News Story

State's Corporate Welfare Agency Takes Credit for Creating Jobs in Good Times ... and Bad

Michigan Economic Development Corporation oversaw the worst job losses in history

In October of 2005, the director of the state’s corporate welfare arm made a prediction about the effectiveness of his agency, the Michigan Economic Development Corporation.

"A year from now, our success in transforming Michigan's economy and generating jobs for Michigan workers will make any legislator think twice about reducing that 'job creation services' line item in the state budget," the MEDC’s James C. Epolito told the MIRS news agency.

Three months later, referring to a major expansion of Michigan's corporate welfare programs, Gov. Jennifer Granholm issued her own prediction: "In five years you're gonna be blown away."

Yet starting three months after that prediction, in April of 2006, Michigan became the state with the nation's highest unemployment rate. It would occupy that unenviable No. 1 position for the next 49 months. In May of 2010 Michigan was finally edged out by Nevada.

All told, between January, 2003 and October of 2010 employment in this state fell nearly 15 percent, from 4.50 million jobs at the start of the period to 3.84 million at the end.

Epolito’s comments nearly 10 years ago are newsworthy now because Gov. Rick Snyder is giving the corporate subsidy programs credit for the state’s current low unemployment rate, part of an effort to turn back proposals to cut the programs and use the money for road repairs instead.

Bridge Magazine documented this in a brief story about state officials trying to "save" the Michigan Economic Development Corporation from the revenue reprioritization.

Bridge wrote: “Key administrative figures, from MEDC CEO Steve Arwood to Gov. Rick Snyder, are publicly warning of the consequences that would result from raiding the state’s business arm to pay for roads. Chief among them: Doing so would send a clear message that Michigan is not welcoming to business. They point to the state’s jobless rate dropping to 5.4 percent in April, the first time in 15 years it has matched the national rate, as proof that their efforts are working.”

The MEDC was created in April of 1999. In the 16 years since, there have only been 17 months during which Michigan's unemployment rate was below the national average. Those 17 months were the first 17 months of the MEDC’s existence. In the 174 months since, the state has done worse than the rest of the country.

Citizens would have been hard pressed to recognize this just from reading the agency's news releases.

For example, in August of 2006, with Michigan in its fifth of 49 months with the nation's highest unemployment rate, the MEDC's director made this boast in a news release:

“Michigan has seen a flurry of company expansions, new investment and new jobs in the past several months thanks to our innovative economic development programs and a tremendous partnership with local communities throughout the state.”

The backdrop and players have changed but in 2015 the theme remains the same. In an email this week Snyder spokesman Dave Murray said the MEDC has played a role in the state's jobs recovery:

"We know that Michigan’s unemployment rate has dropped by more than half since the governor took office, with about 400,000 new private sector jobs created. From economic development efforts here in the state to building relationships around the world to telling tourists everywhere about the Pure Michigan experience, MEDC’s hard work is unquestionably a factor in our state’s success."

James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy, noted the inconsistency: “You can’t take credit when things are going well if you are not going to take the blame when things are going bad,” he said. “For most of the MEDC’s existence, things have been going poorly.”


See also:

Pure Michigan Scare Tactics

There is No Good Reason the MEDC Should Exist

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.