Michigan's Job Creation Plan
Michigan has a huge problem with jobs and capital leaving the state for more favorable climates. Which makes it incredible that the ruling Democrats in the state have this plan to improve things:
- Hiking the minimum wage to $10 an hour for all workers.
- Imposing a blanket moratorium on home foreclosures for 12 months.
- Cutting utility rates 20% across the board.
- Requiring all employers to provide health care to their employees.
- Hiking, by $100 a week, and extending, for six months, unemployment benefits.
Wow, that should really bring companies running to the state to invest their capital. This is always a powerfully attractive package:
- Raise the price of unskilled labor and entry-level employees
- Reduce protections for lenders investing capital in the state
- Set the state up for power shortages
- Increase the price of labor by $12,000 or more per year
- Increase employment-related taxes ( a sure outcome of raising unemplyment benefits)
DrTorch:
This might help Ohio and Elkhart, IN.
October 5, 2009, 12:31 pmJoshK:
I've been thinking that when you look at the Latin American countries and you see a similar attitude and a set of policies you can look at the US and see how they got there. I assume the legislators in MI thought that the reason why they have such a poor job climate is because of a lack of government involvement. They get more involved and make it worse. That prompts them to get further involved.
It's kind of like forbidding people to sell food and then screaming "market failure" when you see people starving.
But I think that's how those countries got there. The next part is the crushing public debt load. Oh wait....
October 5, 2009, 1:20 pmangry patriot:
Liberals will be the death of us all.2012 can't come fast enough!
October 5, 2009, 2:13 pmJoshK:
And in 2012 we'll elect someone from the GOP who will create other crazy programs, subsidies, and other give-aways.
October 5, 2009, 2:33 pmCraig:
Hey, Michigan's slick TV and radio ad campaign that features famous actors will overcome these minor obstacles and bring many businesses to the state.
October 5, 2009, 2:37 pmSmitty:
Michigan Democrats take a cordless bungee jump into the abyss of bad ideas.
October 5, 2009, 2:59 pmTheAvidPenguin:
Politicians never cease to amaze me.
Citizens need to figure out a way to identify and elect better
I was thinking about this last week- what decisions do we want out politicians to make?
October 5, 2009, 3:44 pm-the one that the majority wants
-the one that should be made regardless of what the majority/special interest makes (problem of political suicide could be addressed with term limits)
Dr. T:
I can think of one employer that would love to come to a state with such "improvements": the federal government (but not Congress, whose members ignore existing labor laws).
New York state did similar things in the 1970s. Businesses left, and welfare users moved in. I believe that for welfare purposes, 90 days residence conferred eligibility. NY had welfare benefits that were more than twice as great as many states, and enrollments swelled over then next ten years. Looks like Michigan will be the state to live in if you're unemployed.
October 5, 2009, 4:51 pmJames H:
JoshK, I think that angry patriot may be hoping for the world to end in 2012 (end of the Mayan calendar and associated doomsday predictions), not a different politician on the throne.
The foreclosure moratorium will also likely raise interest rates in the area. I'm sure that some legislation would then be passed to make high interest rates illegal, which would result in no lenders in that market.
I think that the politicians in this area are long-time union members. The policies seem to match the union ideals for their contracts. Works great for the short term, and then the bankruptcies come.
October 5, 2009, 5:40 pmSean:
What would you expect from a state that has the highest unemployment rate in the nation and the number one priority of its elected leaders is to solve climate change.
October 5, 2009, 6:26 pmJBHarshaw:
Reads like one of the looter politicians screeds from an Ayn Rand novel.
Apparently Michigan has decided to take the lead as the first "people's state" barreling full-steam and head-first into the coming dark ages!
October 5, 2009, 6:28 pmStan:
Wow, at this point, those who fail to understand basic economics, are engaged in willful ignorance. The psychological benefits of their frail worldview must be worth more to them than decent standards of living and a competitive state. Economic illiberalism is a religion. What else would cause so many to devoutly follow in such a suicidal path?
October 5, 2009, 6:34 pmBob Smith:
Since super-long foreclosure times increase costs, not just in direct costs but also in deterioration of the collateral, I think the foreclosure moratorium is more likely to reduce allowable loan-to-value than increase interest rates.
October 6, 2009, 1:50 amMike Loe:
If the Michigan Dem's throw in mandatory free cable with high speed internet, i'm there!
October 6, 2009, 5:44 amNora:
I think that what we have to do first is "Reduce protections for lenders investing capital in the state" because with more money the state will grow relatively fast, and the jobs will come.
Great post
October 6, 2009, 7:22 amColin:
Check out today's WashPost article on Michigan: http://www.washingtonpost.com/wp-dyn/content/article/2009/10/05/AR2009100503870.html
October 6, 2009, 7:37 amanon:
Mike Loe:
...and a pony?
October 6, 2009, 8:09 amDrTorch:
Colin,
I gotta think that at some point you have to take a resigned indifference toward these folks.
Adults testing at "6th grade" math?
Factory line workers who "don't know what else to do?" Hey, guess what? Too bad. You made these decisions.
You picked up no new skills repairing your house? Fixing your car? Working on a model railroad?
It's no surprise that people need to learn new skills to stay employed. They've been shouting it from the rooftops for nearly 40 years.
It's no surprise that math is an essential skill. Those teachers you laughed at in HS weren't kidding.
These people made decades worth of poor choices, and misspent thousands of dollars worth of training and assistance. Why should I be forced to provide even more?
October 6, 2009, 8:29 amtomw:
Aren't you glad that we have 50 'laboratories' of Democracy? They can try all sorts of things and demonstrate for the other 48 (CA won't listen - they already know what the solution is ..) what not to do.
Michigan has only to look south to Indiana, where the governor said we aren't going to spend money on things we can do without, to see how to weather an economic downturn.
Michigan is not the only Midwestern state that has significant dependence on auto manufacturing.
tom
October 6, 2009, 8:52 amMethinks:
Huh.
The US Virgin Islands is trying to stimulate its economy by giving tax exemptions of 90-100% for anyone willing to move to the Islands and hire at least ten Islanders.
Once we normalize for the disadvantages of living on a Caribbean Island instead of the mainland, we have a pretty clear picture of which one is winning in the effort to better its economy. It's not Michigan.
October 6, 2009, 10:01 amMark:
If you read the link Colin provided you can see how the Michigan system does not work. They cite two example of bringing jobs. One, they spent $37 million to bring 400 jobs and another they spent $100 million to bring 4000 jobs. So, one idea spent $92,500/job and the other $25,000/job.
If the average job paid $40,000/year, give it a hefty multiplier of 2 (that is each of these $40,000 will create 2 more additional jobs in the community), and an average state tax rate of 5% it will only take 20 years to recoup the investment. Now that is money well spent!
October 6, 2009, 10:09 amMJ:
This is disturbing to read. Despite the continued job losses, Michigan (and Granholm in particular) doesn't seem to be learning anything. The Post article says it all.
At some point the plant workers that were laid off are going to have to swallow their pride and go back to school. I don't know how they, Granholm, or anyone can assume that former auto assembly line workers with barely a high school education and few transferable skills will be able to occupy jobs in "green" industries, manufacturing things like solar panels and wind turbines. This explains why so few of the refrigerator plant employees got jobs at the new plant.
The Michigan legislature, the governor, and the citizens who elect them need to understand that the state needs to get its fiscal house in order and focus on basic services, like education and public safety, rather than throwing money (and lots of it) at politically favored firms and industries. This is not a long-term solution. Take away the subsidies and Michigan's costs are still much higher than its competitors. These deals typically have limited durations, so at some point changes have to be made or else the firms will turn around and leave just like their predecessors.
The more I look at it, the more Michigan is starting to turn into the France of the Midwest. And with the same predictable employment outcomes.
October 6, 2009, 10:46 amNot Sure:
"Factory line workers who “don’t know what else to do?†Hey, guess what? Too bad. You made these decisions." - DrTorch
I worked for a manufacturing company in California in the 90's who... wait for it... decided to relocate out-of-state to a location more business friendly.
While talking with the head of personnel one day during the shut-down phase prior to the actual relocation, the topic of what would happen to the factory floor workers came up. He told me he was trying to find openings in other facilities in the area, but was having trouble because a lot of our workers were legal immigrants who did not speak english.
Many of these people had been with the company for 10 to 20 years.
*facepalm*
October 6, 2009, 12:22 pmDale:
The west coast has California and the east coast has Michigan; seems fair to me. Neither seems to be able to go broke fast enough, although I think Michigan might be winning.
October 6, 2009, 1:29 pmperlhaqr:
What could possibly go wrong?
Plan failed last time? Do it again, only harder/b>! It's gotta work eventually!
October 6, 2009, 10:04 pmAllen:
While Michigan is getting a lot of attention in the press, seems like Ohio is doing nearly as bad.
October 7, 2009, 2:12 pmLost In Space:
Hey if it's running for an office, you can beat your last penny that is will be ...
- Hellbent on further destroying the economy.
- Accompanied by a bag or dark magick tricks.
- Promise you everything on the campaign trail and deliver the opposite.
It doesn't matter what party IT comes from it will be blind, stupid and greedy. The world would be a far better place without politicians.
October 7, 2009, 7:55 pmRichard:
This recent U.S. Jobs Creation Plan presentation, which has a slide devoted to Michigan's job creation efforts, would be of interest/value.
October 26, 2009, 1:41 pmhttp://www.smith-trg.com/createjobs.html
or http://electronics.wesrch.com/pdfEL1GP9A5CAIWY
Thoughts...comments encouraged...