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Troubling Times: The Declining Economic Status of Michigan Relative to the Rest of the United States, High School Graduates Relative to College Graduates and Men Relative to Women

August 2010

Sheldon H. Danziger and Reynolds Farley, University of Michigan

Download 'working_paper10-07.pdf'.


We are living in troubling economic times in the nation and in Michigan in particular. The Great Recession hit Michigan residents particularly hard. However, the erosion of Michigan’s economic status relative to that in the rest of the country began more than 30 years ago. The oil price shocks of the 1970s and the severe recession in the early 1980s provided early warning signs that it would be risky for Michigan to continue to place most of its economic bets on the high-paying manufacturing jobs that were its source of prosperity in the quarter century following World War II. While there have been some attempts to diversify and modernize Michigan’s economy over the last several decades, it seems that Michigan’s firms and workers were too slow to accept the changing economic reality. The recent bankruptcies of General Motors and Chrysler signal the end of Detroit’s industrial dominance and seem to have laid to rest visions of a return to the “good old days.”

We do not know if, in the coming decade, Michigan can reinvent its economy and regain some of its lost prosperity. We do know that unemployment rates and poverty rates will remain high for the foreseeable future.

The economic troubles we have documented have been less severe for those with at least a college degree and for those working in growing sectors, such as health care and business services. To the extent that there is a noncontroversial policy prescription that follows from the data we have reviewed, it is that the government and citizens of Michigan should be doing more to improve the education and skills of our work force. Among Michigan residents between the ages of 25 and 39, 29 percent have a college degree (25.7 percent of men and 31.4 percent of women). This is just below the national average of 30 percent, and well below that of a number of other industrialized states—Massachusetts, 46 percent, New Jersey and Connecticut and Maryland, 40 percent, Minnesota 38 percent, Illinois, 36 percent. A highly skilled workforce is necessary if Michigan is to move forward and regain the economic stature it had 40 years ago.

Education and Training Programs, Welfare Reform and the Administration of Welfare Programs