A study released Tuesday showed that Michigan, while making major economic gains since the pandemic – particularly replacing the millions of jobs lost – still has some work to do convincing people the state is a solid place for business.
The study, commissioned by the Detroit Economic Club and revealed at its annual Michigan Economic Outlook meeting, showed that, while respondents’ confidence in Michigan as a good place for business isn’t as high as officials would like, it is improving.
For instance, 38% of respondents held an “extremely” or “somewhat” negative opinion of Michigan’s 2023 ecomomy, only 30% have that same feeling going into 2024. Conversely, 36% were somewhat or extremely positive about the 2023 economy, but that number jumps to 48% for 2024. The survey of 1,000 business people was taken from Nov. 14 to Dec. 15.
A roundtable panel assembled during the DEC meeting in the Sound Board at MotorCity Casino Hotel offered reasons why the numbers say what they say and suggestions on how to improve them. The panel consisted of:
- Gabriel Ehrlich, Director of Research Seminar in Quantitative Economics at the University of Michigan;
- Quentin Messer, CEO of the Michigan Economic Development Corp.; and
- Hilary Doe, Michigan’s first-ever chief growth officer with the MEDC.
The panel was moderated by Daniel Howes, a financial columnist for The Detroit News.
While discussing the survey results, Erlich said Michigan could find some comfort – and improvement – in its employment numbers and national economic data.
One thing that we use as a point of comparison is still where were we right before the pandemic? And depending on how you measure, there are different ways of measuring employment.
In terms of jobs, he said, Michigan has either “just recovered about six months ago or is just about to recover” all of the jobs that lost at the start of the pandemic. And, he pointed out, the U.S. economy is “well above where it was before the pandemic” in terms of employment.
“You’ve got to keep in mind, Michigan lost a lot more jobs at the start of the pandemic and, historically, when the national economy catches a cold, Michigan gets the flu,” Erlich said. “And it’s been really nice to see Michigan’s economy has shown a lot more resilience than in some business cycles in the past and some downturns.
“Obviously when you talk to people about the economy, the questions you get right now are about inflation,” he added. “If you look at the data, the incoming data inflation is slowing down. We are not going to see prices go back to where they were before the pandemic and before we had the recent bout of inflation, but we can see … the prices get back to where the Federal Reserve wants it to be, which is about 2% per year. Depending how you measure the most recent data, we’re really just around there already. That should give the Fed room to start cutting rates and that will provide relief to some of Michigan’s cyclical industries.”
One reason Michigan may not have the warmest business reputation in the country might be that the state is losing people. Howes pointed out a recent report showed Michigan is 49th out of 50 states in terms of population growth.
Doe pointed out Michigan is typically an “out-migration” state, losing more people than it’s gaining domestically. Some comparative analysis has been done relative to faster growing states, she said, to “identify where we need to improve our metrics to undergird our growth.” That pertains particularly, she said, to where the state can be more supportive of attracting and retaining young talent.
“And what we’ve been hearing … is that it’s not a single thing anymore,” Doe said. “It’s not just jobs. You need great opportunities, great places, and welcoming communities. In particular when we looked at Michigan and compared to faster growing states, those faster growing states had three things in common. They had higher median incomes and faster growing median incomes. They had higher VA attainment and they had walkable transit rich places that were driving their growth.
“So when we think about our long-term growth and our long-term policy recommendations, we’re paying particular attention to how to boost those metrics,” she added.
U-M’s Ehrlich said the state can’t just look domestically any more in terms of attracting talent to Michigan.
“I would love to see us do better in terms of domestic migration and not lose as many people to other states,” he said, “but the reality is for the foreseeable future, we really are going to be looking to international immigration if we want to grow the way that state leaders say they want to grow.”
The general assessment contained in the study showed a lack of confidence in Michigan as a business-friendly state. Messer wouldn’t discount those opinions – “I’m never going to disagree with people’s sentiment, I think we have to honor that,” he said – but he did express confidence in Michigan’s ability to sell itself as a place where businesses will come.
“We have to do a better job of indicating to business owners, companies large and small, what we’re doing in the policy realm to make sure Michigan as a state is open and welcoming for business,” said Messer, who has been CEO of the MEDC since July 2021. “That’s why you’re going to hear us talk more about the full dimensions of the Make It in Michigan economic development framework. You’ve got to develop and attract people … while supporting small business, making sure you streamline permitting, you eliminate regulation, you make it easy for businesses to say yes (to coming here) and I’m confident that, as we continue to do that, we will have upward trajectories.”
