ALICE Report Synopsis

The new Michigan Association of United Ways ALICE report (for Asset Limited, Income Constrained, Employed), makes clear that Michigan is facing severe structural economic challenges. In the seventh year of a national economic expansion––and an even stronger rebound from near bankruptcy of the domestic auto industry––too many Michigan households are struggling.

Forty percent of Michigan households do not have sufficient income to pay for the necessities: primarily housing, childcare, food, health care, taxes and transportation. More than 1.5 million Michigan households are without adequate income to pay for basic necessities. As the report makes clear this is an all Michigan problem: in every county, among all races and all ages. 

Why?

  • Not enough of us work: Michigan is 40th in the proportion of adults who work. 400,000 fewer Michiganders working today than in 2000.
  • Not enough of us work in good-paying jobs: 16 percent below the national average in wages and benefits per capita. In 2000 Michigan was one percent below.
  • Too low education attainment. 32nd in the proportion of adults with a four-year degree or more. And even lower in all the rankings of K-12 student outcomes

This pattern is true irrespective of race. Racial discrimination is an ongoing reality in employment, education, housing and the criminal justice system; but class is now the main dividing line in the American economy and increasingly class is defined by college attainment.

The preeminent challenge of our times is figuring out how to reverse what is being called the Great Decoupling. Where even when the economy is growing––as it has been in Michigan since the end of the Great Recession––only those at the top are benefiting from that growth. The policy priority needs to be reestablishing an economy where as the economy grows all Michigan households enjoy rising incomes.

It should now be clear that having a growing economy, or a low unemployment rate, or being business friendly––all of which have been the goals of state policymakers now and in the past––does not lead to an economy that benefits all. Michigan has been making progress on all three since the end of the  Great Recession. Its far past time that we make explicit that the goal of state economic policy is a rising household income for all Michiganders.

The ALICE report makes clear that the economy is generating too many jobs that pay too little to pay the bills, save for retirement and the kids education and pass on a better opportunity to the next generation. That requires state policies to both remove the multiple barriers many face to find gainful employment and to augment wages and benefits through some combination of employer mandates and/or an expanded safety net. 

But the key to having an economy with rising household incomes for all is good-paying jobs and careers. Where careers are for forty years, not a first job. The prime focus of economic policy must be helping people have a career of good-paying work.

By far the most reliable path to substantially reducing the number of Michigan ALICE households is increased education attainment. The data are clear: the higher one’s education attainment the more one works and earns. The power of education attainment in raising one’s income has been growing for decades. The odds are great that the income gap by education attainment will continue to widen. The most reliable path to a good-paying career is with a bachelor’s degree or more, in both STEM and non-STEM fields.

Clearly not all good-paying jobs require a four-year degree. There are many good-paying jobs that can be obtained with an associate’s degree or occupational credential. But the preponderance of good-paying jobs are going to those with four-year degrees or more. 

In addition, the labor market is now characterized by accelerated creative destruction. Those who have the agility and ability to constantly switch occupations will do best over a forty year career. The notion of a career ladder––predictable and linear steps upward––in a world that is constantly changing is obsolete.

Rather people will need to be like rock climbers––constantly adjusting to new opportunities and challenges, and then resourceful to take advantage of those opportunities. Add to that, in an economy where more and more work is contingent, increasingly the ability to be your own employer. Finding good-paying work and good benefits and managing your own finances. These are the kind of skills that are developed best by earning a four-year degree, particularly in the liberal arts. 

If Michigan is going to be a place with a broad middle class, if employers are going to have the supply of skilled workers they need and if Michigan is going to be a place once again where kids regularly do better than their parents, it will happen because the state made a commitment to provide an education system for all from birth through higher education that builds rigorous broad skills that are the foundation of successful forty-year careers.

Author: Lou Glazer, President and Co-founder of Michigan Future, Inc.
Posted: April 11, 2017

 

Michigan Future, Inc. is a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

Michigan College Access Network | 222 North Chestnut Suite 200 Lansing, MI 48933 (map) | (517) 316-1713 Contact Us | Site Map | Terms and Privacy