News Story

Michigan Employment and Personal Incomes Better, But…

Two releases from government statistical agencies this week show that the state's economy is still pretty bad, but that its long fall may have finally bottomed out. The state unemployment rate is 14.1 percent, down from its peak. Michigan's per capita personal income was down again, but Michigan was not the worst state in the country.

The state's annual per capita personal income fell by $928 from 2008 to 2009. But the rest of the country also fell. Unlike what happened in previous years, Michigan looks comparatively better. Instead of having one of the five worst annual declines, which has been a frequent occurrence since 2004, Michigan's per capita personal income performed 34th best among the states — below average but far from being one of the five worst.

Overall, Michigan is currently ranked 37th among the states in per capita personal income and is 13.1 percent below the national average — still not good but similar to the previous two years.

Bottoming out is an especially welcome occurrence considering the state's dismal performance since 2000. Michigan's per capita GDP fell from 19th to 41st between 2000 and 2008 — a precipitous drop from one of the 20 most productive states to one of the 10 least productive in less than a decade.

Still, transfer payments, which are largely made from government for social assistance programs, increased substantially in Michigan. They now account for 22 percent of all income in the state. Without them, Michigan drops to 41st among the states in per capita personal income.

New figures released by the state office of labor market information show that Michigan's unemployment rate decreased from 14.3 percent to 14.1 percent — below its peak of 14.5 percent in December.

The last time Michigan's rate dropped 0.4 percentage points in such a short period of time was in 2005, when it dropped from 7.2 to 6.8 percent over the course of five months.

Michigan's unemployment rate was last above 14 percent in the 1980s, and if Michigan bounces back in a similar fashion, it could still be a long journey. The state's unemployment began climbing in April of 1978, peaked in December of 1982, and wasn't until January 1989 that the rate fell below 7 percent.

The federal Bureau of Labor Statistics will release the state-by-state results on Friday, which will let Michigan residents know whether the state maintains the highest unemployment rate in the country.

Michigan is seeing better news on its economy, but it is not yet good news.


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Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.