Commentary
Michigan suffers from low income, high costs
State government policies have made things worse
Michigan is in the bottom half of U.S. states in per-capita income. State policies make life more difficult by increasing costs. | Shutterstock
Michigan ranks in the bottom half of states for income, according to the World Population Review, with the state 27th in the nation for per-capita income and 32nd for average household income. To make matters worse, Michigan policies increase the cost of living here.
The cost of electricity is just one example. “Michigan’s rates are 13% higher than the average rate paid by the other Great Lakes states and 16% higher than the national average,” according to a 2021 report from the Mackinac Center for Public Policy.
Yet Consumers Energy and DTE have implored the Michigan Public Service Commission to raise rates on customers in the past couple years. Members of the commission are appointed by the governor.
DTE is currently requesting a $619 million rate hike after leaving customers in the cold and dark this winter due to its unreliable energy. When Consumers Energy asked for a 14% rate hike in 2020-21, Attorney General Dana Nessel intervened, which spared custoers from absurd and prohibitive increases.
But electricity stands to get only more expensive, as Consumers and DTE continue a quest to ditch fossil fuels and move to wind and solar power
What do higher electricity costs have to do with our elected officials? Michiganders pay higher rates than people elsewhere because state legislators and the governor allowed for two energy companies to have a monopoly. If lawmakers want to fix the issue, they can. Why haven’t they? They introduced electricity choice in 2000, but reversed that policy in 2008.
It’s more expensive to own a car in Michigan than anywhere else, as reported in 2021 by Click on Detroit. Our lawmakers’ decisions play a role in that. Start with something we face on a regular basis — buying gas. Michigan residents now pay the sixth-highest gas tax in the nation. As of Jan. 1, they pay 28.6 cents per gallon in state fuel tax and 18.3 cents per gallon in federal gasoline tax. The state also charges a 6% sales tax on gasoline.
Before you put gas into that car, you should buy auto insurance, and here, too, state policies have made things worse. Michigan was long the most expensive state for auto insurance. Reforms enacted in 2019 have helped things, though the state was still No. 1 last year, by one account.
Some people who work for a unionized company will now see more money leave their wallets, thanks the repeal the right-to-work law. Repealing that law was among the highest priorities for the Democratic Party majority that took control of state government in January.
Per-capital income in Michigan, adjusted for inflation, increased 21.9%, since 2012 when right-to-work passed. That’s the 16th best record among the 50 states.
From 2002 to 2012, when Michigan law forced union dues on some workers, personal income only increased 0.5%. This performance was the 3rd worst in the nation, according to the Bureau of Economic Analysis and Bureau of Labor Statistics.
Michigan also had one of the slowest-growing economies in the fourth quarter of 2022. Add up all of the ways our elected officials have managed to nick our paychecks.
This is too much government interference.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
|
Like CapCon on Facebook
Follow CapCon on X
Michigan suffers from low income, high costs
State government policies have made things worse
Michigan ranks in the bottom half of states for income, according to the World Population Review, with the state 27th in the nation for per-capita income and 32nd for average household income. To make matters worse, Michigan policies increase the cost of living here.
The cost of electricity is just one example. “Michigan’s rates are 13% higher than the average rate paid by the other Great Lakes states and 16% higher than the national average,” according to a 2021 report from the Mackinac Center for Public Policy.
Yet Consumers Energy and DTE have implored the Michigan Public Service Commission to raise rates on customers in the past couple years. Members of the commission are appointed by the governor.
DTE is currently requesting a $619 million rate hike after leaving customers in the cold and dark this winter due to its unreliable energy. When Consumers Energy asked for a 14% rate hike in 2020-21, Attorney General Dana Nessel intervened, which spared custoers from absurd and prohibitive increases.
But electricity stands to get only more expensive, as Consumers and DTE continue a quest to ditch fossil fuels and move to wind and solar power
What do higher electricity costs have to do with our elected officials? Michiganders pay higher rates than people elsewhere because state legislators and the governor allowed for two energy companies to have a monopoly. If lawmakers want to fix the issue, they can. Why haven’t they? They introduced electricity choice in 2000, but reversed that policy in 2008.
It’s more expensive to own a car in Michigan than anywhere else, as reported in 2021 by Click on Detroit. Our lawmakers’ decisions play a role in that. Start with something we face on a regular basis — buying gas. Michigan residents now pay the sixth-highest gas tax in the nation. As of Jan. 1, they pay 28.6 cents per gallon in state fuel tax and 18.3 cents per gallon in federal gasoline tax. The state also charges a 6% sales tax on gasoline.
Before you put gas into that car, you should buy auto insurance, and here, too, state policies have made things worse. Michigan was long the most expensive state for auto insurance. Reforms enacted in 2019 have helped things, though the state was still No. 1 last year, by one account.
Some people who work for a unionized company will now see more money leave their wallets, thanks the repeal the right-to-work law. Repealing that law was among the highest priorities for the Democratic Party majority that took control of state government in January.
Per-capital income in Michigan, adjusted for inflation, increased 21.9%, since 2012 when right-to-work passed. That’s the 16th best record among the 50 states.
From 2002 to 2012, when Michigan law forced union dues on some workers, personal income only increased 0.5%. This performance was the 3rd worst in the nation, according to the Bureau of Economic Analysis and Bureau of Labor Statistics.
Michigan also had one of the slowest-growing economies in the fourth quarter of 2022. Add up all of the ways our elected officials have managed to nick our paychecks.
This is too much government interference.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at hope@mackinac.org.
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.