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By Ron French/Bridge Michigan
METRO DETROIT — Personal income in Michigan hit the lowest mark in history compared to the U.S. average last year.
The average income of Michigan’s roughly 10 million residents in 2022 was $57,038, compared to a national average of $65,470, says recently released census data. That means for every $1 the average U.S. resident earns, a Michigander earns just 87.12 cents. That’s lower than the former record of 87.13 cents, which Michigan hit in 2009.
Michigan, which was above average for most of the 20th century, now ranks 39th in personal income and is the lowest in the Midwest.
“This is the poorest we’ve been compared to the country, ever — I just think it’s shocking,” said Lou Glazer, president of Michigan Future Inc. “It’s the culmination of 40 years of decline, irrespective of what party is in charge in Lansing or Washington.”
The personal income of Michiganders peaked in 1953, when the auto industry was thriving and union jobs guaranteed a middle class life. That year, the state ranked 8th in per capita income. Michigan was 16th in 1999, before a steady decline.
That’s offset somewhat by a lower-than-average cost of living — the state ranks 35th in that measure. Still, the data indicate that Michigan residents today are, on average, worse off financially than their parents, when compared to other states.
“People have to realize Michigan is no longer a rich state,” said Eric Lupher, the president of Citizens Research Council. “Michigan used to be a high-income state — the birth of the middle class, arsenal of democracy and all that stuff — and we’ve hit a new low as a state.”
Most of the state’s economic indicators are below average today. Michigan ranks 37th in median household income, 34th in the percentage of adults with a bachelor’s degree or higher, and 49th in population growth since 2000, a factor that discourages companies from expanding their Michigan operations or moving to the state.
Complicating revitalization efforts is the United Auto Workers strike now entering its second month. It has cost the U.S. economy about $4 billion so far, with Michigan bearing the brunt.
Changes in the auto industry over the past 40 years account for some of Michigan’s slump from a wealthy state to the poorest in the Midwest, said Brian Calley, the president of the Small Business Association of Michigan.
There are fewer autoworkers today than a generation ago, and they are paid, adjusting for inflation, less than their parents.
“The drop really tracks with the change in the industrial economy and the amount of income you can make in those areas,” Calley said.
Calley suggests the examine its K-12 education system, which scores below average in the National Assessment of Educational Progress, often called the Nation’s Report Card. In 2022, Michigan fourth graders ranked 40th in the country in reading.
“There’s no reason to expect (the economy) will improve until we have an education system that is redesigned to meet the requirements of today’s workforce,” Calley said.
Glazer said Michigan needs to focus on jobs that require college degrees.
“Until we do,” he said, “we’ll be one of the poorest states in the nation.”
According to Kathryn Ellywicz, a marketing specialist with GreenPath Financial Wellness in Farmington Hills, as inflation and interest rates have increased, so has debt-to-income ratios.
“Household debt has risen to $17 trillion in the second quarter of 2023, according to the Federal Reserve of New York,” Ellywicz stated via email. “Many people we speak with are feeling squeezed, living paycheck to paycheck and using credit cards to make ends meet. Households are facing a confluence of factors -- inflation continues to hamper their budgets; personal savings have dwindled; and credit card debt is at an alltime high. In August, 50% of GreenPath Financial Wellness clients were already in – or within $100 of – a budget deficit. The average balance for GreenPath clients with credit card debt is $15,940.”
Ellywicz shared some ways for people to get the ratio below 40%.
First, reduce spending.
“Make budgeting a part of your regular routine,” Ellywicz stated. “Set aside time each week to ensure your spending is within budget.”
Ellywicz also suggests finding ways to boost income, like gig work as the holidays approach
“Avoid applying for new credit or taking on new debt. See if you can delay any major purchases,” Ellywicz stated.
“The lower your interest rate, the faster you can pay off debt,” she stated. “GreenPath works with creditors to lower interest rates, consolidate your debt into a single monthly payment and pay off unsecured debt in 3 to 5 years.”
GreenPath can be reached at (800) 550-1961 or by visiting greenpath.org.
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