State of Michigan moving toward a knowledge economy

By Jared Wadley
News Service

Descriptions of Michigan’s economy as imploding are inaccurate and counter-productive, a new report says.

“We’re holding ourselves back on progress by only focusing on negative manufacturing losses when we should also focus on what’s positive within the state,” says Thomas Ivacko, a program manager at the U-M Center for Local, State, and Urban Policy.

A new CLOSUP report, Michigan’s Economic Transition: Toward a Knowledge Economy, presents evidence that Michigan’s economy is in a period of historic transformation. The state is replacing its 20th century industrial economy with a 21st century knowledge economy, which requires a motivated and educated workforce infused with entrepreneurial spirit, a sense of personal responsibility for one’s own economic future and an openness to other cultures, Ivacko says.

The state’s economy is suffering, due largely to the loss of market share among the Big Three U.S. automotive companies and the loss of manufacturing jobs. While long-term struggles are still to come, he says the picture isn’t all bleak.

Using data from the U.S. Census Bureau and U.S. Bureau of Labor Statistics, some Michigan facts in the report include:

• Employment has increased in the last eight consecutive years in the sector of educational and health services. The overall growth of 20.7 percent since December 1996 has resulted in approximately 101,300 new jobs. College, universities and professional schools had the highest growth rate at 71.5 percent in that period.
• The manufacturing sector dropped the most (25.6 percent) over the past 10 years going from 862,500 jobs to 631,000 while educational and health services grew the most, climbing 22.7 percent from 489,400 jobs to 590,700.
• Small firms—with five to nine employees—reported growth in the educational services (25.6 percent), finance and insurance (24.8 percent), and management of companies (35 percent) sectors between 1998 and 2004.
• Michigan ranked No. 1 nationwide for “industry performed research and development activities as a share of private industry output,” according to the National Science Foundation study. The state ranked ninth in research and development performed by universities and colleges.

CLOSUP is affiliated with the Gerald R. Ford School of Public Policy at U-M. To see the report go to www.closup.umich.edu.