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Published in Economic Development

Michigan’s economic competitiveness dips slightly as other states make gains

BY Monday, December 12, 2022 12:01am

The leader of a statewide executive roundtable hopes legislators and Gov. Gretchen Whitmer continue focusing on key issues such as talent and workforce development to improve Michigan’s business climate and competitiveness.

While an updated Business Leaders for Michigan analysis again shows Michigan improved over last year in some key metrics, so did other states. That resulted in Michigan dropping two positions to 31st nationally in the organization’s annual benchmarking report that ranks states’ economic performance.

“Michigan made progress from last year, but no one is staying static, particularly states that were closest to us in the rankings that actually grew faster than Michigan,” said Business Leaders for Michigan President and CEO Jeff Donofrio. “Because states around us moved faster, we fell backward.”

Ohio, for instance, jumped from 33rd overall last year to 23rd this year to surpass Michigan when measured against an array of metrics in the benchmarking report. Tennessee, through concerted investments in talent and economic development, has moved from 34th overall six years ago to ninth this year.

That all means the incoming Legislature and Whitmer, who won re-election last month to a second four-year term, need to do more to improve the state’s performance, Donofrio said. He wants to see them “keep the focus on these core issues” and “keep the consistency.”

To improve the state’s competitiveness, Michigan in the last year and a half has made “real catalytic investments … that are focused on getting us to be a higher performing state,” Donofrio said. 

He cited the creation of the Strategic Outreach and Attraction Reserve, or SOAR, Fund a year ago to lure and assist major economic development projects, increasing per-pupil budget allocations for K-12 education and improving schools, and investments in scholarships and workforce development.

“Those programs haven’t been in place long enough really to impact these numbers” in the benchmarking report, Donofrio said. “I say the focus has to be putting our foot on the accelerator or keeping our foot on the accelerator here to make sure in these areas — talent, K-12, economic development — that we’re continuing to invest and continuing to improve systems, and if we do that we’re absolutely on the right track.”

If not, “we’re going to lose population in the workforce in 10 years if we don’t do something differently here,” he said. “We’re going to be challenged with the disruptions that are happening in our core industries and the economic uncertainty that we see globally through the supply chain and other things.”

Business Leaders for Michigan, a roundtable of CEOs and university presidents, annually benchmarks the state’s economic performance against an array of metrics. The group has a goal for Michigan to become a top 10 performing state.

In Business Leaders for Michigan’s 2009 benchmark report, the state ranked 48th overall nationally. By 2021, Michigan improved to 29th and “really shows a lot of great progress” before sliding two spots this year as other states improved.

In individual areas in the 2022 benchmark report, Michigan improved one spot each in GDP per capita and median household income, to 35th and 34th, respectively. The state also moved up two spots to 39th for labor force participation.

Meanwhile, Michigan this year dropped three positions to 18th for CEO business climate perception, and from 20th to 21st for net business creation.

The top 10 states in the Business Leaders for Michigan 2022 benchmarking report are, from first to 10th: Utah, Colorado, Texas, Arizona, Florida, Washington, Idaho, Virginia, Tennessee and New Hampshire.

Idaho, Tennessee and New Hampshire were new entries in the top 10 performing states, and Ohio jumped 10 spots to 23rd nationally. Tennessee and Idaho both have attracted large numbers of tech sector workers who work remotely, according to Business Leaders for Michigan.


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