Any worker in Michigan knows the difficulty of the past decade. But what about the future? What will it take to improve the prospects for prosperity?
In the eyes of Rob Fowler, the president and CEO of the Small Business Association of Michigan, the state’s competitive stake in the global economy will increasingly rely on “economic gardening.”
“Economic gardening is the opposite of traditional economic development strategies that involve attracting companies from outside the state,” Fowler says. “This is a grow-your-own, bootstrapping strategy. Embracing economic gardening will make Michigan a more entrepreneurial place, with a more entrepreneurial culture that supports the growth and establishment of small businesses.”
Of course, there once was a time when folks named “Dow,” “Ford,” and “Kellogg,” started out as economic gardeners and grew businesses that largely shaped Michigan’s economy throughout the 20th Century.
So, what are the prospects for economic gardening today? SBAM answers that question in its latest Michigan Entrepreneurship Scorecard released this summer. The results suggest all sorts of punch lists for Michigan’s next governor…
ECONOMIC ACTIVITY: No big surprises here. Michigan is at or near the bottom for overall growth in gross domestic product, foreign direct investment, and unemployment.
ENTREPRENEURIAL CLIMATE: Michigan is near the bottom in growth in the number of small businesses and small business payroll. We’re 19th in terms of university spin-out businesses, 15th in university R & D. One of our best rankings is 4th in industry R & D.
ACCESS TO CAPITAL: Commercial lending dropped 56 percent in Michigan from 2005 to 2008 — no surprise given the national tightening of credit. Michigan ranks 23rd nationally for commercial lending. But here’s a pleasant surprise… Private lending to small businesses has held up very well – Michigan ranks 5th among all states. We’re mediocre in terms of venture capital (24th) and business incubators (37th).
COST OF DOING BUSINESS: Following SBAM’s “economic gardening” theory, costs of doing businesses should be considered more in regard to the climate for creating businesses in Michigan more than the climate for moving businesses to Michigan. Either way, our costs of doing business are less-than-conducive. In terms of business tax burden, we’re 27th, but our business tax structure is 48th. Labor costs are 43rd (or seventh worst). Other measures also lag…. Workers’ compensation costs (21st), unemployment insurance costs (47th), health care premiums (20th), and metro office rental rates (17th).
THE GREENING OF MICHIGAN?: Gov. Jennifer Granholm has staked a good part of her legacy on next-generation wind and battery power and other forms of “green” industry. But the overall share of Michigan’s economy devoted to green industries actually decreased 3 percent from 2005 to 2008 and Michigan’s green industry ranks a meager 36th nationally. Water quality is a bit of a concern, too. Despite the bounty of the Great Lakes, Michigan ranks only 14th nationally for water quality — nearly 4 percent of the state population is served by water systems that reported health violations in 2008.
EDUCATION & TALENT: Student test score rankings for math (35th) and reading (32nd) are far from stellar. College affordability is a growing problem — Michigan rank’s 36th. And Michigan failed to move the needle on bachelor’s degree attainment from 2005-2008 — we rank 34th nationally.
MICHIGAN VANILLA: By many and diverse measures, Michigan is just plain middle of the pack, regardless of the considerable amounts of gushing pride many residents feel about the state’s Great Lakes, cultural gems, and quirky places. Among all states, we rank in the middle of the pack on charitable giving, commute times, disposable income, state and local tax burden, and crime.
