Historically, the area and state have weathered economic downturns on the strength of its manufacturing industry. Manufacturing may no longer be capable of providing a safety net.
“That's the fragile part of the economy,” said Michigan State University economics professor Paul Menchik.
A weak manufacturing sector is only one factor working against the economy, according to Menchik.
The influence of an aging population is a key concern.
“The number of people in prime working age is falling,” he said.
“So, we're in a situation in which the solutions to potential productivity of people in the state are falling,” Menchik said. “One wonders if we can retain our middle position (among states) of output per person.”
When it comes to consumer taxation, Menchik said Michigan has a 19th-century approach by taxing only purchases. He believes services, as well as purchases, need to be taxed. It's another issue magnified by the graying population.
“As people age, consumption focuses on service,” he said.
The Governor and state leaders are taking steps to diversify our economy, attract new business, and help new companies get off the ground. They also have a plan to "help students who make it through 2 years of college with at least a 2.5 grade-point average. The plan would revamp the Michigan Merit Scholarship to increase the money available for college-bound students to $4,000 from the current $2,500 -- with some college payments delayed two years."
Change takes time, especially in a state where manufacturing has been king for nearly a century, but there are signs of optimism, such as the recent announcement that the California-based Advanced Photonix Inc., a technology company, plans to move its headquarters to Ann Arbor, aided by a nearly $1.2 million state tax break.
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