Seeking Opportunity

Michigan residents are fleeing the Great Lake State. A staggering 65 percent of United Van Lines’ 2006 client moves involving Michigan are outbound — the highest of any state in the union — eclipsing North Dakota, which was number one in 2005.

Since 1977, United Van Lines has published an annual survey of its client moves throughout the 48 contiguous states and Washington, D.C. Last January, Mackinac Center Adjunct Scholar Michael Hicks performed a statistical analysis of United Van Lines and U.S. Census data and found the two to be highly correlated. In other words, United Van Lines moves are an accurate representation of population changes as a whole.

There is probably no single metric for measuring quality-of-life issues better than migration patterns. This has profound implications for Michigan because our people are leaving and, according to United Van Lines, doing so at an increasing percentage rate. In 2003, 2004 and 2005, Michigan’s outbound rate increased by about 0.4 percentage points, 2.8 percentage points and 3.0 percentage points respectively.

In the first six months of 2006, Michigan’s outbound rate is up 1.1 percentage points. At this pace, Michigan is nearing its record of 66.9 percent in 1981, a year when the state suffered double-digit unemployment.

According to United Van Lines, states with leading in-migration are in the West and South: Oregon, North Carolina, Nevada and South Carolina round out the top four. United Van Lines data is something of a leading economic opportunity indicator, effectively highlighting the attractiveness of other states over Michigan.

There are many reasons people move, but it is probably easiest to sum all of them up with one word: opportunity.

Unfortunately, the official response to the Michigan Malaise is more government interference in the private economy and increased spending in areas like higher education. This spending, we are told, will create more knowledgeable workers who will stay in Michigan and solve our problems.

But proponents offer very little in the way of hard evidence to substantiate this claim. Research by economist Richard K. Vedder, on the other hand, shows that even when a state "invests" more in post-secondary education, the result is the same — a relative decline in economic opportunity.

In his book "Going Broke by Degree: Why College Costs Too Much," Vedder details his research findings on higher education spending. Vedder employed statistical modeling techniques to look for a relationship between spending on higher education and the economic growth of a state. He found such a relationship, and it was negative — that is, the more a state spent on universities, the lower the state’s rate of economic growth.

Vedder backed his empirical findings with case studies specific to Michigan. Writing for the Mackinac Center in late 2004, he said: "The statistical results are confirmed by case studies. For example, compare Michigan with the two other largest Midwestern industrial states, Illinois and Ohio. Of the three states in fiscal 1980, Michigan spent the largest proportion of its personal income on state universities (one-third more than Illinois, for example). Over the next two decades, Michigan dramatically increased its already above-average commitment to universities, so that it had the sixth-highest proportion in the nation by 2000."

Of these states, Illinois had the smallest subsidies and the highest growth in per-capita income from the late 1970s until 2002. Michigan was the exact opposite, with high spending and lower growth. Moreover, low subsidies did not deter Illinois residents from pursuing post-secondary education. In 2000, the ratio of college students was higher in the Land of Lincoln than in either Ohio or Michigan, according to Vedder.

So if higher spending on state universities isn’t the answer, what exactly should government do to help stem the flow of its citizens to other states?

The answer is to make Michigan an opportunity state by getting government out of the way. That includes bold strokes like eliminating the Single Business Tax with dollar-for-dollar cuts to the state’s $40 billion budget, passing right-to-work legislation and reversing costly mandates.

In the 1980s, people frequently joked about how the last person leaving Michigan should remember to turn out the lights. If present trends continue, that will be no joke.

Michael D. LaFaive is director of fiscal policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.