Michigan: The Comeback State
“Made in Michigan” means something. Across the nation and around the world, that label has long meant strength, durability, and quality. To Michiganders, it also reflects the pride of a resilient people who helped build this country and now are at the center of a reinvention that will restore our state to greatness.
Michigan is emerging from a “lost decade” marked by job losses and economic decline. In 2010, Michigan ranked 50th in many major national rankings. Those days are behind us, and now we’re moving up in those rankings by working together and building a rock-solid foundation for the future.
The reinvention of Michigan requires us to do things differently. We’re not looking to simply fix the old system—we’re aiming to reinvent our state. With Lt. Gov. Brian Calley, our partners in the legislature, and supporters from across the state, our mission is to focus on creating more and better jobs, building a better future for our children, improving the quality of life for the state’s 10 million residents, and developing a business environment where job providers can thrive and grow.
As most Americans know, Michigan was the innovation and manufacturing center of the world for the first half of the 20th century. It wasn’t just the millions of cars and trucks that were built here that helped change the world. Michigan was the leader in furniture, cereals, and other products, but in some ways we were too successful. We were so successful that we became complacent.
We spent too much time looking in the rearview mirror and became too divisive. We stopped innovating. We stopped taking risks. Even as the state declined, we kept doing the same things that we had always done and waited for the success of the past to resurrect itself.
The result was predictable: Michigan was afflicted for a decade by the economic problems that affected our nation in 2008 and 2009. We led the nation in unemployment and were the only state in the 2010 census to lose residents. We were a broken state with a broken government.
When I came on board as governor, I had ideas for a different kind of leadership to reinvent Michigan. They went beyond simply changing laws and regulations. These ideas meant bringing back a winning attitude and “can do” culture.
Accomplishing these ideas rested first on identifying Michigan’s core problems and then seeking to work together with the state’s key stakeholders on solutions. I believe that time should not be wasted on taking credit or blaming others. They do not solve problems.
Already some progress has been made. Nearly 223,000 new private sector jobs have been created in Michigan since the start of 2011. Michigan’s unemployment rate, which hit 14.2% at the state’s economic low point, had been cut by more than a third (to 9%) by the end of August 2013. The state’s improving economy is prompting more people to return to the marketplace in search of a job. That’s a clear sign of optimism and confidence in the state’s comeback.
We’ve made progress, but we need to do more. Another step in accomplishing our state’s mission is to reinvent the business environment in order to encourage businesses to invest in Michigan and help put more people back to work.
One innovative pilot program that we’ve developed helps those who face the greatest challenges in getting a job. Community Ventures provides a path to employment for people who have never had a job or have been without one for an extended period. In less than a year, this public-private partnership so far has helped more than 1,000 people get jobs.
Another key step for Michigan has been to put state government finances on a sound footing, starting by eliminating a $1.5 billion structural deficit. The state’s long-term liabilities have been reduced by more than $20 billion, which has helped in rebuilding the state’s reserve fund. The fund once dropped down to $2 million, enough to run state government for about 30 minutes. Today, it holds about $580 million, and we have long-term plans in place to continue adding to it.
Part of reinventing Michigan’s business climate was replacing the state’s business tax with a simpler corporate income tax of 6%. This new tax structure has improved our national corporate tax ranking from 49th in the country to 9th. Most importantly, Michigan’s job providers have seen their state business tax burden reduced by 80% or more.
Beyond these reforms, structural challenges had to be addressed in Michigan. Among these issues was our state’s regulatory burden. The essential balance we looked to strike was between removing the regulatory hurdles that hold back businesses while maintaining the necessary protection and oversight our citizens deserve.
We’ve also shifted from economic “hunting” to economic “gardening.” Rather than chasing companies and throwing incentives at them to lure them to Michigan, we’re focusing on helping the businesses already in our state to grow and prosper.
A prime example of this is our Pure Michigan Business Connect program. The concept is simple—we ask Michigan companies to do more business with each other. The idea is if they can get the quality goods and services they need from a Michigan company at a competitive price, it’s better for the state’s economy than using out-of-state vendors. The program doesn’t offer any credits or incentives. It’s just common sense to ask Michigan companies to work together for the benefit of each other and the state.
So far, the state’s two major utilities, Consumers Energy and DTE Energy, have made $2 billion in commitments for in-state goods and services. It’s estimated those commitments alone will support 10,000 jobs. Additionally, several banks have made loan commitments, and other businesses, such as law firms and accounting firms, are offering pro bono services to help businesses grow and thrive. Pure Michigan Business Connect now has about $8 billion in total commitments, and that amount continues to grow.
As Michigan businesses expand and other businesses locate in our state, we’re seeing a disconnect in the job market, despite the incredible talent and good jobs that exist in our state. Some workers still are finding it hard to obtain employment. Moreover, some job providers are finding it difficult to get qualified talent to fill job openings. While we are making strides to better connect talent and opportunity, we must do better.
Government can and should work with the private sector and educational institutions to bridge the divide. Serving as a facilitator to work with these important sectors of the economy will help us achieve what I call the “Three Cs.” Those include: collaborating with the private sector to identify where the good jobs are today and where they will be in the future; creating talent by working with educators to offer programs that produce graduates who will be ready with the relevant skills for those jobs; and connecting the available talent with the needs of job providers.
Our challenge is tough but not insurmountable. The government, business, and education sectors must work together to align the aptitudes and career passions of job seekers with the current and evolving needs of employers.
The solution is to reinvent the way students are prepared for successful careers, reshape how people look for work, and redesign the way employers obtain the skills they need. To this end, we have invested an additional $1 billion in our kindergarten-through-12th grade schools, but our approach to reinvention goes far beyond spending money. It includes developing accountability measures to help districts meet best practices and reforming teacher tenure to make sure the best educators are in our classrooms. Our state also has expanded educational options, including lifting a cap on charter schools and expanding dual enrollment opportunities so more students can earn college credits while still in high school.
We know it’s difficult for employees, especially those in low-wage jobs, to stay on the job when they get sick and don’t have healthcare coverage. With our partners in the legislature, we created the Healthy Michigan program, which will strengthen the state by bringing healthcare coverage to 470,000 people, most of them working and earning less than $15,000 a year. Reducing the $880 million annual cost of uncompensated care that hospitals now bear will mean lower insurance premiums for individuals and businesses, making Michigan more attractive for investment.
The Michigan resurgence must include the reinvention of Detroit. The problems in Detroit are not new. They have been apparent and growing for the past 60 years, and it’s time to fix them. The Motor City’s comeback has already started. This revitalization is being led by innovators who are creating jobs, expanding the city’s economy, and reviving downtown and midtown.
In the past five years, $10 billion has been invested in commercial, industrial, and residential properties in Detroit. Investments by corporations, such as Quicken Loans and Blue Cross Blue Shield of Michigan, have added nearly 12,000 jobs in downtown Detroit in recent years. The Brookings Institute ranks Detroit 9th on its list of the “best recoveries” after the Great Recession.
There’s much more ahead for Detroit: a new $950 million bridge to Canada; a light rail line downtown; and a new $650 million arena for the Detroit Red Wings. These projects will create thousands of jobs, stimulate long-term growth in the city, and show the world a new and improved Motor City.
Restructuring the city’s government will remove the last barrier to Detroit’s recovery. Right now, the city is being held back by poor services, including police, fire, sanitation, and streetlights. We’re working as quickly as possible to address those issues and improve the quality of life for the 700,000 people who live in Detroit and encourage growth in the future. Our goal is simple: make Detroit a safe and attractive place for people to live, work, invest, and do business. This work is vital to our state’s future because Michigan can’t return to greatness unless its largest city is financially sound and growing.
There are no quick fixes to Michigan’s problems, but our proud history tells us that Michiganders know how to roll up their sleeves and get to work. We’ve made tremendous progress. Michigan is indisputably the nation’s “Comeback State,” and we are not done. We are positive, working together, and looking forward with confidence that our best days still lie ahead of us, because they are. That’s the Michigan way.