Friday, April 03, 2009

A Lesson From Michigan

So after a one day break I'm back in the saddle again. Here's a chicken-or-the-egg type question: What comes first the people or the jobs? While you think about that I want to share some highlights from and article in the Detroit News. It can be found here, and is summed up by the headlines "Leaving Michigan Behind: Eight-year population exodus staggers state" "Outflow of skilled, educated workers crimps Michigan's recovery" (was Michigan recovering?).

The writer states "Michigan's exodus is one of the state's best known but least understood problems." Least understood. Hmmmm. Could it be that your economy stinks? Let's look at the map (included in the article) that shows where the Michiganders are moving to.

The red states receive the people. Lots moving to Florida - retirement. But then theres a lot in the south, Texas, Arizona, California. These states have been the boom states economically. So what comes first the jobs or the people?

According to the article "The state loses a family every 12 minutes, and the families who are leaving -- young, well-educated high-income earners"

Now before you say wow I'm glad I'm not there, New York (where I live) is in the same boat. Sandy Parker, the President of the Rochester Business Alliance wrote an article saying that Upstate New York is facing a similar situation. In fact, when I first met her she welcomed me saying that she was happy to see a college education young person moving to Rochester.

So why are the people running away? Some blame it on the decline of manufacturing based economy to a service based economy. I point my finger at taxes. People (individuals and businesses) are shifting to where they won't get dinged with high taxes. 9 of the 10 highest taxed counties in the United States are in New York.

And the problem is that it is becoming a death spiral. As the population ages, they leave the tax base. But there are programs like social security, medicare, etc. Some of these programs are state funded. What happens when your younger population is fleeing.

What we are seeing is the formation of ghost towns. It is fascinating to me in a car-wreck-on-the-interstate kind of way. (You know you rubberneck). I have some interesting data that I want to share about related topics. So what is the lesson that we learn? If you want to kill your economy, tax it.

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