Grand Rapids Pundit

More Jobs NOT Coming to Michigan

Today Volkswagen announced that they will not be building a new car factory in Michigan. They opted to Tennessee instead. According to the article:

Chattanooga won the site because of incentives and tax breaks offered by Tennessee and better infrastructure, the person said. Alabama was a close second while Michigan had been out of the running for some time, according to the person. (Emphasis ours)

Does this surprise anyone? With Michigan’s newly-formed business tax mess, the strangling environment of unionization, and a dismally-performing public school system, no wonder jobs, people, and businesses are not choosing Michigan. When will Lansing wake up and tackle the real economic challenges in this state?

Just for fun, we compared state population growth in the United States with state tax burden levels. The top 20 states that had the highest population growth between 2000 and 2007 are below:

State            Percent  Rank
                 Growth

Nevada           28.41    1
Arizona          23.5     2
Utah             18.5     3
Georgia          16.6     4
Idaho            15.9     5
Texas            14.6     6
Florida          14.2     7
Colorado         13.0     8
North Carolina   12.6     9
Delaware         10.4     10
South Carolina   9.9      11
Washington       9.7      12
Oregon           9.5      13
Alaska           9.0      14
Virginia         8.9      15
New Mexico       8.3      16
Tennessee        8.2      17
California       7.9      18
New Hampshire    6.5      19
Montana          6.2      20

 
Below are the 20 states with the lowest tax burdens:

State           Tax Burden    Rank
Alaska          6.58%         1
New Hampshire   8.01%         2
Tennessee       8.49%         3
Delaware        8.75%         4
Alabama         8.83%         5
Oklahoma        9.00%         6
South Dakota    9.02%         7
Texas           9.30%         8
Wyoming         9.46%         9
Montana         9.74%         10
New Mexico      9.80%         11
North Dakota    9.90%         12
Florida         9.96%         13
Oregon          10.03%        14
Nevada          10.09%        15
Idaho           10.12%        16
Missouri        10.12%        17
Virginia        10.20%        18
Georgia         10.27%        19
Arizona         10.34%        20

 
Surprise! 14 of the 20 states with the lowest tax burdens are in the top 20 states for population (and job) growth. Conversely, the five states with the highest tax burdens are in the bottom 15 states for population growth.

For your information, Michigan is number 45 in population growth between 2000 and 2007 (1.3%), and has the 14th highest tax burden in the United States. That was calculated before last year’s gigantic tax hike, so I’m sure our state has climbed up the list since then.

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Posted by: GRPundit on Tuesday, 15th Jul, 2008

Make Michigan Attractive to Business Again

The stunning inability of Michigan’s politicians to talk about the 8,000 ton elephant in the room continues to amaze us here at GR Pundit. Michigan’s economy is suffering a “single-state” recession for one primary reason – the United Auto Workers union. Why? Michigan’s economy is/was so heavily dependent on the domestic auto industry that any disruption in that industry would surely affect the entire state. The United Auto Workers, along with the management of Ford, Chrysler, and General Motors, conspired over the decades to build extremely lavish and unsustainable benefits packages for unionized employees. However, there was a problem. Toyota. Japanese carmakers entered the market with superior products at lower prices. Suddenly, the domestic big three are completely unable to compete. Here’s the rub: they are being prevented from competing because they simply can’t reduce labor costs enough. The UAW is standing in the way of the necessary and painful reorganization that is required to bring the domestic auto industry into line with foreign car makers.

While the politicians in Lansing debate how best to tax businesses in Michigan, we notice the deafening silence on the issue that is truly the destroyer of Michigan’s economy – forced unionization. This past Saturday’s Wall Street Journal had an excellent editorial by Larry Reed of Midland’s Mackinac Center. He outlines the case for ending forced unionization. The concept is called “right-to-work,” which means that anyone is free to join a union or not. Today’s law in Michigan states that if you join a company with a union, you are forced to pay dues.

We only need to look south, within our own United States, to see the contrast between a heavily unionized state and a non-heavily unionized state. Alabama, which is seeing new car factories being built like crazy, is the exact opposite of Michigan. In fact, according to the editorial, “If current trends continue, Alabama will eclipse Michigan in per-capita income in just three years. With base pay and bonuses, and especially when the cost of living is factored in, nonunion workers in many auto plants in the south are better off than their union counterparts in Michigan.” That’s a powerful statement.

Michigan needs to pass right-to-work legislation immediately. Another interesting point, according to the editorial, is that, between 1970 and 2000, right-to-work states created 1.43 million manufacturing jobs, while non-right-to-work states lost 2.18 million jobs.

The politicians can tinker with taxes all they want, but nothing will substantially change until the real labor environment in Michigan changes. Car factories are being built in the south, while car factories and manufacturers are shuttering in Michigan.

Posted by: GRPundit on Tuesday, 19th Jun, 2007

Fork in the Road for Unions

The Detroit News had a good selection of articles yesterday on the crisis faced by unions in today’s America. The current Northwest Airlines strike is highlighting the fact that the ability of unions to flex muscle and take on “big business” is severely weakened. Northwest trained replacement mechanics for 18 months prior to last week’s strike. An article from today’s DetNews says that the strikers’ chances of forcing the airline into an agreement are slim.

Northwest says that 96% of flights were successfully completed on Tuesday, up from 91% on Saturday. The strike caused a momentary disruption, but things are back to normal. Looks like the strike was just a blip on the radar.

An important quote from the article:

In interviews this week, the replacement hires say they don’t regret their move, despite being derided as “scabs” and “scum” by the strikers, who yell at them from sidewalks above the tarmac.

The Northwest jobs are a chance for better pay and, for many laid off from other airlines, a chance to return to the industry.

That sums the situation up well. While the union members strike, people who are happy just to have a job are filling in. The poor state of the economy in Michigan makes it unwise to walk off the job.

Particularly interesting about the Detroit News’ web site is that a poll of online readers shows that 67% believe that union demands are out of line. Read the comments as well, they are mostly anti-union.

While unions had an important role to play in the past, they have outlived their usefulness and now just stand in the way of economic progress. The legacy air carriers and automakers, weighted down with the union mentality of the 1950s, are the big losers in today’s economy. As companies such as Northwest aggressively challenge unions, the unions will become less and less relevant.

Posted by: GRPundit on Wednesday, 24th Aug, 2005

Michigan’s Economy Ranks Dead Last

A recent report issued jointly by the National Governor’s Association and the National Conference of State Legislatures (hardly partisan hack groups) this month said that Michigan’s economy ranks dead last in the nation.

Some highlights are:

Personal income grew in Michigan by 3.29 percent between March 2003 and March 2004, placing Michigan second to last among the states. The national average was 5.15 percent.

Michigan was last among the states in employment growth between January 2004 and January 2005, showing a -0.3 percent decline, compared to a national average of 1.4 percent growth.

Michigan tied for 43rd in population growth between 2003 and 2004, registering 0.3 percent growth. The national average was 1 percent.

In the mean time, the governor and legislature continue to push useless “economic development” initiatives to give some businesses tax breaks (and tax increases to others). The Mackinac Center just released a report showing that the Michigan Economic Development Corporation has been completely ineffective over the last ten years at creating jobs.

Time to face reality and fix Michigan’s economy with real reforms: