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Rick Haglund: Right to work is latest panacea meant to transform Michigan's economy

Technology is what a lot hoped would turn around Michigan's economy (this is Western Michigan University's technology parK). But in the end, manufacturing still adds the most jobs. (Photo by Kalamazoo Gazette File Photo)
Rick Haglund By Rick Haglund
on January 06, 2013 at 7:00 AM, updated January 06, 2013 at 11:21 AM
Despite a major tax overhaul that favors small companies, most of Michigan's recent job growth has been in its traditional big businesses.

I used to be a sucker for the next big thing that would turbocharge Michigan’s economy.

High technology. Biotechnology. Information technology.

This year’s economic game changer is supposed to be Michigan’s new right-to-work law, which prohibits labor contracts that require workers to pay dues as a condition of employment.

Backers of the law claim right to work will lead to new jobs created by companies that previously wouldn’t invest in Michigan because of its union environment.

But watching Michigan’s economy over the decades has shown me that there is no silver bullet that will quickly boost the state’s fortunes.

Yes, there are more jobs and business investment in areas such as life sciences, health care and other services.

But Michigan still is a state that largely rises and falls on vagaries of the century-old auto industry, regardless of actions by Lansing policymakers.

Despite decades of efforts to diversify the state’s economy, Michigan is entering its fourth year of a classic, manufacturing-led recovery.

Yes, it is weaker than past recoveries and feels more like a recession to many people. But auto industry growth likely will continue to be the big economic story in Michigan this year.

New manufacturing jobs will represent a quarter of the state’s job growth over the next two years, according to a recent University of Michigan forecast.

About 10,000 of those jobs, nearly half of the 23,000 new manufacturing jobs expected in the state by the end of 2014, will be in the auto industry, U-M economists say.

If you consider the job multiplier affects of auto assembly and supplier plants, a case could be made that virtually all of the state’s job growth since the end of 2009 has been auto related, economist George Erickcek of the Upjohn Institute for Employment Research recently told me.

And despite a major tax overhaul by Gov. Rick Snyder and the Legislature that favors small companies, most of Michigan’s recent job growth has been in its traditional big businesses.

Business in the state employing 500 or more workers added 88,800 jobs between the first quarter of 2010 and the first quarter of 2012.

That’s more than double the 42,800 jobs added by companies employing between 20 and 99 workers in the same period, according to a recent U-M study.

Some of that growth was a result of small businesses growing into larger companies, the U-M study said. That’s a good thing.

But transforming a state economy is a difficult process for state policymakers, in part because there are many things they cannot control, such as a severe recession or a credit crisis.

The best we may be able to hope for in 2013 is what the Japanese call “kaizen,” steady, continuous improvement.

Email Rick Haglund at haglund.rick@gmail.com

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