Rich States and Poor States

A study of how states are handling the economic crisis has Michigan as the worst in the country in economic performance for the third year in a row, but does offer some hope of improvement in the future.

The study evaluated states based on their economic policies and looked at economic trends to come up with its rankings. The study, in its third year, was done by the American Legislative Exchange Council, a Washington, D.C. nonprofit.

Michigan ranked 50th in "economic performance" which was based on personal income per capita (50th), domestic migration (47th), and employment (50th).

Despite being last in economic performance, Michigan's economic outlook was 26th, an improvement from the 2009 ranking of 34th.

The economic outlook was based on 15 variables that measured things such as a state's tax burden, the number of public employees, minimum wage and workers' compensation costs.

"We do see some bright sides on the recovery," said Jonathan Williams, director of ALEC's tax and fiscal policy task force and one of the authors of the study. "A lot of that will depend upon whatever administration is elected this fall."

Williams said if every time there is a budget shortfall, the government looks to increase taxes, "that will only worsen the outlook."

"Michigan has to do something to tell the rest of the country, 'We are open for business again,'" Williams said. "Something bold."

He said eliminating the Michigan Business Tax would be an example.

Rich Studley, president of the Michigan Chamber of Commerce, shared some of the optimism for Michigan's future.

"We are starting to see some encouraging signs of improvement," Studley said. "We are optimistic about this fall and winter. I think people will be surprised in just a few years about how well things have improved."

The report's authors were Arthur Laffler, an economist, Stephen Moore, senior economics writer at The Wall Street Journal, and Williams.