Pew Center Is Wrong on Michigan, Right About Trend

A new report from the Pew Center on the States, Beyond California (pdf), erroneously suggests that Michigan's economic travails are due to the fall of the auto industry and the presence of what it characterizes as an "out of sync" tax system.

Certainly, the decline of the Big Three is important, but focusing on just this one sector leaves 84 percent of Michigan's job losses unaccounted for. And the auto industry just doesn't mean what it used to mean for the state. In 1963, the auto industry generated 24 percent of everything produced in this state. Today, it makes up just 6 percent.

On the tax front, in the current nationwide recession, Michigan's tax receipts have held up remarkably well compared to other states. Despite losing more jobs than any other state, plenty of other states have seen greater declines in tax revenue. According to the U.S. Census Bureau, Michigan tax revenues have declined 11 percent, while the average for all states is a 15 percent decline. Michigan revenues outperformed 31 other states, despite having the worst economy.

The Pew report does perform one service in identifying nine states whose fiscal problems border on the magnitude of those faced by California. Interestingly, with the exception of Arizona, all are states with strong public employee unionism laws.

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