News Story

Analysis: Agriculture Still Not the Second-Largest Industry in Michigan

Sen. Stabenow, chairing Senate Agricultural committee does not know this

It’s distressing that the Michigan Senator chairing the U.S. Senate Agricultural committee doesn’t know that, despite rumors, Michigan’s agriculture does not represent the state’s second-largest industry.

In a recent press release on proposed assistance to agricultural industries, Sen. Debbie Stabenow’s office claimed: “Bio-based manufacturing is a key sector of Michigan's agriculture industry, which is Michigan's second largest industry, supporting nearly one out of every four jobs.”

But these statistics being used by the Democrat from Lansing are a hypothetical guess using an inflated definition of agriculture and a multiplier factor.

According to the Bureau of Economic Analysis, there are 63,667 jobs in farming — or one out of 79 jobs. The industry produces 0.9 percent of the state’s earnings. These relatively small figures are nothing to thumb your nose at, but they’re far from the inflated figures used by the senator.

The source for the oft-repeated "second-largest industry" seems to come from an MSU report that uses a very loose definition of agriculture and multiplies the economic impacts from that loose definition.

For instance, cereal factories are included and as are food wholesalers and retailers like grocery stores and restaurants, regardless of their sales of Michigan-grown produce. These jobs are then multiplied for their ancillary effects, meaning that you could be working as a car salesman and still be "induced" by agriculture, even though you directly work in automotive retail.

This makes the multiplier unfair for comparisons. Every industry in the state is connected to each other and some industries are more connected than others. Dropping a dollar on any product produces an echo someplace else.

Regardless of its size, agriculture plays an important role in the state economy. But politicians should not seek to inflate the impacts of the industry when supporting selective favors.

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.