Michigan’s Economy:Income Distribution and Human Services

Presented to Michigan League for Human Services

December 4, 2007

Charles L. BallardDepartment of EconomicsMichigan State University

East Lansing, MIballard@msu.edu

Michigan Incomes Really Have Grown Overall

Inflation-Adjusted Per-Capita Personal Income in Michigan, 1929-2006

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1929

1933

1937

1941

1945

1949

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

Year

Real P

er-C

ap

ita P

erso

nal In

co

me, in

2006 D

ollars

But Income Growth Has Been Slower in Michigan Than the U.S. Average

Per-Capita Personal Income: Michigan as Percent of U.S., 1950-2006

80

85

90

95

100

105

110

115

120

125

130

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

Year

Pe

rce

nt

Manufacturing’s Share of the Economy Has Shrunk Dramatically

Manufacturing as Percent of Gross Domestic Product, For Michigan and for the United States, 1963-2006

0

10

20

30

40

50

60

Year

Perc

en

t

Michigan

United States

Most of Michigan’s Manufacturing Losses Are in the Auto Industry

Motor Vehicles as Percent of Gross Domestic Product, For Michigan and for the United States, 1963-2005

0

5

10

15

20

25

30

Year

Perc

ent Michigan

United States

Michigan Lags In Educational Attainment

Percentage of Population Aged 25 and Over With A Bachelor's Degree, for Michigan and the

United States, 1977-2004

0

5

10

15

20

25

30

Year

Per

cen

t

UnitedStatesMichigan

From 1979 to 2000, the Earnings Gap in Michigan Widened Dramatically

• For college graduates, inflation-adjusted earnings ROSE by 29.4%

• For those with only a high-school diploma, earnings FELL by 8.5%

• For those with no high-school diploma, earnings FELL by 25.5%

Income Inequality Has SoaredShares of Total U.S. Income Received by Poorest Half and Richest Five Percent of

Households, 1981-2004

10

12

14

16

18

20

22

24

Year

Perc

en

t

PoorestHalfTop 5%

Michigan Has Big Regional Differences in Per-Capita Income (Data for 2005)

1. Oakland County $52,274 2. Washtenaw County $39,689 4. Leelanau County $36,502 6. Macomb County $34,761 8. Kent County $33,627 Michigan Average $32,80413. Wayne County $30,85530. Clinton County $30,68566. Tuscola County $22,93283. Luce County $19,115

Unemployment in Michigan Also Has Big Regional Differences (October, 2007)

• Ann Arbor 4.8%

• Lansing-East Lansing 5.4%

• Holland-Grand Haven 5.5%

• Grand Rapids-Wyoming 5.8%

• Saginaw 6.8%

Michigan Average 7.0%• Detroit-Warren-Livonia 7.8%

• Flint 8.1%

Tax Effort Has Reduced SubstantiallyState and Local Taxes as a Percent of Personal Income,

For Selected States, 1972-2005

5

7

9

11

13

15

17

19

Year

Pe

rce

nt

New York

Michigan

United States

Texas

Corrections Has Grown Relative to Other Functions of Michigan Government

Classified Employees in Selected Departments of Michigan Government, Fiscal Years, 1966-2006

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

Corrections

Social Services/FIA/HumanServices

Conclusion

The last 30 years have not been good ones for low- and middle-income families in Michigan.

There is plenty of reason to believe in a brighter future, but improvements will not come overnight, nor will they come without sustained effort.