Tag Archives: Michigan

The November 2011 BLS report

While everyone else is busy gnashing their teeth and tearing their hair about Detroit’s insolvency and the cancellation of light rail plans and the myriad other bleak Ghosts of Christmas Yet To Come, let me instead point you to a cheerful Ghost of Christmas Present, in the unlikely guise of the BLS’ latest state unemployment report.  Here’s a rundown of the 11 states with the highest unemployment rates in November 2011:

  • Nevada – 13%
  • California – 11.3%
  • District of Columbia – 10.6%
  • Mississippi, Rhode Island – 10.5%
  • Florida, Illinois, North Carolina – 10%
  • South Carolina, Georgia – 9.9%
  • Michigan- 9.8%

That’s right.  No fewer than 7 Sunbelt states (8 if you count D.C.) have higher unemployment rates than Michigan including two states that were until very recently economic development darlings, North Carolina and Georgia.  Also for the first time in many years, to my knowledge, we’ve moved ahead of Illinois. This remarkable progress was driven by the biggest drop in unemployment of any state, -0.8%.

The usual caveats apply:  this just reflects a change in how many people are actively seeking work and doesn’t reflect all the poor souls who just gave up and left the labour force.  No one will deny we have plenty of those.  I’m not by nature an optimist.  But I’ll take the good news where I can.

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“Great Lakes Bay” and silly re-branding

This blog is ostensibly focused on Metro Detroit (broadly interpreted to include the Ann Arbor area).  But for the purposes of this post, I am diverting my attention to the area of Michigan I grew up in, the Saginaw Bay area, or as we used to call it, the “Tri-Cities” of Saginaw, Bay City, and Midland.

Over the past few years, some well-intentioned booster (possibly the “Great Lakes Bay Regional Alliance,” an amalgamation of the local Chambers of Commerce) somehow got the local elites to re-brand this area as the “Great Lakes Bay” region.  Why did they do this?  Is there such a thing as the “Great Lakes Bay”?  Last I checked, the inlet of Lake Huron into which the Saginaw River flows was still the Saginaw Bay.

But, you see, Saginaw has a bit of an image problem;  in fact, the name “Saginaw” seems to be the PR equivalent of toxic waste.  At some point, this appears to have been brought to the attention of the folks in charge of marketing the region.

While the concept of the “Great Lakes” may have a more warm and fuzzy feel to it, evoking as it does all those Tim Allen-narrated “Pure Michigan” ads, the new term “Great Lakes Bay” possesses, in my view, a number of less attractive qualities:

  • Generic: If you wanted to go with something generic, why not stick with “the Tri-Cities”?
  • Presumptuous: The Great Lakes region boasts a vast array of inlets that can be classified as bays;  consequently, I find it presumptuous for the Saginaw Bay to appropriate for itself the status of THE bay.
  • Pretentious and/or slightly racist:  Yes, Saginaw has a pretty lousy reputation, for a number of reasons.  White-washing the name of an entire region is not going to move Midland or Bay City or Frankenmuth to a different spot on the map.
  • Condescending:  Who does the GLBRA think they are fooling? How dumb do they think we are?

Let’s just call a spade a spade.  I, for one, am not going to indulge the GLBRA in this nonsense.

The recovery in Southeast Michigan

http://www.urbanophile.com/2011/09/14/2010-gdp-data-shows-nascent-recovery-in-many-american-metros/  Metro Detroit & Ann Arbor both in 4th (2nd-best performing) quintile, Lansing metro in top quintile for 2020 GDP growth —  ahead of Chicago, any of the big metros in Ohio, Milwaukee, Madison, & on par with the Twin Cities & Indianapolis.

Things are picking up, according to the Bureau of the Labour Statistics.  Of all U.S. metro areas,

Detroit-Warren-Livonia, Mich., experienced the largest unemployment rate decrease from March 2010 (-3.3 percentage points)…
In March 2011, Detroit-Livonia-Dearborn, Mich., registered the highest jobless rate among the divisions, 12.7 percent… (But t)he two divisions that make up the Detroit-Warren-Livonia, Mich., metropolitan area posted the largest rate declines from a year earlier: Warren-Troy-Farmington Hills and Detroit-Livonia-Dearborn (-3.4 and -3.3 percentage points, respectively).

West Michigan does even better, with the Grand Rapids, Holland, and Benton Harbor-St Joseph metros all rapidly improving their jobs rankings. (HT BurghDiaspora)

Michigan’s film subsidies: Why I’m glad to see them gone

‘In less than a decade, the absurd notion of welfare for movie producers has evolved… to an unshakable American tradition…’ —Michael Kinsley, ‘Lights, camera, cut on Hollywood subsidies

As I’ve written before, there’s plenty to dispute in Governor Snyder’s FY 2012 budget.  But I’m tired of all the whining about at least one of his cuts:  the elimination of Michigan’s film subsidies.

What do I have against these particular “incentives,” as their supporters often euphemistically term them?  Let me start with the Craig Fahle Show on February 25, when Amy Miller interviewed James Hohman of the Mackinac Center.  Hohman explained that state subsidies are “not expanding the market for film, we’re just transferring wealth from one place to another instead of generating it,” that we’re taking taxpayer money and bribing an industry to move their work from one state to another.  As Amy noted, the industry has, as a consequence, become highly transient.  Jim Russell posted last month on BurghDiaspora about how they think they’re going to be the next Hollywood over in Pennsylvania, too.

But Michigan is special, right? If we just plant the seed and give it a couple of years, the industry will put down roots permanently, won’t it?  Michael Kinsley, in an early March 2011 article for Politico, explains that subsidizing films

essentially is a “beggar thy neighbor” strategy. Some of the movies that have been bribed to locate in New Mexico would have been made in New Mexico anyway… (M)obility giveth and mobility taketh away. Pit the states against one another, and the subsidies will inevitably become more generous and less effective at the same time…

As yet another observer, former Merrill Lynch entertainment industry analyst Harold Vogel, quoted by the Free Press at around the same time, puts it:

“It’s a false promise,” Vogel said. “The industry is notably mercenary. Any time it gets a better deal, they’ll be out of Michigan in the blink of an eye.”

And the studies that supporters have cited turn out to be garbage.  Kinsley again:

In the definitive document on this issue, a paper published in December by the Center for Budget and Policy Priorities, senior fellow Robert Tannenwald notes what he tactfully calls “flaws” in various studies the states have commissioned to justify the subsidy. Even after our recent experience with gullible or mendacious accountants in financial scandals such as Enron… it’s actually shocking that reputable firms like Ernst & Young would pull some of these stunts — such as counting the allowances film crews are paid for expenses as a benefit to the state and then counting the same money again when it is spent…

The really sad part is that our states aren’t just in a bidding war over film subsidies.  Midwestern policy guru Richard Longworth has written frequently about how the states themselves are an economic relic that now undercut the competitiveness of the Midwest’s metro regions.   Last week, he argued again for why tax credits for individual businesses are stupid policy, focusing in particular on the example of the Kansas City area, so eloquently and in such detail that I hope you will forgive my quoting it so extensively:

It’s precisely these states’ inability to compete globally that causes them to declare war on the folks next door.

In a global economy, Kansas and Missouri aren’t competing with each other, any more than Illinois, Indiana and Wisconsin are competing with each other. The real competition is 10,000 miles away and all Midwesterners know that we’re losing it. The region — not just the individual cities and states but the entire region — is losing companies, manufacturing, jobs, people, congressional seats and college grads, which means they’re losing the resources needed to compete in a global economy.

Clearly, what the Midwestern states are doing isn’t working. You’d think they’d do what the Europeans, Indians, Chinese and other competitors are doing, which is to form regional alliances to leverage all their strengths, to maximize their economies of scale, to merge their assets in to a single world-beating economy. On a global scale, Midwestern states are tiny: there are more than 30 Chinese cities with more people than there are in all of Kansas. But as a region, the Midwest has more than 60 million people which, even on a global scale, counts for something…

By mandate, they are geography-bound, forced to limit all thinking and action within their state lines. Any business they can steal from next door looks good to their voters, whether it makes sense or not…

One reason this doesn’t work is that poaching businesses involves giving tax breaks to the poachee. Right now, states aren’t spending on the future because they’re broke, and one reason they’re broke is that they’re giving away badly-needed tax money. The letter from the Kansas City businessmen made this point clearly:

“… The states are being pitted against each other and the only real winner is the business who is ‘incentive shopping’ to reduce costs. The losers are the taxpayers who must provide services to those who are not paying for them.”

Neither does this poaching usually create new jobs. Most of these cross-border raids, in Kansas-Missouri and in other states, involve companies just moving a few miles away across the state line — usually so close that their workforce changes not at all. People just commute in different directions. The overall impact on job totals, incomes and economic gain in the region itself is absolutely nil…

The state governments and governors, like Brownback, claim that these tax lures are necessary to draw in companies not from next door but from far-away states. If so, they aren’t working. A University of Illinois study showed that there are some 300 significant corporate relocations in the United States every year, and about 15,000 different economic development organizations — state, county and local — competing for them. In other words, the odds against success are fifty-to-one…

… State economic development officials tell me that the company, such as Honda or BMW, simply announces that it intends to set up a new assembly plant somewhere in the Midwest. Then the company just sits back and watches the states throw money at them, trying to outbid each other with tax holidays, free land, training subsidies and other lavish gifts.

All the states know this goes on. All know they could stop it in an instant by banding together and refusing to play the game…

Mark Drabenstott, in… Past Silos and Smokestacks, wrote that these recruiting incentives and other bribes account for no less than 80 percent of economic development budgets in the twelve Midwestern states. That leaves virtually no money left over for approaches that might really work.

Every economic development professional knows that this adds nothing to the Midwest’s long-term growth or its ability to compete globally with China and other rising nations. The only true solution is to create truly  new companies and industries by building them from the ground up  — by investing in local education, encouraging local entrepreneurs, setting up incubators, growing business services, increasing venture capital.

This is called economic gardening, and it works. It means working regionally. It means spending money, not giving it away in tax breaks. It means planting seeds now, knowing they won’t sprout until some other governor is in office.

Right now, Midwestern governors are competing not with China but with each other to see how much they can slash spending in the next few months while stealing jobs from the next state… And it’s useless.

Again, Longworth’s entire post is worth reading in full when you get the chance (and I encourage you to subscribe to his blog as well).

The good news is, like Michigan, the madness may be subsiding in other states as well.  According to the Detroit News:

In the last couple of years, New Jersey, Kentucky, Connecticut, Iowa, New Mexico and Kansas have all cut back film programs. Georgia, where producers of “Detroit 1-8-7” originally planned to film, is considering ending its 20 percent rebate altogether. New Mexico lawmakers also are considering spreading out payments to more costly film productions over multiple years.

The bar for sanity has been set so low  in American public policy, I’ll take a little comfort wherever I can.  I like movies and want to see Michigan’s creative scene grow as much as anybody, but this year’s budget is a viciously zero-sum game.  I would much rather have my tax dollars plugging the massive holes in the education budget or local revenue-sharing, to cite two examples, than to some Hollywood producers who are shopping around for a handout.  Wouldn’t you?

Michigan — a leader in road diets?

A bit of much-needed good news on the Michigan transit front:

Recent preliminary research… suggests that Michigan could be the national leader in road diets and having road diet supportive policies in place. Analysis of in-state existing and planned 4 to 3 lane conversions (road diets) yields some early and impressive results:

  • The Tri-County region (Clinton, Eaton, Ingham) has completed 15 miles of conversion from 4 to 3 lanes. An additional 18.5 miles of conversions are planned by 2035.
  • The Genesee County Metropolitan Planning Commission has completed approximately 19.5 miles and released a 2009 Complete Streets technical report that depicts many more by 2035.
  • The Michigan Department of Transportation has completed at least 45 miles of road diets on state trunklines around the state.

Hamilton and Morena have surveyed state DOT’s and regional transportation authorities across the country and found few places that compare to these numbers. Add in that Michigan has adopted Complete Streets laws and also has the highest number of local communities that have adopted Complete Streets policies, and one can quickly come to the conclusion that Michigan is becoming a progressive, national leader in active transportation.

(HT Michigan transit watchdog Joel Batterman)

What’s so great about a road diet, you may ask?  In addition to slowing the average speed of cars, thereby potentially reducing severity of crashes, it allows for the addition of bike lanes and/or adding or widening of sidewalks, making it safer for cyclists and pedestrians.  The name is kind of catchy, too.

‘Cities aren’t structures: cities are people’

In a post this week, the St. Louis-focused blog nextStL ticks through all the big money silver bullet projects in downtown St Louis that failed in their ultimate objective:  to revive that city’s downtown.

I am sad to say I have not yet been to St. Louis, which sounds like a place rich in history, but other developments in Detroit this week suggest that it could sorely use nextStL’s reminder.

There are parts of Detroit that have improved since I arrived there in 2007.  For the most part, downtown is not one of them.  The stretch of Woodward between Campus Martius and Grand Circus Park has seen a particularly appalling decline in those four years:  at this point, I think I could count the number of occupied storefronts on that strip of several blocks on the fingers of one hand.

This makes the almost manic reaction to announcements of $221 million in improvements to Cobo Center, home of the North American International Auto Show, a bit more understandable:

The project will be ready by the 2014 North American International Auto Show, and it will “open up” Cobo to the Detroit River with a new atrium entrance.. Many of the changes will create what promises to be dramatic new vistas of Cobo from East Jefferson and from Windsor…

The Cobo authority will borrow the money through a bond sale to pay for the upgrades. Bonds would be paid back using Cobo revenues plus subsidies from the state’s Convention Center Development Fund, which receives liquor and hotel tax revenues from Southeast Michigan.

The Detroit News’ Daniel Howes never wastes the opportunity for hyperbole, and his post on the Cobo announcement was no exception:

Who says the self-defeating politics of southeast Michigan can never change or that Detroit cannot reap the benefit of a repolished jewel without being expected to pay all the bills?…

Realization of a Cobo makeover underscores the positive evolution of southeast Michigan’s political factionalism and the ability of leaders to shape competing interests into shared goals.

Howes is justified in taking comfort from the newfound spirit of cooperation among the Cobo authority, which until the last year or two was riven by typical nasty strife between its suburban members and the city.

It was then ironic that, as I proceed through Triumph of the City, Glaeser begins his discussion of urban decline with the following observations:

The hallmark of declining cities is that they have too much housing and infrastructure relative to the strength of their economies… The folly of building-centric urban renewal reminds us that cities aren’t structures: cities are people…

Even before the flood, New Orleans had done a mediocre job caring for its poor.  Did it really make sense to spend billions on the city’s infrastructure, when money was so badly needed to help educate the children of New Orleans?  New Orleans’ greatness always came from its people, not from its buildings…

Perhaps the most common error was thinking that these cities could build their way back to success with… (projects like the People Mover or the RenCen or Cobo Hall)

I’ve been guilty of this line of thought too, salivating with anticipation over projects like the Woodward light rail line, which is currently in the midst of a seemingly interminable planning and review.  (Seriously, if we see ground broken prior to Election Day 2012 I will eat my hat.)   All the wonderful and arguably much-needed renovations to Cobo or the Book Cadillac, the construction of the rail line, the massive investment in the Gateway Project at the border crossing with Canada — without advancing the city’s human capital, are these for naught?

Of course not.  Much of what makes New Orleans so peerless is its unrivalled preservation of its precious and unique building stock, and failure to maintain infrastructure, after all, was THE direct cause of the horrific destruction that followed the hurricane.  Likewise, I am confident the millions upon millions invested in opening up Detroit’s riverfront, luring people downtown to ice skate at Campus Martius, restoring and maintaining its endangered Jazz Age architectural treasures, enabling Cobo to retain the auto show, and getting cross-border truck traffic off residential streets, have or will more than pay for themselves over our lifetimes.

But Glaeser helps to reinforce my growing concern that both Gov. Snyder and Mayor Bing, for all their good intentions and the vast improvement they represent over their predecessors, still fail to appreciate the single most crucial, obvious, and proven ingredient to urban recovery:  education.  Governor Snyder has opted to cut funding for it in order to slash business taxes;  Mayor Bing has consistently refused to show leadership amidst the crisis of his city’s schools.  I am lucky to be able to live in a community, Ann Arbor, that owes its very existence to education and appreciates its value;  but it troubles me that that even in 2011 so many of our leaders still don’t get it — that so many southeast Michigan voters still don’t get it — and it does not make me optimistic about the region’s future.

In which I balance the budget

Don’t like the Governor’s budget proposal?  Try your hand at balancing the state budget.

The Free Press’ Stephen Henderson did.

And so did I.  (Click the image below to see the details in full size.)

My budget

My budget