How is Michigan faring? It depends on who you ask

Two narratives of Michigan’s economy will vie for prominence at this week’s Mackinac Policy Conference.

An upbeat narrative portrays Michigan as the comeback state – a state with rapidly improving labor markets and with auto sales trending toward the stratosphere.

But a more downbeat narrative lurks in the shadows. It offers a portrait of a state that continues to slide down the ladder of success, losing ground to the Sun Belt, unable to fix its roads or even provide clean drinking water to its citizens.

Deciding which view to believe matters a lot. It will determine what course of action all those business and political leaders heading up to Mackinac Island this week decide to follow in the months and years ahead.

If Michigan’s economy has indeed recovered in all but a few areas, we need only tinker around the edges of economic policy. But if the state still faces substantial challenges, still struggles to overcome its legacy of Rust Belt decline, more radical prescriptions are called for.

We can cherry-pick data to support either view. Michigan’s unemployment rate has indeed plunged from above 14% during the Great Recession to 4.8% today – below the national rate. Auto sales have recovered completely since the recession and, in the loftiest forecasts, may soon exceed the sales barrier of 20 million vehicles.

In this more optimistic view, Michigan has largely recovered all the ground it lost in the early years of this century. The tragedies of Flint and Detroit Public Schools remain what Sandy Baruah, president and CEO of the Detroit Regional Chamber, calls the “glaring exceptions” – problems to face but not the rule.

But the downside threatens to swamp the view that things are mostly OK. Check the statistics: Michigan ranked ninth among the 50 states in 1999 for total output of goods and services. Today we rank 13th, having watched Georgia, Massachusetts, North Carolina and Virginia outgrow us in the size of their economies. Other states that we once ranked close to – Ohio and New Jersey – have accelerated away in terms of total output.

Then, too, Michigan’s per capita personal income ranked 17th among the states in 1999. Today it ranks 33rd, an after-effect of the Great Recession that devastated the state.

And Michigan, while adding hundreds of thousands of jobs in recent years, remains a few hundred thousand shy of our pre-recession peaks.

Pretty soon the glaring exceptions begin to add up and to seem more the norm. Roads? We still don’t have any meaningful plan to fix them. Poverty in our cities? The unemployment rate in Detroit is more than twice the national average. Preparing our youth for the workforce? Math and reading scores in some of our cities trail far below national averages.

As the state’s leaders assemble on Mackinac Island, even the more optimistic must admit that Michigan faces more than a few challenges. Our economy needs more than a little tinkering.

Fortunately, we have plenty of assets to draw on. Our universities are churning out smart, savvy graduates. Michigan’s legacy of wealth empowers our philanthropic foundations. Economic leaders have embraced the idea of entrepreneurship – relying more on nimble, fast-growing companies to provide the jobs of the future rather than aging old-economy behemoths.

All over Michigan, we see examples of smart thinking and forward movement – in the growth of Detroit’s greater downtown, in the hundreds of technology start-ups flourishing in Ann Arbor, in the growth of entrepreneurial hubs in Kalamazoo and Grand Rapids.

In our economy, as in our lives, we need to strike the right balance, guarding against both mindless cheerleading and destructive pessimism. Getting the balance right will present the biggest challenge at Mackinac this year.

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.