Michigan Residents Doing Better Financially

Adjusted statistics show addition of $23 billion to residents' incomes over past three years

By Tom Gantert | October 4, 2013

In another sign Michigan’s economy is on the rebound, the U.S. Bureau of Economic Analysis updated its reporting on the state's personal income growth over the past few years and found that Michigan's residents made billions more than previously stated.

The release showed that personal income in Michigan increased by 3.1 percent in the second quarter of 2013 from the second quarter of 2012, growing the 8th most among the states. The top six states for growth were right-to-work states (see image nearby).

Michigan's 2010, 2011, and 2012 personal income has been restated upwards by 2.3 percent, 2.1 percent and 2.1 percent, respectively. The adjustments showed an addition of $23 billion to the incomes of Michigan residents over those three years.

That's good news for Michigan's recovery, said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, who added that it’s not unusual for economic reports to be updated with more detailed data that replaces preliminary estimates.

"Michigan's recovery is real," Hohman said. "This is more evidence of it."

University of Michigan Economist Don Grimes said the upward revisions didn't surprise him because the federal government has been underestimating Michigan's employment growth for the past few years.

"The state of Michigan has done as well as could possibly be expected during the past few years," Grimes said in an email. "The question remains how well it will do in the future. The rebound in factory jobs in the auto industry is about done; we will hopefully continue to see growth in white collar employment in the auto industry. The key to Michigan's long-term employment and growth prospects will be tied to our ability to attract 'knowledge economy' jobs and the people who fill those jobs. I am hopeful, but the question remains unanswered."

Michigan's unemployment has crept up recently because more people are entering the labor force. Job growth has rebounded in the auto sectors of the economy, but non-auto manufacturing and other sectors have recovered better than in other states.

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.

State Fairgrounds to be Sold

Delay cost state millions

By Michael D. LaFaive | October 3, 2013

Published reports indicate that the state fairgrounds — once home to an iconic Michigan State Fair — may finally be sold to an investment team that includes former NBA star and Michigan native Magic Johnson.

The state, however, should have sold it to the highest bidder immediately when it had a chance.

In 1996, the Mackinac Center for Public Policy began recommending that the state should get out of the state fair business in its entirety. We argued in our first state budget study that fairs were nice, but "not a proper function of government in a civil society."

In March 2003, we reiterated our call for an end to state fairs and specifically to the sale of the property. We ball parked an estimated sales price at the time of $57 million based on the two-time sale of 36-acre piece of property adjacent to the fairgrounds. The second sale came in at $10.5 million and we extrapolated the per-acre value to the fairgrounds, which is 5.5 times larger.

Since that time, the state has taken the Mackinac Center's advice and gotten out of the fair business, though both fairs effectively continue today in different formats. The state fair (now the Great Lakes State Fair) is now operated out of Novi. The Upper Peninsula state fair is still located in Escanaba, but has done so without state support.

Published reports indicate that the property will be transferred at a cost of $4.65 million — just a fraction of what we estimated a decade ago. That, however, is not the end of the story.

Detroit Free Press reporter John Gallagher points out in his article that the actual price could be as low as zero or more than $9 million, depending on the success of the project. In other words, the state (represented by its Land Bank) is still keeping something of a grip on the property and could earn additional revenue not on its own merits but on the backs of private investors. The state also has the option to take the property back if the project falters.

Even at today's land prices, the state should have just shed the property by selling it to the highest bidder, be they a farmer, philanthropist or builder.