Where the jobs aren't
'Tick, Tock," says the sign outside the community center in Greenville, Mich. But the men and women shuffling into the building on a chilly February afternoon--here to attend a state-organized "Dislocated Employee Workshop" --don't need any reminders that time is fast running out for them and their jobs. Many work at the Electrolux refrigerator plant, which is shutting down this fall and moving most production to Ciudad Juarez, Mexico. That will cost Greenville a staggering 2,700 local jobs. Others here work for Hitachi Magnetics in neighboring Edmore, due to close later this month, shedding 120 employees.
While the nation's job machine is back in gear, for others it is nonexistent. In many industries, the press of global competition means it is time to learn a new trade, head back to school, or consider pulling up stakes and moving on.
Lorraine Campbell, 25, made wire baskets and shelves for a shuttered Electrolux supplier. "I would like to go back to school to become a licensed day-care provider, maybe take some business classes," Campbell says, adding, "I kind of liked my old job." A possible new career is just one of several big changes facing Campbell, who is six months pregnant and whose husband, Michael, 36, works at the Electrolux plant. "He's pretty p - - - ed off, but what are you going to do? If a plant closes, it closes. It just seems like Michigan is kind of going downhill."
Although the national economy has been expanding for 39 months, the Wolverine State still has a 7.1 percent unemployment rate. In 2004, the Michigan economy declined 2.2 percent, according to Detroit-based Comerica Bank. "The wind is at the back of most state economies," says Dana Johnson, Comerica's chief economist. "But we lost 1 percent of our payrolls last year." Compared with a gain of 2.2 million jobs nationally, Michigan lost a total of 46,500 jobs last year--including 17,000 manufacturing jobs. "We recognize that the first part of this decade has not been kind to Michigan," Gov. Jennifer Granholm says.
Michigan's downward journey mirrors that of the Big Three automakers. Gone are thousands of high-wage, big-benefit union jobs--and they are not coming back. "Michigan has one of the worst business climates in the nation," says Michael LaFaive, analyst at the Mackinac Center for Public Policy in Midland, Mich. The Pacific Research Institute in San Francisco ranks Michigan 34th out of the 50 states based on 143 variables such as tax rates, state spending, and tort laws.
Evolution. LaFaive says the biggest no-no is the state's "single business tax," a European-style value-added tax. Democrat Granholm agrees that changes need to be made. "The global economy has evolved, but our business tax structure has not," she says. Recently, she proposed a 37 percent cut in the tax, as well as making the levy take into account a company's profitability. She also wants to borrow $2 billion to finance a venture-capital fund to build and nurture new business in the state, particularly in the materials and life sciences industries.
New jobs can't come soon enough. Michigan has always risen and fallen with the national economy--until now. "We'd just better have our house in order before the next recession," warns Patrick Anderson, an economist in East Lansing. The fate of workers like Lorraine Campbell depends on it. -James M. Pethokoukis
This story appears in the March 21, 2005 print edition of U.S. News & World Report.