The Secret of Economic Growth in Michigan

In a recent radio interview with Morey Fiscal Policy Initiative Director Michael LaFaive, radio host Tony Conley stated that we should be looking at what Texas and North Carolina are doing to foster economic development. Any benchmarking attempt should first start with the right states, but North Carolina isn't one of them.

Bad case selection is a pitfall of benchmarking. Selecting inappropriate measurements is another. Some things are easy to measure: a state's public economic development efforts — the incentive programs it offers, the ribbon-cuttings of big projects, the banter of newspaper columnists. But the reasons for growth are simultaneously more complex and simpler: The reason states grew was that there were more job openings than job losses. There are many reasons for growth and, in Michigan, more for loss.

North Carolina doesn't fit the bill for growth, though. According to a little-used data source from the Bureau of Labor Statistics, in the past decade, North Carolina has had more job loss than job growth, averaging 6.9 percent growth and 7.0 percent job loss each quarter, leading to a net loss of 100,000 jobs.

Texas is a different story. It both gained and lost fewer jobs, but it gained more than it lost. It averaged 6.6 percent growth and 6.4 percent loss, leading to a gain of 626,776 jobs during the same timeframe.

Michigan, of course, did worse than both, but there are job gains in Michigan despite months of reporting net job losses. Michigan added 6.7 percent of its jobs per quarter and lost 7.3 percent. The state lost 812,468 jobs on net.

There are many reasons to add jobs in any state — as economist Friedrich Hayek theorized, all economic problems are those of time and place — and there are opportunities to better use times and places in a state of 10 million people. Perhaps Michigan's tax rates would better used by letting those adding jobs keep more of their money by taxing them less, as they do in Texas.

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