Fact-Checking and Adding Context to the Governor’s Economic Diversity Speech

In a speech on diversifying the state economy at the Mackinac Policy Conference today, Gov. Jennifer Granholm stated that diversification efforts through the Michigan Economic Development Corp. have brought 919 "companies or expansions" to Michigan. She also stated that health care is the state's largest industry. One claim is without context and the other is incorrect.

While 919 business projects may seem impressive, these influence a very small part of the total job creation in the state. According to the U.S. Census Bureau, from March 2005 to March 2006, Michigan's economy added almost 22,000 new businesses. These companies brought 181,000 jobs to the state. Over 55,000 businesses expanded as well, adding 368,000 jobs.

Unfortunately, over the same period, the state also lost 21,000 businesses which caused 168,815 job losses. There were also 59,000 businesses that contracted, shedding 346,000 jobs.

The 919 MEDC projects over the eight years of the governor's tenure represents only a fraction one year's worth of business creation.

Also, she stated that health care had overcome manufacturing as Michigan's largest sector. Actually, according to the Bureau of Labor Statistics, government is Michigan's largest industry and has been since the end of 2005. There are currently 635,300 jobs at all government institutions in Michigan — correctional facilities, state universities, local school districts and the rest. There are only 455,400 manufacturing jobs in Michigan, and 520,400 private-sector education and health jobs.

There are better ways to improve the state economy. Regardless of the policy responses, however, reforms need to be grounded in proper observations of the state's economy.

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