are 29.5% of metro Grand Rapids’ payroll jobs. By comparison, they are 44.6% of metro Boston’s jobs.

The knowledge-based occupations are high-wage in metro Grand Rapids, but still are lower than the national average and even farther behind metro Boston in all 10 of the knowledge-based major occupations. The metro Grand Rapids major occupations with average wages below the national average for all jobs are arts, design, entertainment, sports and media; community and social services; and educational instruction and library. The other seven metro Grand Rapids major occupations have average wages substantially above the national average for all jobs, ranging from more than $19,000 above for business and financial operations jobs to more than $57,000 above for management jobs.

Just like the nation, production jobs in metro Grand Rapids are below average wage jobs: more than $10,000 lower than the region’s average for all jobs and nearly $20,000 below the national average for all jobs.

Metro Grand Rapids is under-concentrated in employment compared to the nation in all the knowledge-based occupations except for architecture and engineering and health care practitioners and technical, where the region is over-concentrated compared to the nation, and arts, design, entertainment, sports and media, where the region’s concentration is even with the nation’s average. By contrast, metro Boston is over-concentrated in employment compared to the nation in all the knowledge-based occupations.

Metro Grand Rapids’ under-concentration and lower average wage in these knowledge-based major occupations are major reasons why the region’s employment earnings (wages and employer paid benefits) per capita are 9% below the national average. By contrast, metro Boston’s employment earnings per capita are 55.4% above the national average. 

As Stevens and Alffolter-Caine conclude, the data are clear: the path to recreating a high-prosperity Michigan and metro Grand Rapids is an economic development strategy focused on competing for high-wage/high-growth, knowledge-based jobs.

Lou Glazer is president of Michigan Future Inc.

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