Monday, August 28, 2006

About That Single State Recession

Massachusetts Gov. Mitt Romney was in Michigan over the weekend to attend the state Republican convention. He also brought a commitment of $750,000 from the Republican Governor's Association for issue ads aimed at showing voters how poorly the state has fared under Democratic leadership.
"Michigan is undergoing a single-state recession," Romney said. "This initial commitment is being made by the RGA in order to talk about creating jobs and other important issues facing the people of Michigan.
This is the same propaganda the DeVos campaign has been circulating:
Michigan's worst-in-the-nation economy is headed even further in the wrong direction. ... Meanwhile, the rest of the nation is creating millions of new jobs, encouraging strong investment and helping businesses to expand.
Actually, the rest of the nation is NOT doing that well under Republican rule:
Monthly job growth since August 2003 is 50% lower than the average of President Clinton's entire term. Since August 2003, job growth has averaged 160,000 per month. During Clinton's eight years in office job growth averaged 236,000 per month.

Real wages have fallen since August 2003. The average worker's real wages were twenty cents lower in June 2006 than they were in August 2003.
And what about that single state recession they keep talking about? Our neighbors to the south aren't doing any better - and they have a Republican governor!

Ohio No. 1 -- in job losses
The 217,000 jobs that vanished from all of Ohio's goods-producing industries between 1997 and last year -- along with their $9.3 billion in average annual wages -- were the biggest losses of any state in the nation. The state's 15.7 percent decline in total average annual wages also ranked Ohio dead last.

Job losses aren't the only measure of Ohio's economic woes.

The state's gross state product generated by its goods-producing industries -- manufacturing, construction, farming, mining and other natural resources -- fell by nearly $9 billion from 1997 to 2004, again the biggest drop of any state.

The rest of the state's economy -- the service-providing industries -- did manage to grow, but well below the national average and not enough to keep up with Ohio's growing work force. [...]

Worse yet, the new jobs paid considerably less than those lost. The average annual pay for goods-producing jobs was more than $46,000 last year, compared to $35,000 for service-sector workers.
The loss of those manufacturing jobs has a serious effect on the middle-class according to Alan Tonelson, a researcher with the United States Business & Industry Council, a Washington-based advocacy group representing medium and small manufacturers.
"Manufacturing is the only sector that has had large-scale success in taking someone with average skills and schooling and providing them with a salary that will allow them to live middle-class lives," said Tonelson, who wrote the book, Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards.

"Those jobs help support much of the economy."
Unfortunately, Tonelson believes the full effect of the Ford and GM cuts have not started to be felt yet in Ohio. He thinks the state will be very hard hit by them.

Change takes time, especially in a state where the economy is heavily tied to one industry, as it is in Michigan. However, Granholm's job plan is succeeding in creating and retaining jobs, and other people are beginning to take notice.
In truth, parts of Michigan are doing well, including this area in the northwest corner of the Lower Peninsula, where more and more executives from Chicago and other big cities are living and working via Internet and cellphone, while enjoying the lakes and golf courses in their backyards. Ann Arbor and other university towns are also thriving, and some high-tech is beginning to arrive in the state, lured by new business incentives pushed by the governor.
Check it out yourself. The MEDC has a detailed list of jobs created across the entire state - not just the northwest corner of the Lower Peninsula.

In the end, the truth is what really matters to people, and Michigan's GOP has been less than truthful about Michigan's problems and who should bear the blame. Charles Ballard, professor of economics at Michigan State University, put the argument in its proper light:
"If Dick DeVos had been elected four years ago, the Michigan economy would look very much as it does now," Ballard said. "The percentage of the economy that's in manufacturing has been declining for half a century. That's not a blip, that's a trend. And if you're in a state like Michigan, which is much more involved in manufacturing than the average state, that's going to cause problems for you."
UPDATE: I guess great minds do think alike! Zack @ Pohlitics had this to say about Michigan's single state recession: It's basically a load of crap.


Zack said...

I guess great minds think alike: I just put up a similar post on the same topic on my site. Nice work, Kathy!

Kathy said...

Zach, we're playing blog tag today. I just updated my blog to incorporate your post and your comment showed up! Great minds thinking alike is right!

Kathy said...

I'm sorry, Zack. I keep spelling your name wrong. I'll give myself three lashes with a wet noodle!

Cathleen said...

Both you and Zack- very nice work! I might have to rip you guys off. ;-)

(with credit, of course!)

Zack said...

Kathy, don't worry about misspelling my name. It's been happening my whole life ;)

Cathleen, sharing is caring. Feel free to use my posts anytime.

Kathy said...

Thanks, Cathleen, and ditto what Zack said!

Kvatch said...

Monthly job growth since August 2003 is 50% lower than the average of President Clinton's entire term. Since August 2003, job growth has averaged 160,000 per month. During Clinton's eight years in office job growth averaged 236,000 per month.

Have we even made up the 1M jobs lost during the first 3 years of Bush's tenure yet?

Lew Scannon said...

Once again, I reiterate, who has been controling the legislature? For longer than Granholm? If they passed one piece of legislation that she vetoed that would have been able to stop dicks like Devos from shipping jobs overseas, then why don't the Republicans produce it? Because they can't! The problem is that we have let business ship all our manufacturing jobs overseas and the result of that has been a slow down in the auto industry because the jobs that filled the vacuum created by our jobs being sucked across our borders don't pay enough to afford to buy a new car. It's simple economics, and if nobody can see it in the Republican party, than they don't deserve to blame others for their own mistakes!!

Kathy said...

Kvatch, I believe those 1M jobs were made up, but that is still no accomplishment considering our population growth. We should be adding 1.8M a year just to stay even with growth.

Lew, I agree 100%, and its also the reason housing sales are stagnant and prices are falling. We are becoming a Wal-Mart nation and a two class country. The have-nots will be forced to shop at stores like Wal-Mart and the rich people who control our country and own the businesses will have us over a barrel. I believe that's the definition of a banana republic.

West Mich. Kevin said...

Of course no one in the state is really under the impression that the governor (or the president for that matter) creates jobs any more than a cow creates eggs.

The Legislature also has limited control on the private sector job market. It's simply just a matter of economics. Capital goes to the place that labor is the cheapest with of other comparative factors also of consideration.

If we want to build the economy a start would be to spend money earmarked for extended unemployment benefits on providing educational opportunities for displaced labor. Particularly in the high tech and service economy sectors.

Unfortunately, organized labor generally does not operate in this domain, so the democrat part won't endorse it. And it calls for spending of public funds so the republican'ts won't do it either.

Maybe we need an independent. Where's Jesse when we need him. said...

I had the same thought and agree with your assessment, but the "Ohio No. 1 -- in job losses" is a bad link.

Kathy said...

Infohack, that link is bad because it's from a year ago. The situation hasn't changed though. The media is still reporting that southeastern Ohio is suffering due to the lack of manufacturing jobs. The article I linked to said the new service sector jobs being created fail to pay as well as the jobs lost. said...

Hi Kathy, I wasn't disagreeing - I posted a similar comment in another forum and was looking for corroborating links.

Apparently in the Republican talking points bulletin, there's a one-state exception clause for purposes of campaigning from painting a rosy picture of the overall U.S. economy.

Kathy said...

Info, here's another link that might interest you:

States continue to hemorrhage manufacturing jobs.