"Slashing" Economic Development Staff? Please Sir, Can We Have Some More?

Last Saturday, The Detroit News ran an article titled "Michigan's Shrinking Government" examining various measures of state spending and employment. The piece had several problems, but one sentence stood out: "The economic development staff has been slashed."

The Michigan Economic Development Corp. — the lead agency in a statewide "economic development" empire — is arguably the most ineffective, least necessary department arm of state government. Shrinkage of the agency's staff is good news; staff levels reaching zero would be much better.

According to the House Fiscal Agency, employment at the MEDC has drifted down from 262 in fiscal 2000 to 230 in 2009, a 12.2 percent drop. This had nothing to do with Michigan government "shrinking," however: In 2006, 34 MEDC employees were transferred to the Michigan State Housing Development Authority. Michigan's political class was taking care of its own, protecting government jobs at an agency then under political fire by shifting staff to another department, and shifting funding sources to ones that rely more on federal money.

Then MEDC CEO James Epolito criticized the political winds driving the transfer, saying, "A year from now, our success in transforming Michigan's economy and generating jobs for Michigan workers will make any legislator think twice about reducing that 'job creation services' line item in the state budget." Michigan's economic central planners have never been known for having clear crystal balls.

Since the MEDC was created in 1999 with the mission of expanding Michigan's economy, our economic output ranking compared to other states has plummeted from 16th to 41st place. Personal incomes have likewise dropped from 16th to 37th place, while the unemployment rate rose to 15.3 percent. Michigan has had the highest unemployment rate for 43 months.

If that history is not sufficiently convincing of this department's worthlessness, two separate statistical analyses of the actual performance of its flagship program, the Michigan Economic Growth Authority, should put the issue to bed. In 2005 and again in 2009, Mackinac Center scholars demonstrated that MEGA has at best had no impact on job creation in the state. There is no systematic, independent evidence that anything else the MEDC does is any more effective at "creating jobs" rather than press releases.

If shrinking the MEDC is an example of the "horrors" to come from a smaller Michigan budget and state government, bring it on.

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