2018 Economic Competitiveness Benchmarking Report. Data to Support a Stronger Michigan

Transcription

1 2018 Economic Competitiveness Benchmarking Report Data to Support a Stronger Michigan

2 1 Introduction 2 Meodology 4 Key Findings 9 Output Metrics 20 Input Metrics 76 Michigan s Regional Performance 84 Business Leaders for Michigan Board of Directors About Business Leaders for Michigan Business Leaders for Michigan, e state s business roundtable, is dedicated to making Michigan a Top Ten state for jobs, personal income and a healy economy. The organization is composed exclusively of e chairpersons, chief executive officers, or most senior executives of Michigan s largest companies and universities. Our members drive nearly one-ird of e state s economy, provide 390,000 direct jobs in Michigan, generate over $1 trillion in annual revenue and serve nearly half of all Michigan public university students. Find out more at Copyright 2018 Business Leaders for Michigan. All Rights Reserved.

3 Introduction Business Leaders for Michigan is pleased to provide you wi is year s fact-based assessment of Michigan s economic competitiveness relative to oer states. We compare Michigan s performance on key output (e.g., employment, personal income) and input (e.g., taxes, education) metrics annually to at of traditional, new economy, and Top Ten benchmark states. These metrics provide multiple reference points for evaluating Michigan s performance. The conclusions included in is report are used by Business Leaders for Michigan and policymakers alike to help develop strategies for making Michigan a Top Ten state for jobs, personal income, and a healy economy. If Michigan were performing like a Top Ten state today, ere would be: 36,000 more Michigan people working $10,000 more income per person $12,500 more GDP per person Research for e 2018 Economic Competitiveness Benchmarking Report was conducted by Anderson Economic Group, a research and consulting firm wi expertise in economics, public policy, finance, and industry analysis. Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 1

4 Meodology How To Read This Report 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I In is report, we use a series of common measures to determine e economic streng of states and regions. The measures are divided into two categories: outputs and inputs. Output indicators like jobs, income, population and GDP show us e impact of policy decisions. They are e end result of ongoing economic development and policy changes. Input indicators measure e factors businesses look at when deciding where to locate. In is report, Michigan s input metrics are divided into two categories: cost indicators and value indicators. When deciding wheer to locate or expand in a region, job providers evaluate e costs (e.g., taxes, fees, utilities) of doing business in a region relative to e value (e.g., talent, infrastructure) it provides. Ultimately, areas at offer more value for equal or lower cost encourage business grow and attraction, which leads to more jobs, higher incomes and a stronger economy. Michigan s rank among e 50 states, wi #1 being top performance and #50 being worst performance in e category. UNEMPLOYMENT RATE % 3.88 % Factors like e cost of doing business, e incentives available, e pool of talent, and e necessary infrastructure to support company operations are considered. When ese indicators are positive, ey greatly influence site selection decisions and, ultimately, lead to stronger outputs. The correlation between inputs and outputs is important to keep in mind when reading is report. Ultimately, e inputs are e factors over which state leaders have e greatest amount of control. This year s benchmarking results can offer continuing direction as we collectively evaluate e next crucial decisions for our economy. Wi all is in mind, readers of is benchmarking report can see at a glance what progress has been made, where Michigan ranks relative to e rest of e U.S., and which direction we re moving. The key below shows you how. Michigan s level of performance for e most recent year One-year trend Positive Negative Holding Average performance of e Top Ten states 2

5 Meodology, continued Michigan s performance on economic output and input metrics is compared to selected traditional and new economy peers and e Top Ten states. Peer States were selected based on traditional and new economy benchmarks. WA OR NV CA ID UT AZ MT WY CO NM ND SD NE KS OK MN IA MO AR WI IL TN IN MI KY OH SC PA WV VA NC VT ME NH NY MA RI CT NJ DE MD DC Traditional Benchmarks Alabama Indiana Georgia Ohio Illinois Tennessee New Economy Benchmarks California Nor Carolina Colorado Texas Massachusetts Virginia AK WA Peer States MT HI TX ND LA MS AL Traditional Benchmarks New Economy Benchmarks GA FL VT ME Top Ten States were selected based on eir average rankings on key job, economic, personal income, and population indicators ( ). See chart below. California Massachusetts Minnesota Nebraska New Hampshire New York Nor Dakota Pennsylvania Texas Washington OR NV CA AK ID UT AZ WY CO NM HI SD NE TX KS OK MN IA MO AR LA WI IL NH NY MA MI RI PA CT NJ OH IN DE WV VA MD DC KY NC TN SC MS AL GA FL Top Ten States for Job and Economic Grow ( ) OVERALL STATE Massachusetts Nor Dakota California New York Washington Texas Pennsylvania Minnesota Nebraska New Hampshire EMPLOYMENT LEVEL EMPLOYMENT GROWTH PER CAPITA INCOME LEVEL PER CAPITA INCOME GROWTH Top Ten States Over e last ten years, ese states averaged e highest ranking across four basic indicators of jobs, income, GDP, and population. In e report, Top Ten refers to is group of states and Michigan's performance relative to eir average performance. The table below looks at a weighted average rank for bo level and ten-year grow for ese four categories. Employment is measured per capita to control for state size. PER CAPITA GDP LEVEL PER CAPITA GDP GROWTH POPULATION LEVEL POPULATION GROWTH Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 3

6 Key Findings 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 4 Michigan s economic grow continued to outpace most oer states during Our grow has begun slowing, however, and our absolute results against most economic measures remained average or below. It is more important an ever for Michigan to be aggressive wi fresh, bold strategies at help us outperform e competition and become a Top Ten leader. Where our economy is concerned, complacency remains e enemy. Output Indicators Despite reaching a 10-year low, Michigan s annual unemployment rate still lags e average of peers and Top Ten states. Private sector employment has exceeded e average grow in Top Ten states for ree out of e last four years, but Michigan's labor force participation rate, while improved over e last year, remains below e Top Ten and peer state averages. Michigan s per capita personal income levels continue to grow, but remain well below peers and Top Ten states. Michigan per capita income grow has outpaced e average of Top Ten states in recent years, but Michigan's 2017 per capita personal income level remained more an $4,000 less an e peer state average and over $10,000 less an Top Ten states. Michigan s per capita GDP levels, while still growing, remain well behind ose of peer and Top Ten states. Michigan per capita GDP grow has generally outpaced bo e peer and Top Ten averages in recent years. However, e average per capita GDP of peer states in 2017 was over $5,000 higher an Michigan s, while Top Ten per capita GDP was more an $12,500 higher. Michigan s population has stabilized, but peers and e Top Ten are growing faster. After losing population in 2009, 2010 and 2011, Michigan has had six straight years of positive grow. During at same period, however, peer and Top Ten average population grow has been as much as 10 times higher an Michigan s. Input indicators Cost Michigan continued to do well during 2017 when it comes to affordability for employers seeking to locate or expand. As competing states and nations continue to become more affordable, however, Michigan must work to hone and retain its competitive edge where costs are concerned. Input indicators Value The state s value inputs improved somewhat during 2017, but its talent and infrastructure gaps continue to pose significant long-term challenges. The state s talent pipeline continues to be in jeopardy as educational results lag most oer states, and it s possible even likely at Michigan could face a critical shortage of skilled workers in e years ahead. Michigan s relatively weak infrastructure also remains a concern. While e state does have many competitive strengs including a weal of new and emerging technologies, intellectual property, and strong exports Michigan s value proposition must increase to impact site selection decisions over e long term.

7 In 2017, Michigan was improving or holding steady in 37 (nearly 70 percent) of e 54 indicators used to measure e cost of locating here and e value provided. However, Michigan's overall ranking remained in e bottom half of states on nearly 60 percent of e measures. Michigan Competitive on Costs Michigan s average ranking on cost factors compares favorably wi Top Ten and peer states, and is stronger an bo where tax and government measures are concerned. The perception of Michigan's overall business climate has been holding steady, but requires improvement. Michigan s business climate was considered e worst of all 50 states in In 2017, Michigan s average ranking among e major business climate indices was 24 e same as during e prior year. Michigan s tax climate is among e best in e nation. Michigan s corporate tax climate continues to be ranked among e 10 best in e U.S., and e overall business tax climate is ranked 12. State and local government in Michigan is generally smaller and more affordable. State and local government taxes increased slightly during 2015, but remain lower an e Top Ten average and on par wi e peer state average. Michigan has fewer government employees per capita and lower government payroll spending an nearly all Top Ten and peer states. However, unfunded OPEB liabilities remain a problem. Michigan's unfunded oer postemployment benefit (OPEB) liabilities are nearly 16 percent higher an peers and more an 24 percent higher an e Top Ten. Michigan Lagging on Value Michigan s average ranking is well behind bo e Top Ten and peer states on factors measuring talent, infrastructure, and place. Michigan must continue to focus on workforce development. In 2017, Michigan ranked in e bottom 10 of all states wi respect to career and college readiness, e number of students enrolled in career and technical education classes, and e number of out-of-state students enrolled at our colleges and universities. Michigan also ranked in e bottom half of states for e percentage of 4 and 8 graders testing proficient in reading and ma, respectively, e number of critical skills degrees and certificates awarded by our colleges and universities, and e percentage of working age population wi an associate's degree or higher. Several aspects of Michigan s infrastructure ranked near e bottom of all states. Michigan ranked 30 for e percentage of households wi highspeed internet. We ranked 39 for e percentage of bridges and urban roads in poor condition. Innovation shows streng as well as areas for improvement. Michigan ranked among e top states for e value of goods exported (6) and research and development investment by universities (6). On e oer hand, we rank only 30 for e share of population wi a bachelor s degree or higher. Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 5

8 Where Michigan Stands Today Average Rankings on Cost Measures, 2018 Michigan s fiscal environment remains stronger an competitor states; however, its labor and business climate perception indices still lag. Average Rank All Business Climate Taxes Labor Energy Government Michigan Top Ten Peers Average Rankings on Value Measures, Economic Competitiveness Benchmarking Report Michigan s value proposition still trails at of oer states; however, ere are promising areas of grow in key investment sectors (engineering, geographic trade, higher education, life sciences, automotive, and natural resources). Average Rank Business Leaders for Michigan I 50 All Talent Infrastructure Innovation Economic Dev. Michigan Top Ten Peers Key Assets Place 6

9 Michigan's Grow s vs. Absolute Rankings s: Cost and Value Indicators 2017 Michigan continues to experience improvement in key input areas; however, more areas of instability are beginning to appear. The share of declining cost and value indicators increased in 2017, while e number of improving cost indicators fell. Absolute Rankings: Cost and Value Indicators 2017 Michigan is mostly above average on cost metrics, but below average on value indicators. Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 7

10 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I Comparisons As measured by key outputs, Michigan s economy continues to experience Top Ten grow, but at grow is beginning to slow. Michigan must safeguard its improvement where cost inputs are concerned, and make much more progress on key value inputs. OUTPUT INPUT - Cost INPUT - Value Taxes Labor Energy Government Talent Infrastructure Innovation Key Assets Place Jobs, Income & e Economy Compete Invest Grow 1 Top

11 output Output Metrics Economic output metrics help show how well Michigan s economy is performing. They reflect e impact of key policies, investments, and leadership at all levels. By tracking major output indicators employment, income, GDP, and population over time, analysts can gauge e state s progress toward prosperity. Michigan continued to enjoy relatively solid grow in jobs, personal income and productivity during e past year. However, e state s grow has begun to show signs of slowing, and e absolute levels of most economic measures remained average or below. Michigan can t afford to become complacent as competitor states and nations continue to drive down costs and add value. 25 in Per Capita Personal Income Grow 34 in Unemployment Rate 20 in Employment Grow 32 nd in Per Capita GDP 7 in Per Capita GDP Grow 30 in Per Capita Personal Income Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 9

12 Unemployment Rate UNEMPLOYMENT RATE Unemployment Rate s % 3.88 % Average share of labor force at is looking for work but does not have a job. A lower unemployment rate indicates at more residents are able to find employment Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 10 Michigan s annual unemployment rate has dropped by nine points since 2009, from 13.6 percent to 4.6 percent, and is now only 0.7 percentage points higher an e Top Ten average and 0.4 percentage points higher an peer states. Unemployment Rate Standings Bureau of Labor Statistics (Local Area Unemployment Statistics)

13 Employment Grow EMPLOYMENT GROWTH Employment Grow s % 1.29 % Year-over-year change in e number of residents wi a private-sector job. Higher levels of private employment indicate bo economic streng and prosperity among e state s residents. output Michigan ranked 20 in private sector employment grow from 2016 to 2017, down from e 15 fastest grow rate e prior period. Michigan s private sector employment grow matched e Top Ten average, but trailed e peer state average. Employment Grow Standings Bureau of Labor Statistics (Quarterly Census of Employment and Wages) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 11

14 Labor Force Participation LABOR FORCE PARTICIPATION Labor Force Participation s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I % % The share of e population age 16 and older, not including residents who are on active duty or institutionalized, at is employed or looking for work. Members of e working-age population can stop looking for work and drop out of e labor force for many reasons, including disability, old age, or discouragement. Higher labor force participation is a sign of a healier economy and workforce. Labor force participation increased in Michigan from 2016 to 2017, marking e second straight year of increased participation. The labor force participation rate in Michigan is 4.2 percentage points less an e Top Ten average and 1.7 percentage points less an e peer state average. Michigan s labor force participation rate in 2017 was lower an at of all peer states except for Alabama and Tennessee. Labor Force Participation Standings Bureau of Labor Statistics (Local Area Unemployment Statistics)

15 Labor Force Grow LABOR FORCE GROWTH Labor Force Grow s 21 st 0.85% 0.71 % The share of e population age 16 and older, not including residents who are on active duty or institutionalized, at is employed or looking for work. Members of e working-age population can stop looking for work and drop out of e labor force for many reasons, including disability, old age, or discouragement. Higher labor force participation is a sign of a healier economy and workforce. output The Michigan labor force grew by 0.9 percent from 2016 to 2017, and now stands at nearly 4.9 million participants. This grow rate exceeded e Top Ten average of 0.7 percent but trailed e peer state average of 1.2 percent. Labor Force Grow Standings Bureau of Economic Analysis (Personal Income Summary), Bureau of Labor Statistics (CPI Inflation Calculator) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 13

16 Per Capita Personal Income PER CAPITA PERSONAL INCOME Per Capita Personal Income s 30 $45,255 $55,613 PER CAPITA PERSONAL INCOME GROWTH % 0.47 % Personal income (2017 dollars) divided by population. Personal income includes salaries, wages, and bonuses from employment; dividends and interest from investments; rental income; pensions, etc Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 14 Income is an indicator of prosperity and average standard of living in a state. Michigan s per capita income grew by 0.5 percent from 2016 to 2017, exceeding e Top Ten grow rate of 0.3 percent. Per capita income grow in Michigan lagged behind e peer state average of 0.7 percent. Per Capita Personal Income Standings Bureau of Economic Analysis (Personal Income Table SA5), Bureau of Labor Statistics (CPI Inflation Calculator)

17 Per Capita GDP PER CAPITA GDP Per Capita GDP s $39, nd $52,301 Total amount of goods and services produced by private industries in e state, adjusted for inflation and changes in relative prices, divided by population. PER CAPITA GDP GROWTH % 1.69 % output Higher private sector GDP per capita is one of e primary measures of a region s economic streng. Michigan s per capita GDP grow of 2.4 percent between 2016 and 2017 ranked seven in e nation. Per capita GDP grow was higher an e Top Ten average of 1.7 percent, and higher an all peer states oer an California, Colorado, and Massachusetts. Per Capita GDP Standings Bureau of Economic Analysis (Real GDP in 2009 Chained Dollars) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 15

18 Michigan GDP/U.S. GDP MICHIGAN GDP/U.S. GDP Michigan GDP/U.S. GDP s % 4.41 % Total amount of goods and services produced in e state, as a share of all goods and services produced in e United States. A high share of United States GDP means at much of e country's production is occurring in at state, and can result in higher incomes for state workers Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 16 Michigan s share of U.S. GDP has remained flat since 2011, at approximately 2.7 percent. Michigan GDP/U.S. GDP Standings Bureau of Economic Analysis (Real GDP in 2009 Chained Dollars)

19 Population POPULATION Population s POPULATION GROWTH % 0.67 % Total number of residents. M M output Grow in population is an indicator for how well a state attracts and retains residents. It also affects a state s ability to support shared responsibilities such as maintaining infrastructure and providing education. Michigan s population increased slightly from 2016 to 2017, but population grow was slower an all of its peers except Illinois and Ohio. Michigan remained e 10 most populated state in 2017, but its population level is about 2.5 million fewer an e Top Ten average. Population Standings U.S. Census Bureau (Population Estimates) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 17

20 Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 18

21 output Output Conclusions Michigan needs to remain focused, energized and disciplined when it comes to achieving lasting economic results. The state s output indicators continue to remain relatively stable, but ey have softened relative to past years. It is more important an ever for Michigan to pursue dynamic, proven tactics at help us become a Top Ten economic force for grow. Why is it important to be Top Ten? Top Ten states benefit from more jobs, higher incomes, and healier economies. If Michigan were performing like a Top Ten state today, ere would be: 36,000 more Michigan people working $10,000 more income per person $12,500 more GDP per person Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 19

22 Input Metrics Employers generally use common indicators when deciding where to create new jobs: Cost indicators like taxes, fees, and energy prices allow site selectors to determine e costs associated wi locating in a particular region Economic Competitiveness Benchmarking Report Business Leaders for Michigan I Value indicators such as talent and infrastructure help site selectors know e value a region can offer for e business costs to be paid. Locations at offer more value for equal or lower costs are more attractive to businesses. States at are not competitive on costs are not seriously considered by site selectors. When cost indicators are favorable, however, it is value indicators at are capable of helping keep a location competitive. When comparing two or more regions wi similar cost structures, e region wi better infrastructure, talent and innovation capabilities will often win. Ultimately, business site selection decisions have a major impact on job creation, income levels, and economic productivity. That is why Michigan must monitor its own cost/value input indicators to ensure e best possible balance for business attraction, retention and expansion. Cost Value 20

23 input Corporate Tax Climate CORPORATE TAX CLIMATE Index at compares corporate tax burdens based on corporate income tax and gross receipts tax (10 = most favorable, 0 = least favorable). A lower corporate tax burden can improve a state s attractiveness to bo new and existing businesses. Corporate Tax Climate s cost In 2018, Michigan s corporate tax climate was more business-friendly an all of e Top Ten states, except New York. Michigan was ranked e ird most favorable among its peer states, behind Nor Carolina and Virginia. Corporate Tax Climate Standings The Tax Foundation (State Business Tax Climate Index) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 21

24 Overall Business Tax Climate OVERALL BUSINESS TAX CLIMATE Rankings are based on e overall tax index and component tax indices (corporate tax, individual income tax, sales tax, unemployment insurance tax, and property tax) (10=most favorable, 0= least favorable). These measures indicate how attractive a state might be to bo businesses and individuals in terms of common tax burdens. Overall Business Tax Climate s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 22 Michigan had e 12 best overall business tax climate in Michigan s tax climate is better an e average of bo e Top Ten and peer states. Note: Data for corporate and overall business tax climate rankings use different indices. Overall Business Tax Climate Standings The Tax Foundation (State Business Tax Climate Index)

25 input State and Local Taxes STATE & LOCAL TAXES % st 11.04% State and Local Taxes s State and local tax revenue as a share of personal income. Higher state and local taxes reduce takehome pay for residents and mean a higher cost of living. In 2015, state and local tax revenue amounted to 9.3 percent of statewide personal income, down from 10.7 percent in Michigan had lower state and local tax revenues as a share of personal income an e Top Ten average, and was on par wi e peer state average. State and Local Taxes Standings Tax Policy Center cost Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 23

26 Days Required to Pay Taxes DAYS REQUIRED TO PAY TAXES 24 The number of days a year at represent e portion of e year's earnings at are paid in federal, state, and local taxes Days Required to Pay Taxes s Lower tax burdens mean more take-home income for state residents Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 24 Michigan s days to pay taxes is slightly less an e Top Ten average, and commensurate wi e peer state average. Days Required to Pay Taxes Standings The Tax Foundation

27 input Unit Cost of Labor UNIT COST OF LABOR $ Private industry compensation, divided by private sector GDP. The share of output at is paid to workers indicates e value proposition for employers. Lower unit labor costs make a state a more attractive environment in which to operate. Michigan s unit cost of labor has declined slightly over e last five years but remained higher an e Top Ten average in The unit cost of labor in Michigan was higher an all of its peer states except Massachusetts. $0.49 Note: GDP is nominal for all private industries. Unit Cost of Labor s Unit Cost of Labor Standings Bureau of Economic Analysis (Real GDP by State, Compensation of Nonfarm Private Employees Table SA6N - Private Industries) cost Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 25

28 Business Climate Rankings BUSINESS CLIMATE INGS Average of ree major business climate indices at account for several factors such as business costs, business leaders perceptions, regulatory climate, quality of life, etc. (1 = best, 50 = worst). This measure is an indicator for how attractive a state might be for businesses. Business Climate Rankings s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 26 Michigan s average ranking across ree major business climate indices increased slightly from 2016 to 2017, putting e state at 24 out of 50. Since 2009, Michigan's aggregate ranking has improved 26 spots; however, Michigan s average rank still lags behind e Top Ten average and e peer state average. Business Climate Rankings Standings CEO Magazine (Best and Worst States for Business), CNBC (Top States for Business), Forbes (Best States for Business)

29 input Value Added Per Worker VALUE ADDED PER WORKER $ Real private industry GDP, divided by average annual non-farm employment. Worker productivity supports increased income and economic activity. While value added per worker in Michigan has steadily improved over e last several years, it was 12.5 percent lower an e Top Ten average in 2017, and e state ranked below all of its peers except for Alabama, Nor Carolina, and Tennessee. $ Value Added Per Worker s Value Added Per Worker Standings Bureau of Economic Analysis (Real GDP by State), Bureau of Labor Statistics (State and Metro Area Employment, Hours, and Earnings) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 27

30 Union Representation UNION REPRESENTATION Union Representation s 16.80% 42 nd 13.93% Employees represented by a union (as a percentage of ose employed). An indicator of labor market bargaining power, labor flexibility, and pro-business sentiments in e state. For some employers, lower union membership makes a state a more attractive place to operate Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 28 Michigan had e 8 highest union representation among all states in Michigan s rate was 2.9 percentage points higher an e Top Ten average and higher an all peer states except California. Union Representation Standings Bureau of Labor Statistics (Current Population Survey)

31 input Electricity Costs - Commercial ELECTRICITY COSTS: COMMERCIAL Price per kilowatt-hour (kwh) of electricity for commercial users. Maintaining competitive energy costs contributes to a state s attractiveness to businesses. In 2018, Michigan s electricity costs for commercial customers were lower an e Top Ten average, but higher an ose in all peer states except Alabama, California, and Massachusetts. Note: 2018 figures are calculated using data rough March Electricity Costs - Commercial s Electricity Costs - Commercial Standings Energy Information Administration (Electricity Data Interactive) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 29

32 Electricity Costs - Industrial 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 30 ELECTRICITY COSTS: INDUSTRIAL st 8.78 Price per kilowatt-hour (kwh) of electricity for industrial users. Maintaining competitive energy costs contributes to a state s attractiveness to businesses. In 2018, Michigan s electricity costs for industrial users were 17 percent lower an e Top Ten average, and slightly below e average of peer states. Note: 2018 figures are calculated using data rough March Electricity Costs - Industrial s Electricity Costs - Industrial Standings Energy Information Administration (Electricity Data Interactive)

33 input Natural Gas Costs A weighted average of e price per ousand cubic feet of natural gas for industrial and commercial users, weighted by e proportion of consumption from each sector. Maintaining competitive energy costs contributes to a state s attractiveness to businesses. Michigan s natural gas prices have fallen by 40 percent since 2008, and are slightly lower an e Top Ten average. Despite significant price declines, Michigan natural gas prices in 2016 were higher an e peer state average.. NATURAL GAS COSTS $ $6.35 Natural Gas Costs s Natural Gas Costs Standings Energy Information Administration (Natural Gas Data Interactive) cost Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 31

34 Gasoline Costs GASOLINE COSTS $ $2.11 The price per gallon of fuel for all users, converted from price per BTU. Gasoline Costs s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 32 Maintaining competitive energy costs contributes to a state s attractiveness to businesses. Between 2015 and 2016, e average price for a gallon of gas in Michigan fell by 25 cents. Michigan s average gasoline price was lower an e Top Ten and peer state averages. Gasoline Costs Standings Energy Information Administration (SEDS Estimates)

35 input State Unfunded Pension Liabilities STATE UNFUNDED PENSION LIABILITIES State Unfunded Pension Liabilities s 22 nd State government pension benefit unfunded actuarial accrued liability (UAAL) divided by population. This measure indicates e burden of unfunded retiree benefits on taxpayers. Payments for high unfunded liabilities may crowd out spending for competing needs, such as infrastructure and education. $3,182 $3,769 Michigan s unfunded pension liability per capita increased slightly from 2015 to 2016, but was 22nd lowest in e nation and lower an bo e Top Ten and peer state averages. Note: Unfunded liabilities are measured in UAAL, or unfunded actuarial accrued liabilities. State Unfunded Pension Liabilities Standings U.S. Census Bureau (Census of Governments), Pew Center on e States Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 33

36 State Unfunded Non-Pension (OPEB) Liabilities STATE UNFUNDED OPEB LIABILITIES State Unfunded OPEB Liabilities s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I $1, State government unfunded oer postemployment benefit liability (OPEB) divided by population. This measure indicates e burden of unfunded retiree benefits on taxpayers. Payments for high unfunded liabilities may crowd out spending for competing needs, such as infrastructure and education. Michigan s unfunded OPEB liability per capita has decreased each year since 2013, but remains higher an e average of Top Ten and peer states. Note: Top Ten average for OPEB excludes Nebraska due to data availability. Cannot make inter-year comparisons for OPEB due to use of a different data source for $1,600 State Unfunded OPEB Liabilities Standings U.S. Census Bureau (Census of Governments), Pew Center on e States 34

37 input Local Debt Service LOCAL DEBT SERVICE % 3.89 % Local government interest payments on debt, divided by local government direct expenditures (bo in current dollars). Maintaining debt service at low levels is an indicator of fiscal sustainability. Local government interest on debt in Michigan accounted for 3.8 percent of direct state expenditures in The state ranked on par wi e average of Top Ten states and slightly better an e peer state average. Note: This measure does not include debt service on principal since e Census of Governments does not report a direct debt service measure. Local Debt Service s Local Debt Service Standings U.S. Census Bureau (Annual Survey of State and Local Government Finances) cost Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 35

38 Total State & Local Spending TOTAL STATE & LOCAL SPENDING 20 Total state and local government expenditures (2017 dollars) divided by population. $9.72 $12.19 Total State & Local Spending s State and local government expenditures are made in important areas such as education, infrastructure, and public safety. However, high government expenditures may mean less private sector economic activity by redirecting dollars and employees for public sector use Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 36 Michigan s state and local government spending was 20 percent lower an e Top Ten average in 2015, and four percent lower an e average of peer states. Total State & Local Spending Standings U.S. Census Bureau (Annual Survey of State and Local Government Finances)

39 input Government Employees GOVERNMENT EMPLOYEES 5 The number of full-time equivalent state and local government employees per 1,000 people. High levels of government employment can contribute to quality government service, but can also lead to high taxes, administrative burden, and higher legacy costs. Michigan s number of government employees per capita increased slightly between 2015 and Still, e state has fewer government employees per capita an any Top Ten or peer state oer an Pennsylvania Government Employees s Government Employees Standings U.S. Census Bureau (Annual Survey of Public Employment & Payroll) cost Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 37

40 Local Government Payroll Spending LOCAL PAYROLL SPENDING Local Government Payroll Spending s 12 Local government payroll spending per resident. Government payrolls are an indicator of e expanse and quality of government services offered. However, high payroll figures can also indicate large administrative costs and inefficiency. $1,539 $2, Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 38 Local government administrative spending in Michigan is 28 percent less an e Top Ten average and 19 percent lower an e peer state average.. Local Government Payroll Spending Standings U.S. Census Bureau (Annual Survey of State and Local Government Finances)

41 input 4 Grade Reading 4TH GRADE READING 31.81% % The percentage of 4 grade students who attained a proficient level for reading. This provides an indicator of how well schools are meeting competitive academic standards. Michigan 4 grade reading performance lags behind bo e Top Ten and peer state averages. 4 Grade Reading s 4 Grade Reading Standings value Note: Data are only released every two years. National Center for Education Statistics (National Assessment of Educational Progress) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 39

42 8 Grade Ma 8TH GRADE MATH 8 Grade Ma s 31.24% 32 nd 39.74% The percentage of 8 grade students who attained a proficient level for ma. This provides an indicator of how well schools are meeting competitive academic standards Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 40 Michigan 8 graders are performing below bo e Top Ten and peer state averages. Alough e percentage of students attaining ma proficiency grew by 2.7 percentage points between 2015 and 2017, over eight percent fewer students achieved e proficient level relative to Top Ten states. Note: Data are only released every two years. 8 Grade Ma Standings National Center for Education Statistics (National Assessment of Educational Progress)

43 input Career & Technical Education Enrollment CAREER & TECH ENROLLMENT 42 nd The average number of career-oriented and/or technical education classes in which public high school students are enrolled. Serves as a measure of how well high school students are being prepared for highly-skilled technical professions. Fewer an one in four students in public high schools in Michigan was enrolled in a career or technical education class in This is less an onehalf e enrollment rate for bo Top Ten and peer states. Career & Technical Education Enrollment s Career & Technical Education Enrollment Standings National Center for Education Statistics (Table Enrollment in Public Elementary and Secondary Schools, by and Grade), Perkins Collaborative Resource Network value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 41

44 Career & College Readiness CAREER & COLLEGE READINESS Career & College Readiness s 47 36% N.A. 57 % The share of students who took e SAT and met benchmark standards for bo reading and ma. Well-prepared high school graduates help a state maintain a strong talent base. Passing students (bo subj.) % Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 42 Michigan s share of SAT test takers who scored proficient on bo reading and ma is 21 percentage points lower an e Top Ten average and 19 percentage points below e peer state average. Michigan's overall SAT performance trails at of oer states, due in part to its 100% student participation rate a much higher rate an most states. Note: Michigan began administering e SAT to all students in 2016; 2017 is e first year for which complete data are available. Michigan Top Ten States Peer States Career & College Readiness Standings College Board SAT Assessment Reports

45 input Active Apprentices ACTIVE APPRENTICES The number of total active apprentices per 1,000 working age people (ages 20 rough 64, inclusive). A higher number of apprentices indicates states where skilled workers are receiving valuable on-e-job training. In 2017, Michigan made great strides in increasing its number of active apprenticeships, rising eight spots in its overall rank. Michigan's active apprenticeship rate is on par wi e Top Ten average and exceeds e peer state average. Active Apprentices s Active Apprentices Standings U.S. Department of Labor value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 43

46 Out-of-State Enrollment OUT-OF-STATE ENROLLMENT Out-of-State Enrollment s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I % % Percentage of first-year undergraduates from out of state. This measure indicates how well higher education institutions are attracting students from out of state to provide an infusion of talent and capital. This should be compared wi in-state enrollment to ensure at states are maintaining in-state enrollment. The rate of out-of-state enrollment at higher education institutions in Michigan was less an half of e Top Ten average in Michigan out-of-state enrollment trailed all peer states except for California and Texas. Note: Data are only available every two years. Out-of-State Enrollment Standings National Center for Education Statistics (Residence and Migration of First-Time Degree-Seeking Undergraduates)

47 input Degrees Conferred Associate+ Per 10,000 DEGREES CONFERRED Total associate, bachelor s, master s, and doctorate degrees conferred per 10,000 residents by public and private institutions. Educational attainment is a factor in assessing e quality of a state's talent pool. The number of degrees conferred by higher education institutions in Michigan decreased from 2015 to 2016, and remains below e Top Ten average. Michigan was near e middle of its peers in terms of e number of degrees conferred per 10,000 of population. Note: Degrees include associate, bachelor's, and graduate/professional degrees. Higher education institutions include all public and private degree-granting institutions. All years are consistent in eir inclusion of degrees, wheer first or second majors. Degrees Conferred s Degrees Conferred Standings National Center for Education Statistics (Integrated Postsecondary Education Data System), U.S. Census Bureau (Population Estimates) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 45

48 Technical Education Critical Skills Degrees & Certificates TECHNICAL EDUCATION rd Total critical skills degrees and certificates conferred divided by e working age population (ages 20 rough 64, inclusive). These degrees especially prepare students for high-skilled occupations, particularly in e STEM fields, which are e types of jobs Michigan expects to increase in e future Technical Education s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 46 Michigan ranks 33rd in terms of critical skills degrees and certificates awarded. The state lags behind e Top Ten and peer state averages. Note: Higher education institutions include all public and private degree-granting institutions. Differences in is year s data reflect revisions as a result of newer data being collected. Technical Education Standings National Center for Education Statistics (Integrated Postsecondary Education Data System), U.S. Census Bureau (Population Estimates)

49 input Educational Attainment Population age wi Associate+ EDUCATIONAL ATTAINMENT 39.74% 32 nd 45.92% Share of residents aged 25 to 64 wi an associate degree or higher. The availability of highly educated talent can promote future grow of e economy, particularly in highly skilled professions. More education also correlates strongly wi higher wages. Michigan ranks 32nd nationally in terms of educational attainment only slightly lower an e peer state average but more an six percentage points lower an e Top Ten state average. Note: No new update is available in is category. Performance reflects at shown in prior year benchmarking report. Educational Attainment s Educational Attainment Standings U.S. Census Bureau (American Community Survey) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 47

50 Talent Migration Adults wi Bachelor s Degree or Higher TALENT MIGRATION Talent Migration s 14 Immigrants wi a bachelor s degree or higher minus emigrants wi a bachelor s degree or higher. This measure indicates how well a state attracts and retains highly educated individuals to live in e state. 11,453 28, Economic Competitiveness Benchmarking Report Business Leaders for Michigan I Michigan ranked 14 for talent migration in The total net migration for e state exceeded at of six Top Ten states, and five peer states. Note: This measure does not take into account emigrants who have moved to anoer country. Talent Migration Standings U.S. Census Bureau (American Community Survey) 48

51 input Median Age MEDIAN AGE Median Age s Median age of state residents. Increase in e median age is an indicator of an aging population, where e population grow rate of middle-aged and older residents outpaces at of children and young adults. States wi a high median age among residents may be good at attracting retirees, but is also can be a sign at younger people are seeking out oer places to work and raise a family. Michigan was e elevenoldest state in 2016, wi a median age of 39.7 years. Michigan s median age was higher an all of its peers and all of e Top Ten states except Pennsylvania. Median Age Standings U.S. Census Bureau (American Community Survey) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 49

52 Urban Roads in Poor Condition URBAN ROADS IN POOR CONDITION Urban Roads in Poor Condition s 24.83% % Share of urban roads in poor condition, by leng. A strong, reliable transportation system benefits bo businesses and individuals. Poor road quality imposes many tangible costs and reduces productivity Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 50 The number of poor-quality urban roads in Michigan declined by 1.2 percent between 2015 and Urban road quality was worse in Michigan an e Top Ten and peer state averages. Michigan ranks 39 among all states. Among peers, only California and Nor Carolina have a greater percentage of urban roads in poor condition. Note: Includes interstate highways, freeways, expressways, and major arterial roads in urban areas. Some values missing due to data reporting issues. Urban Roads in Poor Condition Standings U.S. Department of Transportation (Leng by Pavement Roughness)

53 input Bridges in Poor Condition BRIDGES IN POOR CONDITION % 7.09 % Percentage of bridges in deficient condition, by area. A strong, reliable transportation system benefits bo businesses and individuals. Poor bridge quality imposes many tangible costs and reduces productivity. The share of bridges categorized as poor in Michigan decreased by 0.4 percent between 2016 and Michigan trails e Top Ten average, and has a higher proportion of deficient bridges an all peer states except for Illinois, Massachusetts, and Nor Carolina. Deficient Bridges s Deficient Bridges Standings U.S. Department of Transportation (Highway Bridge by Wearing Surface) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 51

54 Drinking Water System Conditions DRINKING WATER SYSTEM CONDITIONS Drinking Water System Conditions s 9.81% 2.2 % The percentage of drinking water facilities in e state wi a serious violation, according to EPA standards. Clean drinking water prevents disease and can have life-long positive impacts on cognition and heal Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 52 Michigan ranks among e top states for drinking water quality nationwide. The state s performance exceeds eight of e Top Ten states in Drinking Water System Conditions Standings Environmental Protection Agency (Drinking Water Dashboard)

55 input Energy Grid Reliability ENERGY GRID RELIABILITY Duration of power outage per customer (in hours). An unreliable power grid can signal low quality infrastructure, and discourage businesses from locating in a state. Michigan ranks 37 nationwide in terms of average outage duration per customer. The average outage duration in Michigan has fallen by 65 percent since 2013, but remains significantly longer an e Top Ten average and longer an average rates in many peer states. Energy Grid Reliability s Energy Grid Reliability Standings U.S. Energy Information Administration value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 53

56 Broadband Speed BROADBAND SPEED Broadband Speed s 12 Average speed for downloading and uploading information, in kilobits per second (kbps). Strong telecommunications infrastructure can improve productivity and is attractive for businesses. 16,650 16, Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 54 Michigan ranks 12 nationally in terms of broadband connection speed, just below e average of Top Ten states and higher an e peer state average. Broadband Speed Standings Akami (Internet Connection Speeds)

57 input Broadband Penetration BROADBAND PENETRATION Broadband Penetration s 80.5% % The percentage of households wi highspeed internet connections, based on household survey data. Access to internet at home makes it easier and more affordable for students, workers, and entrepreneurs to stay connected. Michigan ranked 30 nationwide in terms of e number of households wi access to quality internet service in The state had a lower broadband penetration rate an bo e Top Ten and peer state averages. Broadband Penetration Standings U.S. Census Bureau (American Community Survey) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 55

58 Exports Per $100,000 of GDP EXPORTS Exports s $13,256 6 Total value of goods originating in a state at were shipped out of e country, as a share of total GDP. Exports help support jobs and grow e state's economy. $9, Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 56 Michigan had e sixhighest value of exports (scaled by GDP) in 2017 in total goods. The level of exports from Michigan exceeded e Top Ten average and ose of all peer states except Texas. Exports Standings Department of Commerce (TradeStats Express), Bureau of Economic Analysis (GDP in Current Dollars - Private Industries)

59 input University R&D Expenditures Per $1M of GDP UNIVERSITY R&D EXPEND $5,070 6 Research and development expenditures by higher education institutions, as a share of total GDP. Research and development expenditures by universities improve e state s attractiveness to out-of-state students and talent, and provide an important source of innovation and entrepreneurship in e state. Research and development expenditures at universities in Michigan were six in e nation in 2016, and were higher an all of e Top Ten states except Massachusetts and Pennsylvania. Michigan universities research and development expenditures were greater an ose of all of its peers except Massachusetts and Nor Carolina. $4,317 University R&D Expenditures s University R&D Expenditures Standings National Center for Science and Engineering Statistics (Higher Ed R&D Expenditures), Bureau of Economic Analysis (GDP in Current Dollars - All Industries) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 57

60 Highly Educated Young People HIGHLY EDUCATED YOUNG PEOPLE Highly Educated Young People s 31.79% % The share of residents ages 25 to 34 wi a bachelor s degree or higher. Young, educated residents have e potential to promote innovation and innovation-driven economic grow for years to come Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 58 Michigan s share of young, educated residents increased by 4.7 percent from 2007 to 2016; however, e state still lags behind e Top Ten and peer state averages. Highly Educated Young People Standings U.S. Census Bureau (American Community Survey)

61 input U.S. Patents Per 100,000 Residents U.S. PATENTS Number of U.S. patents awarded per 100,000 residents. Patents provide an incentive for innovators and entrepreneurs to improve technology. The states whose residents are e source of is innovation have an advantage in reaping e economic benefits derived from em. U.S. Patents s value Michigan ranked 9 in e nation in e number of patents issued, matching e Top Ten average. On a per capita basis, Michigan inventors were more prolific an ose in all of its peer states except Massachusetts and California. U.S. Patents Standings U.S. Patent & Trademark Office (Statistics), U.S. Census Bureau (Population Estimates) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 59

62 Venture Capital Investment Per $100,000 of GDP VENTURE CAPITAL INVESTMENT Venture Capital Investment s 29 $63.82 Total capital infusions by venture capital funds and investors per $100,000 in nominal GDP. This measure indicates a state s leadership in innovation and entrepreneurship and ability to attract funding for high-risk firms. $ Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 60 This is a volatile indicator. Venture capital investment in Michigan grew by 12 percent from 2016 to Venture capital investment in Michigan remains lower an in all Top Ten states except Nor Dakota, and lagged all but four peer states in Venture Capital Investment Standings PWC/Moneytree Historical Data

63 input Entrepreneurial Activity ENTREPRENEURIAL ACTIVITY Entrepreneurial Activity s 34 Kauffman Index of Entrepreneurial Activity (e share of individuals age 20 to 64 who previously did not own a business and subsequently started a business wi 15 or more hours worked during e year). This measure indicates e number of entrepreneurs in e state. Greater entrepreneurship, in e right environment, can lead to more innovation and more successful businesses. 0.26% 0.30% value Entrepreneurial activity in Michigan declined slightly from 2015 to 2016 and trailed e Top Ten and peer state averages. Entrepreneurial activity in e state has recovered, however, after ranking near e bottom nationwide in Entrepreneurial Activity Standings Ewing Marion Kauffman Foundation (Kauffman Index of Entrepreneurial Activity) Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 61

64 Net New Establishments NET NEW ESTABLISHMENTS Net New Establishments s The number of new businesses opened during e year less e number of businesses closed. Independent of employment, new business creation can provide economic grow, a more stable economic foundation, and a more diverse economy. 3, Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 62 Michigan ranked 27 in 2016 in terms of net new business establishments a significant improvement from 2007 when e state ranked last in e nation. However, Michigan s new establishment rate still falls far below e Top Ten and peer state averages. Net New Establishments Standings U.S. Census Bureau (American Community Survey, County Business Patterns)

65 input New Construction Permits NEW CONSTRUCTION PERMITS st 3.75 The number of new, privately owned housing units auorized for construction per 1,000 residents. This measure indicates how quickly new housing stock is being created in e state a proxy for growing population and household formation, and a source of economic grow. Permits for new construction in Michigan improved for e ird straight year in However, ere were fewer new construction permits issued per capita in Michigan an in all Top Ten states but Pennsylvania and New York. Michigan also lagged behind all peer states except Illinois and Ohio. New Construction Permits s New Construction Permits Standings U.S. Census Bureau (Building Permits Survey) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 63

66 Business Churn BUSINESS CHURN st The sum of establishments born and exiting a state wiin e last 12 mons, per 100,000 people. Higher levels of business churn indicate a more innovative and vibrant economy. Business Churn s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 64 In 2015, Michigan had one of e lowest levels of business churn in e nation, trailing behind bo e Top Ten average and peer state averages. Business Churn Standings U.S. Census Bureau (Business Dynamics Statistics)

67 input Fastest-Growing Companies FASTEST-GROWING COMPANIES Fastest-Growing Companies s Number of companies per 1,000,000 people at are among e 5,000 fastestgrowing companies in e country. Being home to e fastest-growing companies nationwide is a sign at a state is fostering an environment where startup companies can rive. Michigan s share of e nation s fastest-growing companies has dropped over e past five years. Michigan lags behind bo e Top Ten and peer state averages. Fastest-Growing Companies Standings Inc. and MAQ Software value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 65

68 Economic Development Expenditures ECON. DEV. EXPENDITURES Economic Development Expenditures s 25 $25.54 State and local government expenditures on economic development programs and incentives (2017 dollars), divided by population. This measure indicates e total scale of public spending on economic development programs and incentives in a state. Welltargeted incentives can attract businesses and increase employment in a state. $ Economic Competitiveness Benchmarking Report Business Leaders for Michigan I Michigan s economic development expenditures per capita ranked 25 in e nation in 2017, and exceeded bo e Top Ten and peer state averages. Economic Development Expenditures Standings Council for Community and Economic Research (State Economic Development Expenditures Database), U.S. Census Bureau (Population Estimates) 66

69 input Key Assets Share of National Employment EMPLOYMENT PERCENTAGE 14.69% % Employment as a share of working-age population in e engineering, geographic trade, higher education, life sciences, automotive, and natural resources sectors. These six sectors represent major opportunities crucial for growing Michigan's economy and moving it forward in e new global marketplace. The ree major indicators presented (GDP, employment, and earnings) show how ese sectors are contributing to a state's production and to residents' well-being. Michigan s share of e working-age population employed in key opportunity industries increased by 0.2 percent between 2016 and 2017, and is on par wi e Top Ten state average. Michigan also exceeds e peer state average by nearly one percent. Key Assets - Share of National Employment s Key Assets - Share of National Employment Standings AEG analysis using base data from e Bureau of Labor Statistics, Quarterly Census of Employment and Wages and e U.S. Census Bureau (spreadsheets) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 67

70 Key Assets Average Earnings AVERAGE EARNINGS 11 $67,841 Average annual earnings (in 2017 dollars) in e engineering, geographic trade, higher education, life sciences, automotive, and natural resources sectors. $71,050 Key Assets Average Earnings s These six sectors represent major opportunities crucial for growing Michigan's economy and moving it forward in e new global marketplace. The ree major indicators presented (GDP, employment, and earnings) show how ese sectors are contributing to a state's production and to residents' well-being. Key Assets Average Earnings Standings 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 68 Earnings in Michigan s key industries grew by 2.2 percent between 2016 and The state s key industry earnings lag behind e Top Ten average, and are on par wi e peer state average. AEG analysis using base data from e Bureau of Labor Statistics, Quarterly Census of Employment and Wages, e American Association of Railroads, and e Integrated Postsecondary Education Data System (spreadsheets)

71 input Key Assets Real GDP Per Capita GDP PER CAPITA Key Assets Real GDP Per Capita s 16 $8,396 $9,646 Real GDP in e engineering, geographic trade, higher education, life sciences, automotive, and natural resources sectors. These six sectors represent major opportunities crucial for growing Michigan's economy and moving it forward in e new global marketplace. The ree major indicators presented (GDP, employment, and earnings) show how ese sectors are contributing to a state's production and to residents' wellbeing. Real GDP among key industries in Michigan fell by 1.4 percent between 2015 and This decline was less an e 3.6 percent decline among "Top Ten" states and less an e 2.0 percent decline among peer states. Key Assets Real GDP Per Capita Standings AEG analysis using base data from e Bureau of Economic Analysis value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 69

72 Population Age POPULATION AGE % 43 rd 14.05% The percentage of a state's population between e ages of 25 and 34. Grow in prime working-age population is an indicator for how well a state attracts and retains workers. This affects a state s ability to grow, attract businesses, and maintain public infrastructure and programs. Population Age s 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 70 The percentage of young working-age people in Michigan has increased by 0.8 percentage points since However, Michigan has e lowest percentage of population age among all of its peers and second lowest among all Top Ten states. Population Age Standings Intercensal Estimates of e Resident Population by Sex and Age for States Annual Estimates of e Resident Population for Selected Age by Sex

73 input Commute Time COMMUTE TIME Commute Time s The average number of minutes it takes for a worker to travel to and from work. A shorter commute time means easier access to jobs for workers and less productive time wasted during commutes. Michigan ranks in e middle of all states for commute time, and slightly less an e Top Ten and peer state averages. Commute Time Standings U.S. Census Bureau (American Community Survey Commuting Characteristics by Sex) value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 71

74 Violent Crime Rate VIOLENT CRIME RATE Violent Crime Rate s The number of violent crimes per 100,000 residents. Lower violent crime means a safer living and working environment, making e state a more attractive place to live and start a business Economic Competitiveness Benchmarking Report Business Leaders for Michigan I Violent crime rates in Michigan increased by 10 percent from 2015 to Michigan s violent crime rate in 2016 was 42 percent higher an e Top Ten average and 13 percent higher an e peer state average. Violent Crime Rate Standings Federal Bureau of Investigation (Uniform Crime Reporting) 72

75 input Cost of Living COST OF LIVING $ $98.31 An estimation of e differences in e price levels of goods and services across states. A higher cost of living means businesses and households must pay more for an identical good or service. This can indicate a high desire to live in an area, but can also prevent businesses and households from purchasing necessary items. Michigan was e 29 most affordable state in The average of Top Ten states was about $9 lower and among peer states about $3 lower for e same basket of goods. Cost of Living s Cost of Living Standings Bureau of Economic Analysis value Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 73

76 Thriving Metropolitan Areas 2018 Economic Competitiveness Benchmarking Report Business Leaders for Michigan I 74 THRIVING METROPOLITAN AREAS nd The average ranking of large (300,000+) metropolitan areas in each state as measured by population, GDP, and personal income; and by population, GDP, and personal income grow over a 10- year period. Metropolitan areas act as engines of economic grow. Thriving metros indicate a healy, growing state economy. In 2016, Michigan s large metropolitan areas had an average ranking of 63rd out of 161 metro areas nationwide on key economic indicators. This represents a significant improvement in metropolitan area performance since The performance of Michigan s large metropolitan areas is now on par wi e peer state average, but still trails e Top Ten average. Note: Nor Dakota has no metropolitan areas wi 300,000+ population. Avg. metro area rank among all large metro areas 1 Thriving Metropolitan Areas s Michigan Top Ten States Peer States Thriving Metropolitan Areas Standings AEG analysis of Bureau of Economic Analysis, Bureau of Labor Statistics, and Census Bureau data

77 input Input Conclusions Michigan continued to do well during 2017 when it comes to employer affordability. However, oer states and nations many wi superior value inputs to offer are catching up. Alough e state continued to improve its value-add during 2017, Michigan continues to struggle wi talent and infrastructure gaps. Lagging educational outcomes and weak infrastructure pose challenges when it comes to attracting and keeping employers. Michigan must work to leverage its competitive strengs and invest in its own value proposition if site selectors are to be positively influenced to choose e state in e future. Business Leaders for Michigan I 2018 Economic Competitiveness Benchmarking Report 75