Michigan’s reliance on manufacturing has been an important factor in its economic decline, says a report released Monday by Michigan Future Inc. The report’s authors say that knowledge-based sectors are likely to be the core of more and better jobs in a global economy.
From 1990 to 2011, Michigan’s manufacturing workforce dropped from 18 percent to 10 percent of the state’s total employment, while knowledge-based services — private health care and social services, finance and insurance, IT, and professional services — saw growth of 313,700 jobs. Today, the sector represents 26.3 percent of Michigan’s workforce (up from 21.7 percent since 1990).
On a national level, manufacturing employment declined by 32 percent and represented just 7 percent of the country’s workforce in 2011. In comparison, employment in knowledge-based services increased by 55 percent and represented 26 percent of the nation’s workforce.
“Factory jobs and their contribution to a middle-class society have tumbled dramatically across the nation, while jobs and employment earnings in knowledge-based services have become the key driver of prosperity,” says Lou Glazer, president of Michigan Future Inc. “The lesson Michigan needs to learn is clear: The places that are doing the best today and almost certainly will do the best in the future are those states and regions that are concentrated in knowledge-based services, not factories.”
The New Path to Prosperity: Lessons for Michigan from Two Decades of Economic Change highlights Minnesota as an example of a state that has prospered because of its knowledge-based services. From 1990 to 2011, Minnesota experienced a 29 percent increase in overall job growth, while Michigan’s workforce increased by 7 percent, compared to 27 percent nationally.
“States such as Minnesota show the path for Michigan to return to prosperity,” says Don Grimes, co-author of the report. “The data is clear: The absolute and relative increase in employment earnings per capita in knowledge-based services, which is a combination of strong job and wage rate growth, means that knowledge-based services are now the key to a growing and more prosperous middle-class in America over the long run.”
To read the full report, click here.