Why Michigan loses people to other states

Michigan has lost population over the last 20 years. Gov. Gretchen Whitmer’s Growing Michigan Together Council hopes to reverse that trend by studying what works elsewhere and what’s not working in Michigan.

The governor, however, actively opposes some tactics other states use to grow their population.

While the council ponders how to address the state’s population loss, the answer is economic liberty, said Michael LaFaive, senior director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy.

“[F]or every 10 percent increase in personal taxes, Michigan loses 4,700 people every year thereafter,” LaFaive wrote in 2010.

The 11.5% increase in the personal income tax, enacted in 2007, drove more than 10,000 people out of Michigan, LaFaive wrote. The Legislature implemented what was supposed to be a temporary tax increase in 2007, taking it from 3.9% to 4.25%.

The tax increase was partially rolled back, going from 4.25% to 4.05%, in 2023. Whitmer’s administration is fighting to prevent the lower rate from becoming permanent. The Mackinac Center Legal Foundation has filed a lawsuit arguing the tax cut is permanent, not event-driven, as Attorney General Dana Nessel says. Two lawmakers have joined the suit.

Right-to-work is also a factor that drives population growth, according to LaFaive. Whitmer signed a repeal of the 2012 right-to-work law earlier this year.

“The administration made repeal of a demonstrably effective economic development, interstate migration and population growth tool a top priority in early 2023,” LaFaive told Michigan Capitol Confidential. “This was a bad decision if lawmakers are really looking to goose job opportunities and an inflow of people to the Great Lakes State.”

Michigan Capitol Confidential reported in January that in two years, 2.1 million people had moved from states without right-to-work laws to states with those laws.

Right-to-work also produces higher wages, which contributes to population growth. Per-capital income increased 21.9% in the ten years after Michigan’s right-to-work law was passed in 2012. Personal income only grew 0.5% in the ten years before that, when there were no right-to-work protections.

Neither the council nor Whitmer responded to an email seeking comment.