NCPA - National Center for Policy Analysis


November 18, 2004

Michigan's state-level "job creation" programs are not delivering the goods, according to recent numbers on the state's job and income growth from the Mackinac Center for Public Policy.

In 1995, previous governor John Engler focused on job growth, elevating the Michigan Jobs Commission to department-level status; from that commission the Michigan Economic Development Corporation (MEDC) was created in 1999.

Since then Michigan:

  • Ranked last among the 50 states and Washington, D.C., in employment growth based on the percentage of new jobs created, between December 1995 and December 2003.
  • Dropped from 23 to 30 out of the 50 states in gross state product per capita, between 1995 and 2001.
  • Ranked 49 out of the 50 states in per-capita income growth, between 1995 and 2003.
  • Lost 23 percent of all jobs in the United States between 2001 and 2003.

The goal of the MEDC was to retain jobs while creating new ones, through tax abatements, targeted incentives and job training, focusing particularly on depressed areas. In fact, the incentives used to create jobs cost Michigan taxpayers $290 million between 1999 and 2003, money that would have probably created more jobs if left in the hands of the people, says Mackinac.

Taxpayer money would be better spent on broad reforms, such as across-the-board tax cuts, regulatory and labor market reforms (such as ensuring that unions are voluntary and not compulsory), and school choice promotion, explains Mackinac.

Source: Michael D. LaFaive, "The Record of 'Economic Development' Policy in Michigan," Mackinac Center for Public Policy, September 6, 2004.

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