2018 economic competitiveness benchmarking report · of michigan’s economic competitiveness...

2018 Economic Competitiveness Benchmarking ReportData to Support a Stronger Michigan

About Business Leaders for MichiganBusiness Leaders for Michigan, the state’s business roundtable, is dedicated to making Michigan a “Top Ten” state for jobs, personalincome and a healthy economy. The organization is composed exclusively of the chairpersons, chief executive officers, or most seniorexecutives of Michigan’s largest companies and universities. Our members drive nearly one-third of the state’s economy, provide390,000 direct jobs in Michigan, generate over $1 trillion in annual revenue and serve nearly half of all Michigan public universitystudents. Find out more at www.businessleadersformichigan.com.

Copyright © 2018 Business Leaders for Michigan. All Rights Reserved.

1 Introduction

2 Methodology

4 Key Findings

9 Output Metrics

20 Input Metrics

76 Michigan’s Regional Performance

84 Business Leaders for Michigan Board of Directors

Business Leaders for Michigan I 2018 Econom

ic Competitiveness Benchm

arking Report

1

Introduction

Business Leaders for Michigan is pleased to provide you with this year’s fact-based assessment

of Michigan’s economic competitiveness relative to other states. We compare Michigan’s

performance on key output (e.g., employment, personal income) and input (e.g., taxes,

education) metrics annually to that of “traditional,” “new economy,” and “Top Ten” benchmark

states. These metrics provide multiple reference points for evaluating Michigan’s performance.

The conclusions included in this report are used by Business Leaders for Michigan and

policymakers alike to help develop strategies for making Michigan a “Top Ten” state for jobs,

personal income, and a healthy economy.

If Michigan were performing like a “Top Ten” state today, there would be:

36,000more Michigan people working

$10,000more income per person

$12,500more GDP per person

Research for the 2018 Economic Competitiveness Benchmarking Report was

conducted by Anderson Economic Group, a research and consulting firm with

expertise in economics, public policy, finance, and industry analysis.

Methodology

UNEMPLOYMENT RATE

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344.63%

3.88%

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How To Read This Report

In this report, we use a series of common measuresto determine the economic strength of states andregions. The measures are divided into twocategories: outputs and inputs.

•Output indicators like jobs, income,population and GDP show us the impact of policydecisions. They are the end result of ongoingeconomic development and policy changes.

• Input indicators measure the factorsbusinesses look at when deciding where to locate.

In this report, Michigan’s input metrics are dividedinto two categories: cost indicators and valueindicators. When deciding whether to locate orexpand in a region, job providers evaluate the costs(e.g., taxes, fees, utilities) of doing business in aregion relative to the value (e.g., talent,infrastructure) it provides. Ultimately, areas that offermore value for equal or lower cost encouragebusiness growth and attraction, which leads to morejobs, higher incomes and a stronger economy.

Factors like the cost of doing business, theincentives available, the pool of talent, and thenecessary infrastructure to support companyoperations are considered. When these indicatorsare positive, they greatly influence site selectiondecisions and, ultimately, lead to stronger outputs.

The correlation between inputs and outputs isimportant to keep in mind when reading thisreport. Ultimately, the inputs are the factors overwhich state leaders have the greatest amount ofcontrol. This year’s benchmarking results can offercontinuing direction as we collectively evaluatethe next crucial decisions for our economy.

With all this in mind, readers of this benchmarkingreport can see at a glance what progress has beenmade, where Michigan ranks relative to the rest ofthe U.S., and which direction we’re moving. Thekey below shows you how.

Michigan’srank amongthe 50 states, with #1 being topperformance and#50 being worstperformance inthe category.

Michigan’s level ofperformance for themost recent year

One-year trend

Average performanceof the “Top Ten” states

Positive Negative Holding

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3

STATE

MassachusettsNorth DakotaCaliforniaNew YorkWashingtonTexasPennsylvaniaMinnesotaNebraskaNew Hampshire

OVERALLRANK

123456789

10

4182

22137

17235

21

3114303212365

712179

2014153

23

211649

251614207

12639

1316121417

1018

121574

202

13

154714

1325

213741

EMPLOYMENTGROWTH

RANK

EMPLOYMENTLEVELRANK

PER CAPITAINCOME

GROWTH RANK

PER CAPITAINCOME

LEVEL RANK

PER CAPITAGDP LEVEL

RANK

PER CAPITAGDP GROWTH

RANK

POPULATION LEVELRANK

POPULATIONGROWTH

RANK

255

163782

41232240

“Top Ten” States

WA

OR

NV

UT

AZNM

CO

ID

MT

KS

OK

MN

MO

AR

LA

ILIN

OH

KY

TN

MS AL GA

FL

SC

NC

VAWV

ME

NH

NJ

DE

MDDC

CTRI

MAWI

MI

HI

VT

Traditional Benchmarks

New Economy Benchmarks

Peer States

WA

OR

NV

UT

AZNM

WY

ID

MT ND

SD

NE

KS

OK

MN

IA

MO

AR

LA

KY

MS

FL

SC

WV

PA

NY

ME

NH

NJ

DE

MDDC

CTRI

MAWI

MI

AK

IA

HI

VT

ND

TX

AK

NY

CA COIL

OH

TN

AL GA

NC

TX

IN

VA

WY

PA

CA

SD

NE

Methodology, continued

Michigan’s performance on economic output and inputmetrics is compared to selected traditional and neweconomy peers and the “Top Ten” states.

Peer States were selected based on traditionaland new economy benchmarks.

Traditional Benchmarks• Alabama • Indiana• Georgia • Ohio• Illinois • Tennessee

New Economy Benchmarks• California • North Carolina• Colorado • Texas• Massachusetts • Virginia

“Top Ten” States were selected based on their averagerankings on key job, economic, personal income, andpopulation indicators (2008–2017). See chart below.

• California• Massachusetts• Minnesota• Nebraska• New Hampshire

“Top Ten” States for Job and Economic Growth (2008–2017)

Over the last ten years, these states averaged the highest ranking across four basic indicators of jobs,income, GDP, and population. In the report, “Top Ten” refers to this group of states and Michigan'sperformance relative to their average performance. The table below looks at a weighted average rank forboth level and ten-year growth for these four categories.



arking Report

Employment is measured per capita to control for state size.

• New York• North Dakota• Pennsylvania• Texas• Washington

Key Findings

Michigan’s economic growth continued to outpacemost other states during 2017. Our growth hasbegun slowing, however, and our absolute resultsagainst most economic measures remainedaverage or below. It is more important than everfor Michigan to be aggressive with fresh, boldstrategies that help us outperform the competitionand become a “Top Ten” leader.

Where our economy is concerned, complacencyremains the enemy.

Output Indicators

Despite reaching a 10-year low, Michigan’s annualunemployment rate still lags the average of peersand “Top Ten” states. Private sector employmenthas exceeded the average growth in “Top Ten”states for three out of the last four years, butMichigan's labor force participation rate, whileimproved over the last year, remains below the “TopTen” and peer state averages.

Michigan’s per capita personal income levelscontinue to grow, but remain well below peers and“Top Ten” states. Michigan per capita incomegrowth has outpaced the average of “Top Ten”states in recent years, but Michigan's 2017 percapita personal income level remained more than$4,000 less than the peer state average and over$10,000 less than “Top Ten” states.

Michigan’s per capita GDP levels, while stillgrowing, remain well behind those of peer and “TopTen” states. Michigan per capita GDP growth hasgenerally outpaced both the peer and “Top Ten”averages in recent years. However, the average percapita GDP of peer states in 2017 was over $5,000

higher than Michigan’s, while “Top Ten” per capitaGDP was more than $12,500 higher.

Michigan’s population has stabilized, but peersand the “Top Ten” are growing faster. After losingpopulation in 2009, 2010 and 2011, Michigan hashad six straight years of positive growth. Duringthat same period, however, peer and “Top Ten”average population growth has been as much as10 times higher than Michigan’s.

Input indicators — Cost

Michigan continued to do well during 2017 whenit comes to affordability for employers seeking tolocate or expand. As competing states and nationscontinue to become more affordable, however,Michigan must work to hone and retain itscompetitive edge where costs are concerned.

Input indicators — Value

The state’s value inputs improved somewhatduring 2017, but its talent and infrastructure gapscontinue to pose significant long-term challenges.The state’s talent pipeline continues to be injeopardy as educational results lag most otherstates, and it’s possible— even likely—thatMichigan could face a critical shortage of skilledworkers in the years ahead.

Michigan’s relatively weak infrastructure alsoremains a concern. While the state does havemany competitive strengths—including a wealthof new and emerging technologies, intellectualproperty, and strong exports—Michigan’s valueproposition must increase to impact site selectiondecisions over the long term.

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4

Michigan—Competitive on CostsMichigan‘s average ranking on cost factorscompares favorably with “Top Ten” and peer states,and is stronger than both where tax andgovernment measures are concerned.

The perception of Michigan's overall businessclimate has been holding steady, but requiresimprovement. Michigan’s business climate wasconsidered the worst of all 50 states in 2009. In2017, Michigan’s average ranking among the majorbusiness climate indices was 24—the same asduring the prior year.

Michigan’s tax climate is among the best in thenation. Michigan’s corporate tax climate continuesto be ranked among the 10 best in the U.S., and theoverall business tax climate is ranked 12th.

State and local government in Michigan isgenerally smaller and more affordable. State andlocal government taxes increased slightly during2015, but remain lower than the “Top Ten” averageand on par with the peer state average. Michiganhas fewer government employees per capita andlower government payroll spending than nearly all“Top Ten” and peer states.

However, unfunded OPEB liabilities remain aproblem. Michigan's unfunded other post-employment benefit (OPEB) liabilities are nearly 16percent higher than peers and more than 24percent higher than the “Top Ten.”

Michigan—Lagging on ValueMichigan’s average ranking is well behind boththe “Top Ten” and peer states on factors measuringtalent, infrastructure, and place.

Michigan must continue to focus on workforcedevelopment. In 2017, Michigan ranked in thebottom 10 of all states with respect to career andcollege readiness, the number of students enrolledin career and technical education classes, and thenumber of out-of-state students enrolled at ourcolleges and universities. Michigan also ranked inthe bottom half of states for the percentage of 4thand 8th graders testing proficient in reading andmath, respectively, the number of critical skillsdegrees and certificates awarded by our collegesand universities, and the percentage of working agepopulation with an associate's degree or higher.

Several aspects of Michigan’s infrastructure rankednear the bottom of all states. Michigan ranked30th for the percentage of households with high-speed internet. We ranked 39th for the percentageof bridges and urban roads in poor condition.

Innovation shows strength as well as areas forimprovement. Michigan ranked among the topstates for the value of goods exported (6th) andresearch and development investment byuniversities (6th). On the other hand, we rank only30th for the share of population 25-34 with abachelor’s degree or higher.

5



arking Report

In 2017, Michigan was improving or holding steady in 37 (nearly 70 percent) of the 54 indicators used tomeasure the cost of locating here and the value provided. However, Michigan's overall ranking remained inthe bottom half of states on nearly 60 percent of the measures.

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Average Rankings on Cost Measures, 2018

50

45

40

35

30

25

20

15

10

5

0

All

Business Climate

TaxesLabor

Energy

Government

Aver

age

Rank

Michigan “Top Ten” Peers

Average Rankings on Value Measures, 2018

50

45

40

35

30

25

20

15

10

5

0

All

Talent

Infrastru

cture

Innovatio

n

Economic Dev.

Key Assets

Place

Aver

age

Rank

Michigan “Top Ten” Peers

Where Michigan Stands Today

Michigan’s fiscal environmentremains stronger thancompetitor states; however, itslabor and business climateperception indices still lag.

Michigan’s value propositionstill trails that of other states;however, there are promisingareas of growth in keyinvestment sectors(engineering, geographic trade,higher education, life sciences,automotive, and naturalresources).

7



arking Report

Absolute Rankings: Cost and Value Indicators 2017

Trends: Cost and Value Indicators 2017

Michigan's Growth Trends vs. Absolute Rankings

Michigan continues toexperience improvement in keyinput areas; however, moreareas of instability arebeginning to appear. The shareof declining cost and valueindicators increased in 2017,while the number of improvingcost indicators fell.

Michigan is mostly aboveaverage on cost metrics, butbelow average on valueindicators.

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2009Trend1

1

Top 102

2017 2009 2017

Taxes

Labor

Energy

Government

Talent

Infrastructure

Innovation

Key Assets

Place

OU

TPU

TIN

PUT

- Co

stIN

PUT

- Va

lue

Compete

Invest

Grow

Jobs, Income & the Economy

Trend ComparisonsAs measured by key outputs,Michigan’s economy continuesto experience “Top Ten” growth,but that growth is beginning toslow. Michigan must safeguardits improvement where costinputs are concerned, and makemuch more progress on keyvalue inputs.



arking Report

9

Output Metrics

Economic output metrics help show how well Michigan’s economy isperforming. They reflect the impact of key policies, investments, andleadership at all levels. By tracking major output indicators—employment, income, GDP, and population—over time, analysts cangauge the state’s progress toward prosperity.

Michigan continued to enjoy relatively solid growth in jobs, personalincome and productivity during the past year. However, the state’s growthhas begun to show signs of slowing, and the absolute levels of mosteconomic measures remained average or below. Michigan can’t afford tobecome complacent as competitor states and nations continue to drivedown costs and add value.

output

25thinPer Capita Personal

Income Growth

34thin Unemployment

Rate

30thin Per Capita

Personal Income

20thin Employment

Growth

in

32ndin Per Capita

GDP

7thPer Capita

GDP Growth

What it is:Average share of labor force that is lookingfor work but does not have a job.

Why it matters:A lower unemployment rate indicates thatmore residents are able to findemployment.

Michigan’s annualunemployment rate hasdropped by nine points since2009, from 13.6 percent to4.6 percent, and is now only0.7 percentage points higherthan the “Top Ten” averageand 0.4 percentage pointshigher than peer states.

Unemployment Rate Standings

Unemployment Rate

Bureau of Labor Statistics (Local Area Unemployment Statistics)

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10

UNEMPLOYMENT RATE

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344.63%

3.88%

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end

Top

10

Avg

.

Unemployment Rate Trends

11

output

Employment Growth Trends

What it is:Year-over-year change in the number ofresidents with a private-sector job.

Why it matters:Higher levels of private employmentindicate both economic strength andprosperity among the state’s residents.

Michigan ranked 20th in

private sector employment

growth from 2016 to 2017,

down from the 15th fastest

growth rate the prior period.

Michigan’s private sector

employment growth

matched the “Top Ten”

average, but trailed the peer

state average.

Employment Growth Standings

Bureau of Labor Statistics (Quarterly Census of Employment and Wages)

EMPLOYMENT GROWTH

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201.35%

1.29%

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Employment Growth



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Labor Force Participation

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Labor Force Participation Trends

What it is:The share of the population age 16 andolder, not including residents who are onactive duty or institutionalized, that isemployed or looking for work.

Why it matters:Members of the working-age populationcan stop looking for work and drop out ofthe labor force for many reasons, includingdisability, old age, or discouragement.Higher labor force participation is a sign ofa healthier economy and workforce.

Labor force participationincreased in Michigan from2016 to 2017, marking thesecond straight year ofincreased participation. Thelabor force participation ratein Michigan is 4.2 percentagepoints less than the “Top Ten”average and 1.7 percentagepoints less than the peer stateaverage. Michigan’s laborforce participation rate in2017 was lower than that ofall peer states except forAlabama and Tennessee.

Labor Force Participation Standings


LABOR FORCE PARTICIPATION

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3761.48%

65.71%

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th

What it is:The share of the population age 16 andolder, not including residents who are onactive duty or institutionalized, that isemployed or looking for work.

Why it matters:Members of the working-age populationcan stop looking for work and drop out ofthe labor force for many reasons, includingdisability, old age, or discouragement.Higher labor force participation is a signof a healthier economy and workforce.

The Michigan labor force

grew by 0.9 percent from

2016 to 2017, and now

stands at nearly 4.9 million

participants. This growth

rate exceeded the “Top Ten”

average of 0.7 percent but

trailed the peer state

average of 1.2 percent.

Labor Force Growth Standings

Labor Force Growth

Bureau of Economic Analysis (Personal Income Summary),Bureau of Labor Statistics (CPI Inflation Calculator)

13

output

LABOR FORCE GROWTH

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210.85%

0.71%

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Labor Force Growth Trends



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Per Capita Personal Income

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PER CAPITA PERSONAL INCOME GROWTH

RANK

Level 0.47%

0.35%

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Trend

Top

10 A

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Per Capita Personal Income Trends

What it is:Personal income (2017 dollars) divided bypopulation. Personal income includessalaries, wages, and bonuses fromemployment; dividends and interest frominvestments; rental income; pensions, etc.

Why it matters:Income is an indicator of prosperity andaverage standard of living in a state.

Michigan’s per capita incomegrew by 0.5 percent from2016 to 2017, exceeding the“Top Ten” growth rate of 0.3percent. Per capita incomegrowth in Michigan laggedbehind the peer state averageof 0.7 percent.

Per Capita Personal Income Standings

Bureau of Economic Analysis (Personal Income Table SA5),Bureau of Labor Statistics (CPI Inflation Calculator)

PER CAPITA PERSONAL INCOME

RANKLe

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30$45,255

$55,613

thTr

end

Top

10

Avg

.

What it is:Total amount of goods and servicesproduced by private industries in thestate, adjusted for inflation and changesin relative prices, divided by population.

Why it matters:Higher private sector GDP per capita isone of the primary measures of a region’seconomic strength.

Michigan’s per capita GDPgrowth of 2.4 percentbetween 2016 and 2017ranked seventh in the nation.Per capita GDP growth washigher than the “Top Ten”average of 1.7 percent, andhigher than all peer statesother than California,Colorado, and Massachusetts.

Per Capita GDP Standings

Per Capita GDP

Bureau of Economic Analysis (Real GDP in 2009 Chained Dollars)

15

output

Per Capita GDP TrendsPER CAPITA GDP

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32$39,725

$52,301

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PER CAPITA GDP GROWTH

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72.36%

1.69%

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What it is:Total amount of goods and servicesproduced in the state, as a share of allgoods and services produced in theUnited States.

Why it matters:A high share of United States GDP meansthat much of the country's production isoccurring in that state, and can result inhigher incomes for state workers.

Michigan’s share of U.S. GDP

has remained flat since

2011, at approximately 2.7

percent.

Michigan GDP/U.S. GDP Standings

Michigan GDP/U.S. GDP

Bureau of Economic Analysis (Real GDP in 2009 Chained Dollars)

Michigan GDP/U.S. GDP TrendsMICHIGAN GDP/U.S. GDP

RANKLe

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122.68%

4.41%

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end

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10

Avg

.

Population

POPULATION GROWTH

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340.29%

0.67%

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Avg

.

Population Trends

What it is:Total number of residents.

Why it matters:Growth in population is an indicator forhow well a state attracts and retainsresidents. It also affects a state’s ability tosupport shared responsibilities such asmaintaining infrastructure and providingeducation.

Michigan’s population

increased slightly from 2016

to 2017, but population

growth was slower than all

of its peers except Illinois

and Ohio. Michigan remained

the 10th most populated

state in 2017, but its

population level is about

2.5 million fewer than the

“Top Ten” average.

Population Standings

U.S. Census Bureau (Population Estimates)

POPULATION

RANKLevel

10 9.96 M

12.40 M

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17

output



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19

output

Output Conclusions

Michigan needs to remain focused, energized and disciplinedwhen it comes to achieving lasting economic results.

The state’s output indicators continue to remain relativelystable, but they have softened relative to past years. It is moreimportant than ever for Michigan to pursue dynamic, proventactics that help us become a “Top Ten” economic force forgrowth.

Why is it important to be “Top Ten?”

“Top Ten” states benefit from more jobs, higher incomes,and healthier economies. If Michigan were performing like a“Top Ten” state today, there would be:

36,000 more Michigan people working

$10,000 more income per person

$12,500 more GDP per person

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Input Metrics

Employers generally use common indicators when deciding where to createnew jobs:

• Cost indicators like taxes, fees, and energy prices allow site selectors todetermine the costs associated with locating in a particular region.

• Value indicators such as talent and infrastructure help site selectorsknow the value a region can offer for the business costs to be paid.

Locations that offer more value for equal or lower costs are more attractiveto businesses.

States that are not competitive on costs are not seriously considered by siteselectors. When cost indicators are favorable, however, it is value indicatorsthat are capable of helping keep a location competitive. When comparingtwo or more regions with similar cost structures, the region with betterinfrastructure, talent and innovation capabilities will often win.

Ultimately, business site selection decisions have a major impact on jobcreation, income levels, and economic productivity. That is why Michiganmust monitor its own cost/value input indicators to ensure the bestpossible balance for businessattraction, retention andexpansion. Cost Value

Corporate Tax Climate

21

input

cost

Corporate Tax Climate Trends

What it is:Index that compares corporate tax burdensbased on corporate income tax and grossreceipts tax (10 = most favorable, 0 = leastfavorable).

Why it matters:A lower corporate tax burden can improvea state’s attractiveness to both new andexisting businesses.

In 2018, Michigan’s

corporate tax climate was

more business-friendly than

all of the “Top Ten” states,

except New York. Michigan

was ranked the third most

favorable among its peer

states, behind North Carolina

and Virginia.

Corporate Tax Climate Standings

The Tax Foundation (State Business Tax Climate Index)

CORPORATE TAX CLIMATE

RANKLe

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85.76

4.59

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.



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COMPETE INVEST GROW

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COMPETE INVEST GROW

What it is:Rankings are based on the overall taxindex and component tax indices(corporate tax, individual income tax,sales tax, unemployment insurance tax,and property tax) (10=most favorable, 0=least favorable).

Why it matters:These measures indicate how attractive astate might be to both businesses andindividuals in terms of common taxburdens.

Michigan had the 12th best

overall business tax climate

in 2018. Michigan’s tax

climate is better than the

average of both the “Top

Ten” and peer states.

Note: Data for corporate and overall business tax climaterankings use different indices.

Overall Business Tax Climate Standings

Overall Business Tax Climate

The Tax Foundation (State Business Tax Climate Index)

OVERALL BUSINESS TAX CLIMATE

RANKLe

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125.64

4.91

thTr

end

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10

Avg

.

Overall Business Tax Climate Trends

23

input

cost



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COMPETE INVEST GROW

State and Local Taxes

State and Local Taxes Trends

What it is:State and local tax revenue as a share ofpersonal income.

Why it matters:Higher state and local taxes reduce take-home pay for residents and mean a highercost of living.

In 2015, state and local tax

revenue amounted to 9.3

percent of statewide

personal income, down

from 10.7 percent in 2009.

Michigan had lower state

and local tax revenues as a

share of personal income

than the “Top Ten” average,

and was on par with the

peer state average.

State and Local Taxes Standings

Tax Policy Center

STATE & LOCAL TAXES

RANKLe

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219.31%

11.04%

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end

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10 A

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COMPETE INVEST GROW

Days Required to Pay Taxes

Days Required to Pay Taxes Trends

What it is:The number of days a year that representthe portion of the year's earnings that arepaid in federal, state, and local taxes.

Why it matters:Lower tax burdens mean more take-homeincome for state residents.

Michigan’s days to pay taxes

is slightly less than the

“Top Ten” average, and

commensurate with the

peer state average.

Days Required to Pay Taxes Standings

The Tax Foundation

DAYS REQUIRED TO PAY TAXES

RANKLe

vel 105

113

Tren

dTo

p 10

Avg

.24th

Unit Cost of Labor

Unit Cost of Labor Trends

What it is:Private industry compensation, divided byprivate sector GDP.

Why it matters:The share of output that is paid to workersindicates the “value proposition” foremployers. Lower unit labor costs make astate a more attractive environment inwhich to operate.

Michigan’s unit cost of labor

has declined slightly over

the last five years but

remained higher than the

“Top Ten” average in 2017.

The unit cost of labor in

Michigan was higher than all

of its peer states except

Massachusetts.

Note: GDP is nominal for all private industries.

Unit Cost of Labor Standings

Bureau of Economic Analysis (Real GDP by State, Compensation ofNonfarm Private Employees Table SA6N - Private Industries)

UNIT COST OF LABOR

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44$0.53

$0.49

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25



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26

COMPETE INVEST GROW

CEO Magazine (Best and Worst States for Business),CNBC (Top States for Business), Forbes (Best States for Business)

Business Climate Rankings

Business Climate Rankings Trends

What it is:Average of three major business climateindices that account for several factorssuch as business costs, business leaders’perceptions, regulatory climate, quality oflife, etc. (1 = best, 50 = worst).

Why it matters:This measure is an indicator for howattractive a state might be for businesses.

Michigan’s average ranking

across three major business

climate indices increased

slightly from 2016 to 2017,

putting the state at 24th out

of 50. Since 2009, Michigan's

aggregate ranking has

improved 26 spots; however,

Michigan’s average rank still

lags behind the “Top Ten”

average and the peer state

average.

Business Climate Rankings Standings

BUSINESS CLIMATE RANKINGS

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2425.0

22.2

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What it is:Real private industry GDP, divided byaverage annual non-farm employment.

Why it matters:Worker productivity supports increasedincome and economic activity.

While value added per

worker in Michigan has

steadily improved over the

last several years, it was

12.5 percent lower than the

“Top Ten” average in 2017,

and the state ranked below

all of its peers except for

Alabama, North Carolina,

and Tennessee.

Value Added Per Worker Standings

Value Added Per Worker

Bureau of Economic Analysis (Real GDP by State),Bureau of Labor Statistics (State and Metro Area Employment, Hours, and Earnings)

VALUE ADDED PER WORKER

RANKLe

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27$90.50

$106.97

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Value Added Per Worker Trends

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COMPETE INVEST GROW

Union Representation

Union Representation Trends

What it is:Employees represented by a union (as apercentage of those employed).

Why it matters:An indicator of labor market bargainingpower, labor flexibility, and pro-businesssentiments in the state. For someemployers, lower union membership makesa state a more attractive place to operate.

Michigan had the 8th

highest union representation

among all states in 2017.

Michigan’s rate was 2.9

percentage points higher

than the “Top Ten” average

and higher than all peer

states except California.

Union Representation Standings

Bureau of Labor Statistics (Current Population Survey)

UNION REPRESENTATION

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4216.80%

13.93%

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What it is:Price per kilowatt-hour (kwh) ofelectricity for commercial users.

Why it matters:Maintaining competitive energy costscontributes to a state’s attractiveness tobusinesses.

In 2018, Michigan’selectricity costs forcommercial customers werelower than the “Top Ten”average, but higher thanthose in all peer statesexcept Alabama, California,and Massachusetts.

Note: 2018 figures are calculated using data throughMarch 2018.

Electricity Costs - Commercial Standings

Electricity Costs - Commercial

Energy Information Administration (Electricity Data Interactive)

ELECTRICITY COSTS: COMMERCIAL

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11.53¢

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Electricity Costs - Commercial Trends

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COMPETE INVEST GROW

What it is:Price per kilowatt-hour (kwh) ofelectricity for industrial users.


In 2018, Michigan’s

electricity costs for industrial

users were 17 percent lower

than the “Top Ten” average,

and slightly below the

average of peer states.

Note: 2018 figures are calculated using data throughMarch 2018.

Electricity Costs - Industrial Standings

Electricity Costs - Industrial

Energy Information Administration (Electricity Data Interactive)

ELECTRICITY COSTS: INDUSTRIAL

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317.35¢

8.78¢

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Electricity Costs - Industrial Trends

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What it is:A weighted average of the price perthousand cubic feet of natural gas forindustrial and commercial users,weighted by the proportion ofconsumption from each sector.


Michigan’s natural gas

prices have fallen by 40

percent since 2008, and

are slightly lower than the

“Top Ten” average. Despite

significant price declines,

Michigan natural gas prices

in 2016 were higher than

the peer state average.

.

Natural Gas Costs Standings

Natural Gas Costs

Energy Information Administration (Natural Gas Data Interactive)

NATURAL GAS COSTS

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13$6.30

$6.35

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Natural Gas Costs Trends

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What it is:The price per gallon of fuel for all users,converted from price per BTU.


Between 2015 and 2016,

the average price for a

gallon of gas in Michigan

fell by 25 cents. Michigan’s

average gasoline price was

lower than the “Top Ten”

and peer state averages.

Gasoline Costs Standings

Gasoline Costs

Energy Information Administration (SEDS Estimates)

GASOLINE COSTS

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13$1.96

$2.11

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Gasoline Costs Trends

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State Unfunded Pension Liabilities

State Unfunded Pension Liabilities Trends

What it is:State government pension benefitunfunded actuarial accrued liability (UAAL)divided by population.

Why it matters:This measure indicates the burden ofunfunded retiree benefits on taxpayers.Payments for high unfunded liabilities maycrowd out spending for competing needs,such as infrastructure and education.

Michigan’s unfunded

pension liability per capita

increased slightly from 2015

to 2016, but was 22nd

lowest in the nation and

lower than both the “Top

Ten” and peer state averages.

Note: Unfunded liabilities are measured in UAAL, orunfunded actuarial accrued liabilities.

State Unfunded Pension Liabilities Standings

U.S. Census Bureau (Census of Governments), Pew Center on the States

STATE UNFUNDED PENSION LIABILITIES

RANKLevel

$3,182

$3,769

Trend

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10 A

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State Unfunded OPEB Liabilities Trends

What it is:State government unfunded otherpostemployment benefit liability (OPEB)divided by population.

Why it matters:This measure indicates the burden ofunfunded retiree benefits on taxpayers.Payments for high unfunded liabilitiesmay crowd out spending for competingneeds, such as infrastructure andeducation.

Michigan’s unfunded OPEB

liability per capita has

decreased each year since

2013, but remains higher

than the average of “Top

Ten” and peer states.

Note: “Top Ten” average for OPEB excludes Nebraska due todata availability. Cannot make inter-year comparisons forOPEB due to use of a different data source for 2012.

State Unfunded OPEB Liabilities Standings

State Unfunded Non-Pension (OPEB) Liabilities

U.S. Census Bureau (Census of Governments), Pew Center on the States

STATE UNFUNDED OPEB LIABILITIES

RANKLevel

38$1,977

$1,600

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Local Debt Service

Local Debt Service Trends

What it is:Local government interest payments ondebt, divided by local government directexpenditures (both in current dollars).

Why it matters:Maintaining debt service at low levels is anindicator of fiscal sustainability.

Local government interest on

debt in Michigan accounted

for 3.8 percent of direct state

expenditures in 2015. The

state ranked on par with the

average of “Top Ten” states

and slightly better than the

peer state average.

Note: This measure does not include debt service on principalsince the Census of Governments does not report a direct debtservice measure.

Local Debt Service Standings

U.S. Census Bureau (Annual Survey of State and Local Government Finances)

LOCAL DEBT SERVICE

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273.75%

3.89%

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COMPETE INVEST GROW

Total State & Local Spending

Total State & Local Spending Trends

What it is:Total state and local governmentexpenditures (2017 dollars) divided bypopulation.

Why it matters:State and local government expendituresare made in important areas such aseducation, infrastructure, and public safety.However, high government expendituresmay mean less private sector economicactivity by redirecting dollars andemployees for public sector use.

Michigan’s state and localgovernment spending was20 percent lower than the“Top Ten” average in 2015,and four percent lower thanthe average of peer states.

Total State & Local Spending Standings


TOTAL STATE & LOCAL SPENDING

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$9.72

$12.19

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What it is:The number of full-time equivalent stateand local government employees per1,000 people.

Why it matters:High levels of government employmentcan contribute to quality governmentservice, but can also lead to high taxes,administrative burden, and higher legacycosts.

Michigan’s number of

government employees per

capita increased slightly

between 2015 and 2016.

Still, the state has fewer

government employees per

capita than any “Top Ten” or

peer state other than

Pennsylvania.

Government Employees Standings

Government Employees

U.S. Census Bureau (Annual Survey of Public Employment & Payroll)

GOVERNMENT EMPLOYEES

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44.20

53.43

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.5th

Government Employees Trends

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Local Government Payroll Spending

Local Government Payroll Spending Trends

What it is:Local government payroll spending perresident.

Why it matters:Government payrolls are an indicator ofthe expanse and quality of governmentservices offered. However, high payrollfigures can also indicate largeadministrative costs and inefficiency.

Local governmentadministrative spending inMichigan is 28 percent lessthan the “Top Ten” averageand 19 percent lower thanthe peer state average..

Local Government Payroll Spending Standings


LOCAL PAYROLL SPENDING

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$1,539

$2,155

Tren

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.12th

4th Grade Reading

39

4th Grade Reading Trends

What it is:The percentage of 4th grade students whoattained a proficient level for reading.

Why it matters:This provides an indicator of how wellschools are meeting competitive academicstandards.

Michigan 4th grade readingperformance lags behindboth the “Top Ten” and peerstate averages.

Note: Data are only released every two years.

4th Grade Reading Standings

National Center for Education Statistics (National Assessment of Educational Progress)

4TH GRADE READING

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3731.81%

38.04%

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COMPETE INVEST GROW

What it is:The percentage of 8th grade studentswho attained a proficient level for math.

Why it matters:This provides an indicator of how wellschools are meeting competitiveacademic standards.

Michigan 8th graders areperforming below both the“Top Ten” and peer stateaverages. Although thepercentage of studentsattaining math proficiencygrew by 2.7 percentagepoints between 2015 and2017, over eight percentfewer students achieved the“proficient” level relative to“Top Ten” states.

Note: Data are only released every two years.

8th Grade Math Standings

8th Grade Math

National Center for Education Statistics (National Assessment of Educational Progress)

8TH GRADE MATH

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3231.24%

39.74%

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8th Grade Math Trends

Career & Technical Education Enrollment

Career & Technical Education Enrollment Trends

What it is:The average number of career-orientedand/or technical education classes in whichpublic high school students are enrolled.

Why it matters:Serves as a measure of how well highschool students are being prepared forhighly-skilled technical professions.

Fewer than one in four

students in public high

schools in Michigan was

enrolled in a career or

technical education class in

2016. This is less than one-

half the enrollment rate for

both “Top Ten” and peer

states.

Career & Technical Education Enrollment Standings

National Center for Education Statistics (Table 203.10 Enrollment in Public Elementaryand Secondary Schools, by Level and Grade), Perkins Collaborative Resource Network

CAREER & TECH ENROLLMENT

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COMPETE INVEST GROW

34

36

38

40

42

44

46

48

50

52

54

56

58

2017

Pass

ing

stud

ents

(bot

h su

bj.)—

%

Michigan Top Ten States Peer States

What it is:The share of students who took the SATand met benchmark standards for bothreading and math.

Why it matters:Well-prepared high school graduateshelp a state maintain a strong talentbase.

Michigan’s share of SAT testtakers who scored proficienton both reading and math is21 percentage points lowerthan the “Top Ten” averageand 19 percentage pointsbelow the peer state average.Michigan's overall SATperformance trails that ofother states, due in part to its100% student participationrate—a much higher ratethan most states.

Note: Michigan began administering the SAT to all studentsin 2016; 2017 is the first year for which complete data areavailable.

Career & College Readiness Standings

Career & College Readiness

College Board SAT Assessment Reports

CAREER & COLLEGE READINESS

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4736%N.A.

57%

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Career & College Readiness Trends

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What it is:The number of total active apprenticesper 1,000 working age people (ages 20through 64, inclusive).

Why it matters:A higher number of apprentices indicatesstates where skilled workers are receivingvaluable on-the-job training.

In 2017, Michigan made

great strides in increasing

its number of active

apprenticeships, rising eight

spots in its overall rank.

Michigan's active

apprenticeship rate is on

par with the “Top Ten”

average and exceeds the

peer state average.

Active Apprentices Standings

Active Apprentices

U.S. Department of Labor

ACTIVE APPRENTICES

RANKLevel

163.03

3.12

thTrend

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Active Apprentices Trends

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Out-of-State Enrollment

Out-of-State Enrollment Trends

What it is:Percentage of first-year undergraduatesfrom out of state.

Why it matters:This measure indicates how well highereducation institutions are attractingstudents from out of state to provide aninfusion of talent and capital. This shouldbe compared with in-state enrollment toensure that states are maintaining in-stateenrollment.

The rate of out-of-stateenrollment at highereducation institutions inMichigan was less than halfof the “Top Ten” average in2016. Michigan out-of-stateenrollment trailed all peerstates except for Californiaand Texas.

Note: Data are only available every two years.

Out-of-State Enrollment Standings

National Center for Education Statistics (Residence and Migration ofFirst-Time Degree-Seeking Undergraduates)

OUT-OF-STATE ENROLLMENT

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4513.16%

28.47%

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What it is:Total associate, bachelor’s, master’s, anddoctorate degrees conferred per 10,000residents by public and privateinstitutions.

Why it matters:Educational attainment is a factor inassessing the quality of a state's talentpool.

The number of degrees

conferred by higher

education institutions in

Michigan decreased from

2015 to 2016, and remains

below the “Top Ten” average.

Michigan was near the

middle of its peers in terms

of the number of degrees

conferred per 10,000 of

population.

Note: Degrees include associate, bachelor's, andgraduate/professional degrees. Higher education institutionsinclude all public and private degree-granting institutions.All years are consistent in their inclusion of degrees, whetherfirst or second majors.

Degrees Conferred Standings

Degrees ConferredAssociate+ Per 10,000

National Center for Education Statistics (Integrated PostsecondaryEducation Data System), U.S. Census Bureau (Population Estimates)

DEGREES CONFERRED

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26200.49

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Degrees Conferred Trends

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What it is:Total critical skills degrees andcertificates conferred divided by theworking age population (ages 20 through64, inclusive).

Why it matters:These degrees especially preparestudents for high-skilled occupations,particularly in the STEM fields, which arethe types of jobs Michigan expects toincrease in the future.

Michigan ranks 33rd in

terms of critical skills

degrees and certificates

awarded. The state lags

behind the “Top Ten” and

peer state averages.

Note: Higher education institutions include all public andprivate degree-granting institutions. Differences in this year’sdata reflect revisions as a result of newer data beingcollected.

Technical Education Standings

Technical EducationCritical Skills Degrees & Certificates

National Center for Education Statistics (Integrated Postsecondary EducationData System), U.S. Census Bureau (Population Estimates)

TECHNICAL EDUCATION

RANKLevel

3387.02

103.23

rdTrend

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Technical Education Trends

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What it is:Share of residents aged 25 to 64 with anassociate degree or higher.

Why it matters:The availability of highly educated talentcan promote future growth of theeconomy, particularly in highly skilledprofessions. More education alsocorrelates strongly with higher wages.

Michigan ranks 32nd

nationally in terms of

educational attainment—

only slightly lower than the

peer state average but more

than six percentage points

lower than the “Top Ten”

state average.

Note: No new update is available in this category.Performance reflects that shown in prior year benchmarkingreport.

Educational Attainment Standings

Educational Attainment Population age 25-64 with Associate+

U.S. Census Bureau (American Community Survey)

EDUCATIONAL ATTAINMENT

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3239.74%

45.92%

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Educational Attainment Trends

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Talent Migration Adults with Bachelor’s Degree or Higher

Talent Migration Trends

What it is:Immigrants with a bachelor’s degree orhigher minus emigrants with a bachelor’sdegree or higher.

Why it matters:This measure indicates how well a stateattracts and retains highly educatedindividuals to live in the state.

Michigan ranked 14th for

talent migration in 2016.

The total net migration for

the state exceeded that of six

“Top Ten” states, and five peer

states.

Note: This measure does not take into account emigrants whohave moved to another country.

Talent Migration Standings


TALENT MIGRATION

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11,453

28,156

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.14th

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Median Age

Median Age Trends

What it is:Median age of state residents.

Why it matters:Increase in the median age is an indicatorof an aging population, where thepopulation growth rate of middle-agedand older residents outpaces that ofchildren and young adults. States with ahigh median age among residents may begood at attracting retirees, but this alsocan be a sign that younger people areseeking out other places to work and raisea family.

Michigan was the eleventh-oldest state in 2016, with amedian age of 39.7 years.Michigan’s median age washigher than all of its peersand all of the “Top Ten”states except Pennsylvania.

Median Age Standings


MEDIAN AGE

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Urban Roads in Poor Condition

Urban Roads in Poor Condition Trends

What it is:Share of urban roads in poor condition, bylength.

Why it matters:A strong, reliable transportation systembenefits both businesses and individuals.Poor road quality imposes many tangiblecosts and reduces productivity.

The number of poor-quality

urban roads in Michigan

declined by 1.2 percent

between 2015 and 2016.

Urban road quality was

worse in Michigan than the

“Top Ten” and peer state

averages. Michigan ranks

39th among all states.

Among peers, only California

and North Carolina have a

greater percentage of urban

roads in poor condition.

Note: Includes interstate highways, freeways, expressways, andmajor arterial roads in urban areas. Some values missing dueto data reporting issues.

Urban Roads in Poor Condition Standings

U.S. Department of Transportation (Length by Pavement Roughness)

URBAN ROADS IN POOR CONDITION

RANKLevel

3924.83%

23.41%

thTrend

Top

10

Avg

.

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U.S. Department of Transportation (Highway Bridge by Wearing Surface)

What it is:Percentage of bridges in deficientcondition, by area.

Why it matters:A strong, reliable transportation systembenefits both businesses and individuals.Poor bridge quality imposes manytangible costs and reduces productivity.

The share of bridgescategorized as poor inMichigan decreased by 0.4percent between 2016 and2017. Michigan trails the“Top Ten” average, and hasa higher proportion ofdeficient bridges than allpeer states except forIllinois, Massachusetts, andNorth Carolina.

Deficient Bridges Standings

Bridges in Poor Condition

BRIDGES IN POOR CONDITION

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398.60%

7.09%

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Deficient Bridges Trends

COMPETE INVEST GROW

What it is:The percentage of drinking waterfacilities in the state with a seriousviolation, according to EPA standards.

Why it matters:Clean drinking water prevents diseaseand can have life-long positive impactson cognition and health.

Michigan ranks among the

top states for drinking water

quality nationwide. The

state’s performance exceeds

eight of the “Top Ten” states

in 2017.

Drinking Water System Conditions Standings

Drinking Water System Conditions

Environmental Protection Agency (Drinking Water Dashboard)

DRINKING WATER SYSTEM CONDITIONS

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9.81%

2.2%

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Drinking Water System Conditions Trends

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COMPETE INVEST GROW

What it is:Duration of power outage per customer(in hours).

Why it matters:An unreliable power grid can signal lowquality infrastructure, and discouragebusinesses from locating in a state.

Michigan ranks 37th

nationwide in terms of

average outage duration per

customer. The average

outage duration in Michigan

has fallen by 65 percent

since 2013, but remains

significantly longer than the

“Top Ten” average and longer

than average rates in many

peer states.

Energy Grid Reliability Standings

Energy Grid Reliability

U.S. Energy Information Administration

ENERGY GRID RELIABILITY

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2.72

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Energy Grid Reliability Trends

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COMPETE INVEST GROW

Akami (Internet Connection Speeds)

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Broadband Speed

Broadband Speed Trends

What it is:Average speed for downloading anduploading information, in kilobits persecond (kbps).

Why it matters:Strong telecommunicationsinfrastructure can improve productivityand is attractive for businesses.

Michigan ranks 12th

nationally in terms of

broadband connection

speed, just below the

average of “Top Ten” states

and higher than the peer

state average.

Broadband Speed Standings

BROADBAND SPEED

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16,650

16,687

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.12th

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What it is:The percentage of households with high-speed internet connections, based onhousehold survey data.

Why it matters:Access to internet at home makes iteasier and more affordable for students,workers, and entrepreneurs to stayconnected.

Michigan ranked 30th

nationwide in terms of the

number of households with

access to quality internet

service in 2016. The state

had a lower broadband

penetration rate than both

the “Top Ten” and peer state

averages.

Broadband Penetration Standings

Broadband Penetration


BROADBAND PENETRATION

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83.4%

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Broadband Penetration Trends

COMPETE INVEST GROW

What it is:Total value of goods originating in astate that were shipped out of thecountry, as a share of total GDP.

Why it matters:Exports help support jobs and grow thestate's economy.

Michigan had the sixth-highest value of exports(scaled by GDP) in 2017 intotal goods. The level ofexports from Michiganexceeded the “Top Ten”average and those of allpeer states except Texas.

Exports Standings

ExportsPer $100,000 of GDP

Department of Commerce (TradeStats Express),Bureau of Economic Analysis (GDP in Current Dollars - Private Industries)

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EXPORTS

RANKLevel

6$13,256

$9,027

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Exports Trends

COMPETE INVEST GROW

57

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University R&D ExpendituresPer $1M of GDP

University R&D Expenditures Trends

What it is:Research and development expendituresby higher education institutions, as a shareof total GDP.

Why it matters:Research and development expendituresby universities improve the state’sattractiveness to out-of-state students andtalent, and provide an important source ofinnovation and entrepreneurship in thestate.

Research and development

expenditures at universities in

Michigan were sixth in the

nation in 2016, and were

higher than all of the

“Top Ten” states except

Massachusetts and

Pennsylvania. Michigan

universities’ research and

development expenditures

were greater than those of

all of its peers except

Massachusetts and North

Carolina.

University R&D Expenditures Standings

National Center for Science and Engineering Statistics (Higher Ed R&D Expenditures),Bureau of Economic Analysis (GDP in Current Dollars - All Industries)

UNIVERSITY R&D EXPEND

RANKLe

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6 $5,070

$4,317

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.

COMPETE INVEST GROW

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58

What it is:The share of residents ages 25 to 34 witha bachelor’s degree or higher.

Why it matters:Young, educated residents have thepotential to promote innovation andinnovation-driven economic growth foryears to come.

Michigan’s share of young,

educated residents

increased by 4.7 percent

from 2007 to 2016;

however, the state still lags

behind the “Top Ten” and


Highly Educated Young People Standings

Highly Educated Young People


HIGHLY EDUCATED YOUNG PEOPLE

RANKLevel

3031.79%

39.33%

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Highly Educated Young People Trends

COMPETE INVEST GROW

What it is:Number of U.S. patents awarded per100,000 residents.

Why it matters:Patents provide an incentive forinnovators and entrepreneurs to improvetechnology. The states whose residentsare the source of this innovation have anadvantage in reaping the economicbenefits derived from them.

Michigan ranked 9th in the

nation in the number of

patents issued, matching

the “Top Ten” average. On a

per capita basis, Michigan

inventors were more prolific

than those in all of its peer

states except Massachusetts

and California.

U.S. Patents Standings

U.S. PatentsPer 100,000 Residents

U.S. Patent & Trademark Office (Statistics), U.S. Census Bureau (Population Estimates)

59

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value

U.S. PATENTS

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964.32

64.25

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.U.S. Patents Trends



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COMPETE INVEST GROW

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60

COMPETE INVEST GROW

Venture Capital InvestmentPer $100,000 of GDP

Venture Capital Investment Trends

What it is:Total capital infusions by venture capitalfunds and investors per $100,000 innominal GDP.

Why it matters:This measure indicates a state’s leadershipin innovation and entrepreneurship andability to attract funding for high-risk firms.

This is a volatile indicator.

Venture capital investment

in Michigan grew by 12

percent from 2016 to 2017.

Venture capital investment

in Michigan remains lower

than in all “Top Ten” states

except North Dakota, and

lagged all but four peer

states in 2017.

Venture Capital Investment Standings

PWC/Moneytree Historical Trend Data

VENTURE CAPITAL INVESTMENT

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29 $63.82

$475.40

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What it is:Kauffman Index of EntrepreneurialActivity (the share of individuals age 20to 64 who previously did not own abusiness and subsequently started abusiness with 15 or more hours workedduring the year).

Why it matters:This measure indicates the number ofentrepreneurs in the state. Greaterentrepreneurship, in the rightenvironment, can lead to moreinnovation and more successfulbusinesses.

Entrepreneurial activity in

Michigan declined slightly

from 2015 to 2016 and

trailed the “Top Ten” and


Entrepreneurial activity in

the state has recovered,

however, after ranking near

the bottom nationwide in

2012.

Entrepreneurial Activity Standings

Entrepreneurial Activity

Ewing Marion Kauffman Foundation (Kauffman Index of Entrepreneurial Activity)

61

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ENTREPRENEURIAL ACTIVITY

RANKLe

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0.26%

0.30%

Tren

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p 10

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.34th

Entrepreneurial Activity Trends



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COMPETE INVEST GROW

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COMPETE INVEST GROW

Net New Establishments

Net New Establishments Trends

What it is:The number of new businesses openedduring the year less the number ofbusinesses closed.

Why it matters:Independent of employment, new businesscreation can provide economic growth, amore stable economic foundation, and amore diverse economy.

Michigan ranked 27th in

2016 in terms of net new

business establishments—a

significant improvement

from 2007 when the state

ranked last in the nation.

However, Michigan’s new

establishment rate still falls

far below the “Top Ten” and


Net New Establishments Standings

U.S. Census Bureau (American Community Survey, County Business Patterns)

NET NEW ESTABLISHMENTS

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27785

3,760

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What it is:The number of new, privately ownedhousing units authorized for constructionper 1,000 residents.

Why it matters:This measure indicates how quickly newhousing stock is being created in thestate—a proxy for growing populationand household formation, and a source ofeconomic growth.

Permits for new construction

in Michigan improved for the

third straight year in 2017.

However, there were fewer

new construction permits

issued per capita in

Michigan than in all “Top

Ten” states but Pennsylvania

and New York. Michigan also

lagged behind all peer states

except Illinois and Ohio.

New Construction Permits Standings

New Construction Permits

U.S. Census Bureau (Building Permits Survey)

NEW CONSTRUCTION PERMITS

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412.37

3.75

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New Construction Permits Trends

63

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COMPETE INVEST GROW

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COMPETE INVEST GROW

Business Churn

Business Churn Trends

What it is:The sum of establishments born andexiting a state within the last 12 months,per 100,000 people.

Why it matters:Higher levels of business churn indicate amore innovative and vibrant economy.

In 2015, Michigan had one

of the lowest levels of

business churn in the nation,

trailing behind both the

“Top Ten” average and peer

state averages.

Business Churn Standings

U.S. Census Bureau (Business Dynamics Statistics)

BUSINESS CHURN

RANKLevel

41336.24

423.03

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65

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COMPETE INVEST GROW

What it is:Number of companies per 1,000,000people that are among the 5,000 fastest-growing companies in the country.

Why it matters:Being home to the fastest-growingcompanies nationwide is a sign that astate is fostering an environment wherestartup companies can thrive.

Michigan’s share of the

nation’s fastest-growing

companies has dropped over

the past five years. Michigan

lags behind both the “Top

Ten” and peer state averages.

Fastest-Growing Companies Standings

Fastest-Growing Companies

Inc. and MAQ Software

FASTEST-GROWING COMPANIES

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3010.14

15.62

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Fastest-Growing Companies Trends

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COMPETE INVEST GROW

What it is:State and local government expenditureson economic development programs andincentives (2017 dollars), divided bypopulation.

Why it matters:This measure indicates the total scale ofpublic spending on economic developmentprograms and incentives in a state. Well-targeted incentives can attract businessesand increase employment in a state.

Michigan’s economic

development expenditures

per capita ranked 25th in the

nation in 2017, and exceeded

both the “Top Ten” and peer

state averages.

Economic Development Expenditures Standings

Economic Development Expenditures

Council for Community and Economic Research (State Economic DevelopmentExpenditures Database), U.S. Census Bureau (Population Estimates)

ECON. DEV. EXPENDITURES

RANKLe

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25$25.54

$22.81

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Economic Development Expenditures Trends

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COMPETE INVEST GROW

Key Assets —Share of National Employment

Key Assets - Share of National Employment Trends

What it is:Employment as a share of working-agepopulation in the engineering, geographictrade, higher education, life sciences,automotive, and natural resources sectors.

Why it matters:These six sectors represent majoropportunities crucial for growingMichigan's economy and moving it forwardin the new global marketplace. The threemajor indicators presented (GDP,employment, and earnings) show howthese sectors are contributing to a state'sproduction and to residents' well-being.

Michigan’s share of the

working-age population

employed in key opportunity

industries increased by 0.2

percent between 2016 and

2017, and is on par with the

“Top Ten” state average.

Michigan also exceeds the

peer state average by nearly

one percent.

Key Assets - Share of National Employment Standings

AEG analysis using base data from the Bureau of Labor Statistics, Quarterly Census ofEmployment and Wages and the U.S. Census Bureau (spreadsheets)

EMPLOYMENT PERCENTAGE

RANK

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1514.69%

14.65%

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.

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COMPETE INVEST GROW

Key Assets —Average Earnings

Key Assets – Average Earnings Trends

What it is:Average annual earnings (in 2017 dollars)in the engineering, geographic trade,higher education, life sciences, automotive,and natural resources sectors.

Why it matters:These six sectors represent majoropportunities crucial for growingMichigan's economy and moving it forwardin the new global marketplace. The threemajor indicators presented (GDP,employment, and earnings) show howthese sectors are contributing to a state'sproduction and to residents' well-being.

Earnings in Michigan’s keyindustries grew by 2.2 percentbetween 2016 and 2017. Thestate’s key industry earningslag behind the “Top Ten”average, and are on par withthe peer state average.

Key Assets – Average Earnings Standings

AEG analysis using base data from the Bureau of Labor Statistics, Quarterly Census ofEmployment and Wages, the American Association of Railroads, and the IntegratedPostsecondary Education Data System (spreadsheets)

AVERAGE EARNINGS

RANKLe

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11$67,841

$71,050

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COMPETE INVEST GROW

What it is:Real GDP in the engineering, geographictrade, higher education, life sciences,automotive, and natural resourcessectors.

Why it matters:These six sectors represent majoropportunities crucial for growingMichigan's economy and moving itforward in the new global marketplace.The three major indicators presented(GDP, employment, and earnings) showhow these sectors are contributing to astate's production and to residents' well-being.

Real GDP among keyindustries in Michigan fell by1.4 percent between 2015and 2016. This decline wasless than the 3.6 percentdecline among "Top Ten"states and less than the2.0 percent decline amongpeer states.

Key Assets – Real GDP Per Capita Standings

Key Assets —Real GDP Per Capita

AEG analysis using base data from the Bureau of Economic Analysis

GDP PER CAPITA

RANK

Leve

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16 $8,396

$9,646

th

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.Key Assets – Real GDP Per Capita Trends

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COMPETE INVEST GROW

Population Age 25–34

Population Age 25–34 Trends

What it is:The percentage of a state's populationbetween the ages of 25 and 34.

Why it matters:Growth in prime working-age populationis an indicator for how well a stateattracts and retains workers. This affectsa state’s ability to grow, attractbusinesses, and maintain publicinfrastructure and programs.

The percentage of young

working-age people in

Michigan has increased by

0.8 percentage points since

2013. However, Michigan

has the lowest percentage of

population age 25–34

among all of its peers and

second lowest among all

“Top Ten” states.

Population Age 25–34 Standings

Intercensal Estimates of the Resident Population by Sex and Age for States 2000-2010Annual Estimates of the Resident Population for Selected Age by Sex 2010-2015

POPULATION AGE 25-34

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4312.73%

14.05%

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What it is:The average number of minutes it takesfor a worker to travel to and from work.

Why it matters:A shorter commute time means easieraccess to jobs for workers and lessproductive time wasted duringcommutes.

Michigan ranks in the

middle of all states for

commute time, and slightly

less than the “Top Ten” and


Commute Time Standings

Commute Time

U.S. Census Bureau (American Community Survey—Commuting Characteristics by Sex)

COMMUTE TIME

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2624.5

26.0

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Commute Time Trends

COMPETE INVEST GROW

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COMPETE INVEST GROW

Violent Crime Rate

Violent Crime Rate Trends

What it is:The number of violent crimes per100,000 residents.

Why it matters:Lower violent crime means a safer livingand working environment, making thestate a more attractive place to live andstart a business.

Violent crime rates in

Michigan increased by 10

percent from 2015 to 2016.

Michigan’s violent crime

rate in 2016 was 42

percent higher than the

“Top Ten” average and 13

percent higher than the

peer state average.

Violent Crime Rate Standings

Federal Bureau of Investigation (Uniform Crime Reporting)

VIOLENT CRIME RATE

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What it is:An estimation of the differences in theprice levels of goods and services acrossstates.

Why it matters:A higher cost of living means businessesand households must pay more for anidentical good or service. This canindicate a high desire to live in an area,but can also prevent businesses andhouseholds from purchasing necessaryitems.

Michigan was the 29th most

affordable state in 2016.

The average of “Top Ten”

states was about $9 lower

and among peer states

about $3 lower for the

same basket of goods.

Cost of Living Standings

Cost of Living

Bureau of Economic Analysis

COST OF LIVING

RANKLevel

29$107.18

$98.31

thTrend

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.

Cost of Living Trends

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COMPETE INVEST GROW

100

95

90

85

80

75

70

65

60

55

50

45

40

2012 2013 2014 2015 2016

Avg.

met

ro a

rea

rank

am

ong

all la

rge

met

ro a

reas

Michigan Top Ten States Peer States

1

What it is:The average ranking of large (300,000+)metropolitan areas in each state asmeasured by population, GDP, andpersonal income; and by population, GDP,and personal income growth over a 10-year period.

Why it matters:Metropolitan areas act as engines ofeconomic growth. Thriving metrosindicate a healthy, growing state economy.

In 2016, Michigan’s large

metropolitan areas had an

average ranking of 63rd out

of 161 metro areas

nationwide on key economic

indicators. This represents a

significant improvement in

metropolitan area

performance since 2011. The

performance of Michigan’s

large metropolitan areas is

now on par with the peer

state average, but still trails

the “Top Ten” average.

Note: North Dakota has no metropolitan areas with300,000+ population.

Thriving Metropolitan Areas Standings

Thriving Metropolitan Areas

AEG analysis of Bureau of Economic Analysis, Bureau of Labor Statistics, and Census Bureau data

THRIVING METROPOLITAN AREAS

RANKLevel

2263.18

44.68

ndTrend

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Thriving Metropolitan Areas Trends

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COMPETE INVEST GROW



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Input Conclusions

Michigan continued to do well during 2017 when it comes toemployer affordability. However, other states and nations—many withsuperior value inputs to offer—are catching up.

Although the state continued to improve its value-add during 2017,Michigan continues to struggle with talent and infrastructure gaps.Lagging educational outcomes and weak infrastructure posechallenges when it comes to attracting and keeping employers.Michigan must work to leverage its competitive strengths and investin its own value proposition if site selectors are to be positivelyinfluenced to choose the state in the future.

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76

KEWEENAWW

ONTONAGON

GOGEBICIRON

BARAGA

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MASON LAKE OSCEOLA CLARE GLADWINARENAC

HURON

MIDLAND

TUSCOLA SANILAC

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GRATIO AGINAW

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MONTCALM

IONIA CLINTON

EATO LIVINGSTONALLEGAN

VAN BUREN JACKSON

BERRIEN CAS JOSEPH BRANCH HILLSDALE WEE MONROE

HOUGHTON

ISABELLA

MUSKEGON

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8

Upper Peninsula region

InvestUP

UPWARD Talent Council

Northwest region NWMCOG dba/Networks Northwest

Northeast region

NEMCOG

West Michigan region

Lakeshore Advantage

The Right Place

East Central Michigan region

Middle Michigan Development Corporation

Saginaw Future

East Michigan region

Flint and Genesee Chamber of Commerce

Tuscola County Economic Developmen

South Central region

LEAP

Southwest region

Cornerstone Alliance

Southwest Michigan First

Southeast Michigan region

Ann Arbor SPARK

Detroit Metro region

Detroit Economic Growth Corp

Detroit Regional Chamber

Macomb County PED

Oakland County PCD

Wayne County EDGE

REGIONS

Michigan’s Regional PerformanceMichigan is not one economy; rather it is multiple economies identified by commonregional assets. This section illustrates the economic performance of Michigan'sregions over the last five years.

OutputUnemployment RateEmployment GrowthLabor Force GrowthPer Capita Personal IncomePopulation

InputOut-of-State EnrollmentDegrees ConferredTechnical EducationPatents Per CapitaNew Construction PermitsPopulation Age 25–34Educational Attainment

What it is:Year-over-year change in the number of residents

with a private-sector job.

Why it matters:Higher levels of private employment indicate both

economic strength and prosperity among the state’s

residents.

Employment Growth

What it is:Average share of labor force that is looking for

work but does not have a job.

Why it matters:A lower unemployment rate indicates that more

residents are able to find employment.

Unemployment Rate

77

regional

Bureau of Labor Statistics (Quarterly Census of Employment and Wages)


2017 Unemployment Rate

2012-17 Employment Change



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What it is:The share of the population age 16 and older, not

including residents who are on active duty or

institutionalized, that is employed or looking for

work.

Why it matters:Members of the working-age population can stop

looking for work and drop out of the labor force for

many reasons, including disability, old age, or

discouragement. Higher labor force participation is

a sign of a healthier economy and workforce.

Labor Force Growth

Bureau of Economic Analysis (Personal Income Summary),Bureau of Labor Statistics (CPI Inflation Calculator)

2012–17 Labor Force Change

What it is:Percent of first-year undergraduates from out of

state.

Why it matters:This indicates how well higher education

institutions are attracting students from out of

state to provide an infusion of talent and capital.

This should be compared with in-state enrollment

to ensure that states are maintaining in-state

enrollment.

Note: Data are only available every two years.

Out-of-State Enrollment

NCES Residence and Migration of First-time Degree Seeking Undergraduates

2012-2016 Regional Out-of-State Enrollment

79

regional

What it is:Personal income (2017 dollars) divided by

population. Personal income includes salaries,

wages, and bonuses from employment; dividends

and interest from investments; rental income;

pensions, etc.

Why it matters:Income is an indicator of prosperity and average

standard of living in a state.

Per CapitaPersonal Income

2016 Per Capita Personal Income

Bureau of Economic Analysis (Personal Income Table SA5),Bureau of Labor Statistics (CPI Inflation Calculator)

2011-16 Per Capita Personal Income Change



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What it is:Total number of residents.

Why it matters:Growth in population is an indicator for how

well a state attracts and retains residents. It

also affects a state’s ability to support shared

responsibilities such as maintaining

infrastructure and providing education.

Population

U.S. Census Bureau (Population Estimates)

2017 Population

2012-17 Population Change

81

regional

What it is:Total associate, bachelor’s, master’s, and doctorate

degrees conferred per 10,000 residents by public

and private institutions.

Why it matters:Educational attainment is a factor in assessing the

quality of a state's talent pool.

Note: Degrees include associate, bachelor's, and graduate/professionaldegrees. Higher education institutions include all public and privatedegree-granting institutions. All years are consistent in their inclusion ofdegrees whether first or second majors.

Degrees Conferred


2016 Degrees Conferred

What it is:Total critical skills degrees and certificates

conferred divided by the working age population

(ages 20 through 64, inclusive).

Why it matters:These degrees especially prepare students for high-

skilled occupations, particularly in the STEM fields,

which are the types of jobs Michigan expects to

increase in the future.

Note: Higher education institutions include all public and private degree-granting institutions. Differences in this year's data reflect revisions as aresult of newer data being collected.

Technical EducationCritical Skills Degrees and Certificates


2017 Technical Education



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What it is:Number of U.S. patents awarded per 100,000

residents.

Why it matters:Patents provide an incentive for innovators and

entrepreneurs to improve technology. The states

whose residents are the source of this innovation

have an advantage in reaping the economic

benefits derived from them.

Patents Per Capita

U.S. Patent and Trademark Office, U.S. Census Bureau (Population Estimates)

2015 Patents Per Capita

What it is:Share of residents aged 25 to 64 with an associate

degree or higher.

Why it matters:The availability of highly educated talent can

promote future growth of the economy, particularly

in highly skilled professions. More education also

correlates strongly with higher wages.

Note: Regional data represent the average attainment during the specifiedtime period, rather than the change between years.

Educational Attainment


2012–16 Educational Attainment

What it is:The percent of a state’s population between the

ages of 25 and 34.

Why it matters:Growth in prime working-age population is an

indicator for how well a state attracts and retains

workers. This affects a state’s ability to grow, attract

businesses, and maintain public infrastructure and

programs.

Population Age 25–34

Intercensal Estimates of the Resident Population by Sex and Age for States 2000-2010

2017 Population Age 25–34

83

regional

What it is:The number of new, privately owned housing

units authorized for construction per 1,000

residents.

Why it matters:This measure indicates how quickly new housing

stock is being created in the state—a proxy for

growing population and household formation,

and a source of economic growth.

New Construction Permits

U.S. Census Bureau (Building Permit Survey)

2012–17 New Construction Permits Change



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84

BLAKE W. KRUEGERCHAIR OF THE BOARDWolverine Worldwide, Inc.

DARYL M. ADAMSSpartan Motors, Inc.

RICHARD E. ALLISON, JR.Domino’s

KEITH J. ALLMANMasco Corporation

G. MARK ALYEAAlro Steel Corporation

GERARD M. ANDERSON DTE Energy

JOSEPH B. ANDERSON, JR.TAG Holdings, LLC

LINDA H. APSEYITC Holdings Corp.

DAVID W. BARFIELD The Bartech Group

MARY T. BARRAGeneral Motors Company

MARK BASSETTHemlock Semiconductor Group

ALAN S. BATEYGeneral Motors Company

ALBERT M. BERRIZ McKinley, Inc.

MARK J. BISSELLBISSELL Inc.

JOHN C. CARTERChase

TIMOTHY P. COLLINSComcast

GREGORY J. CRABBAmerisure Insurance Companies

MATTHEW P. CULLENRock Ventures LLC

MARY CULLERFord Motor Company

WALTER P. CZARNECKIPenske Corporation

KURT L. DARROWLa-Z-Boy Incorporated

DAVID C. DAUCH American Axle & Manufacturing

MARK A. DAVIDOFFDeloitte LLP

RICHARD L. DeVOREThe PNC FinancialServices Group

DOUG DeVOSAmway

ALESSANDRO P. DiNELLOFlagstar Bank

STEFAN O. DOERRBASF Corporation

MATTHEW B. ELLIOTT Bank of America

JOHN ENGLERMichigan State University

PHIL EYLERGentherm

WILLIAM CLAY FORD, JR. Ford Motor Company

TRACY GALLOWAYMicrosoft Corporation

DAN GILBERTQuicken Loans Inc. &Rock Ventures LLC

DAVID F. GIRODATFifth Third Bank-Eastern Michigan

KAREN GODWINGoogle, Inc.

DAN GORDONGordon Food Service, Inc.

PHILIP R. HAGERMANDiplomat

RONALD E. HALL, JR. Bridgewater Interiors, LLC

MATTHEW R. HAWORTHHaworth, Inc.

DENNIS HOEGNexteer Automotive

CHRISTOPHER ILITCH Ilitch Holdings, Inc.

MICHAEL J. JANDERNOA42 North Partners

MILES E. JONESDawn Food Products, Inc.

HANS-WERNER KAAS McKinsey & Company

ALAN JAY KAUFMANH.W. Kaufman Group

JAMES P. KEANESteelcase Inc.

JOHN C. KENNEDYAutocam Medical

RICK KEYESMeijer, Inc.

STEPHEN M. KIRCHERBoyne Resorts

WILLIAM L. KOZYRATI Automotive

BRIAN K. LARCHEEngineered MachinedProducts, Inc.

KEVIN A. LOBOStryker Corporation

DANIEL J. LOEPP Blue Cross Blue Shield ofMichigan

EVAN D. LYALL Roush Enterprises, Inc.

BEN C. MAIBACH III Barton Malow Company

RICHARD A. MANOOGIAN Masco Corporation

FLORINE MARK The Weight Watchers Group, Inc.

CHARLES G. McCLUREMichigan Capital Advisors

DAVID E. MEADORDTE Energy

Business Leaders for Michigan - 2018 Board of Directors

HANK MEIJERMeijer, Inc.

FREDERICK K. MINTURNMSX International

PAUL J. MUELLERThe Hanover Insurance Group

JAMES B. NICHOLSONPVS Chemicals, Inc.

JON NOBISTwo Men And A Truck®/International, Inc.

D. JEFFREY NOELWhirlpool Corporation

WILLIAM U. PARFETNorthwood Group

CYNTHIA J. PASKY Strategic Staffing Solutions

ROGER S. PENSKE Penske Corporation

JIM PETERSWhirlpool Corporation

WILLIAM F. PICKARD, Ph.D. Global AutomotiveAlliance, LLC

SANDRA E. PIERCE Huntington Bank

PATRICIA K. POPPECMS Energy &Consumers Energy

BILL PUMPHREY Cooper Standard

JOHN RAKOLTA, JR.Walbridge

MICHAEL T. RITCHIE Comerica Bank

DOUG ROTHWELL Business Leaders for Michigan

ANDRA M. RUSHRush Group

JOHN G. RUSSELLEmeritus Member

JAMES R. SCAPAAltair

MARK S. SCHLISSELUniversity of Michigan

RAYMOND E. SCOTTLear Corporation

DAVID M. STAPLESSpartanNash

SPENCER S. STILESStryker Corporation

ROBERT S. TAUBMAN Taubman Centers, Inc.

RAMESH (RAY) TELANG PricewaterhouseCoopers

JAMES J. TOBINMagna International Inc.

GARY TORGOWChemical Financial Corporation

HOWARD UNGERLEIDERThe Dow Chemical CompanyDowDuPont

SAMUEL VALENTI III TriMas Corporation

STEPHEN A. VAN ANDELAmway

S. EVAN WEINEREdw. C. Levy Co.

THOMAS G. WELCH, JR.Fifth Third Bank-Western Michigan

FRANKLIN C. WHEATLAKEUtility Supply andConstruction Company

M. ROY WILSONWayne State University

WILLIAM C. YOUNG Plastipak Holdings, Inc.

Herman Miller, Inc.

Kelly Services, Inc.

Perrigo Company

This list represents the board members at the time of printing. For a current list, visit www.BusinessLeadersforMichigan.com.

www.BusinessLeadersforMichigan.com

2018 economic competitiveness benchmarking report · of michigan’s economic competitiveness...

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