News Story

In Michigan, More Getting Richer, Poor Getting Less Poor

State has recovered ‘very strongly’ from Great Recession

The years since the end of the Great Recession have brought substantial wage gains to Michigan workers on both ends of the economic spectrum. That’s according to census data as reviewed by James Hohman, director of fiscal policy at the Mackinac Center for Public Policy.

Hohman’s analysis found that since 2010, the number of Michigan households reporting an income below $30,000 per year declined by 259,000, or 20%. The ranks of households with earnings above $75,000 per year, meanwhile, increased by 45%, or 458,000.

The numbers, taken from the Census Bureau’s American Community Survey, belie the notion that Michigan’s economic recovery has left behind low-income earners, Hohman said.

“There is more wealth across the board,” he said. “The rich are getting richer, but the poor are getting richer, too.”

The household income data is not adjusted for inflation, Hohman said, but there is a clear trend of broad-based wage growth.

University of Michigan economist Don Grimes agrees that incomes have been growing for both low- and high-wage earners.

But the Census Bureau’s poverty index, which is adjusted for inflation, may be a more accurate measure of the state of those on the bottom rungs of the economic ladder, Grimes said.

Last year, the poverty rate in Michigan was 14.1% of all households, down from a high of 17.5% in 2011, according to the Census Bureau. The poverty line for a family of four is an income of $25,465 per year.

Comerica Bank economist Robert Dye said economic activity indexes have shown that Michigan recovered “very strongly” from the Great Recession. But in the last two years, he said, that recovery has slowed, and it may be negatively affected further by the ongoing strike at General Motors.

The Mackinac Center’s Hohman has a rosier view. “The bottom line is that there are fewer Michigan households relying on low incomes and a lot more households earning higher incomes,” he said, “That’s good news.”

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.