News Story

Business scorecard shows Michigan still in COVID business slump

Report says Michigan lags behind Midwest neighbors

The latest edition of an annual scorecard says Michigan’s economy hasn’t fully rebounded since COVID. But it finds some bright spots among small businesses and female entrepreneurs.

The Small Business Association of Michigan’s Entrepreneurship Score Card assesses the state’s entrepreneurial economy compared to that of other states.

“The Score Card consistently shows that small businesses play an indispensable role in our economy in both good and bad economic times,” SBAM President and CEO Brian Calley said in a statement. “While there has been impressive rebound in some areas, Michigan’s economy has not shown its typical exuberance and is now lagging behind neighboring states.”

The report noted that over a 20-year period, Michigan seized and then dropped a leading position in net new jobs from business expansions.

Between 2011 and 2019, Michigan’s job growth made it one of the best-performing states in the region. Since the 2020 COVID recession, Michigan has continued to decline toward becoming the lowest-performing state.

The per capita income gap between Michigan and the rest of the nation has worsened in the last 20 years.

Michigan saw small business growth between 2012 and 2018, but that progress deteriorated after 2020.

The report noted that since the mid-2010s, Michigan’s small business survival rate has improved. Michigan also ranks in the Top 10 for R&D and high-tech workforce jobs.

Michigan faces a projected population loss of around 700,000 residents by 2050, according to a Citizen’s Research Council of Michigan report. The population loss might be exacerbated by the state’s falling labor force participation rate, which has been dropping for 20 years.

New business formations continue to drive job growth and diversify Michigan’s economy.

The fastest-growing businesses, by size, have been the smallest ones — those with one to nine employees. Their number increased by 30% in the past 20 years.

Sole proprietors have become more prevalent, and smaller businesses have seen faster growth than large ones. Payrolls have grown among the smallest businesses by 103% in the last 20 years, nearly double the increases seen by large businesses.

The income of Michigan’s sole proprietors has, in the past 10 years, grown faster than the national average. Michigan exceeds the national average in another category: the share of businesses owned by women.

Rep. Ken Borton, R-Gaylord, blamed Democratic policies for the economic slump. In 2022, voters gave Democrats a political trifecta, with control of the Michigan House, Senate, and governor’s office.

“Under Republican leadership, Michigan made a comeback, but now small-business growth, job creation, and family incomes are lagging on Democrats’ watch,” Borton told CapCon in an email. “Destructive Democrat laws are raising taxes, hiking electricity costs, and adding new burdens on employers. Michigan needs a bold, coordinated economic growth plan, and House Republicans are leading the way with plans to cut red tape, measure program performance, reverse Democrats’ income tax hike, and restore the right to work so business can grow and people can succeed.”

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.