Rick Haglund: When in-demand talent can work from anywhere, what will happen to Michigan?

November 19, 2021 6:35 am

Detroit | Getty Images

Alarmed that Michigan was losing too many young college graduates to Chicago, New York, San Francisco and other talent magnets, then-Gov. Jennifer Granholm decided to try a new approach to economic development in the early 2000s.

She took notice of the radical notion, presented in urbanist Richard Florida’s groundbreaking 2002 book, “The Rise of the Creative Class,” that young college grads in fields such as engineering, health care, design and media were increasingly moving to places with a vibrant quality of life, even if they didn’t have jobs.

The economy was changing from workers moving to where the jobs were, to companies moving to where talent was located, Florida and others observed.

Jennifer Granholm after the first debate in Detroit | Andrew Roth

Granholm’s response was the 2004 “Cool Cities” initiative in which communities competed for state grants to improve downtowns, housing, parks, cultural institutions and other “placemaking” elements to become more attractive to new and existing residents.

The program was widely panned by those clinging to the long-established notion that making Michigan more attractive for businesses through tax cuts and investment incentives would attract needed talent.

Others noted that when government tries to designate something as “cool,” that’s the moment it becomes uncool.

“Cool Cities” didn’t achieve Granholm’s goal of reversing decades of disinvestment and decay in Michigan’s cities. But her contention that Michigan needed a much bigger emphasis on attracting talent was on the mark.

“Place need business. Business needs talent and talent wants place,” said Public Policy Associates Chair Jeff Padden, a quote he attributed to Rob Fowler, who retires next month as CEO of the Small Business Association of Michigan (SBAM).

“If you don’t get place right, there’s nothing you can do in economic development to save you from failure,” Padden told me.

We can see this in the auto industry, which is looking to hire thousands of software engineers in its historic transition to electric vehicles.

While metro Detroit is still the nation’s auto engineering capital, automakers will place many of these new jobs in Silicon Valley; Denver; Seattle; and Austin, Texas, and other hip cities where software talent is concentrated.

The COVID pandemic has shown that high-education attainment workers can perform their jobs from just about anywhere, and many are doing them from where they want to live, not where their employers’ cubicle farms are located.

That presents a difficult challenge for states like Michigan that are rapidly aging and not seen as “cool,” except for the winter temperatures.

State Senate Economic and Small Business Development Committee Chair Ken Horn (R-Frankenmuth) recently told me he thinks Michigan will need 1 million more residents to fill existing jobs from rapidly retiring Baby Boomers and new jobs that state employers want to create.

Padden traces Michigan’s predicament to the days of former Gov. John Engler, a tax cutter extraordinaire who was laser focused on cutting taxes and easing business regulations as the true path to prosperity.

“Michigan made a decision long ago to set a goal of becoming a top 10 low-cost state,” he said. “The notion of investing in talent was really off the radar. We succeeded in winning the race, but the race we won was a race to the bottom.”

Not quite. Thirteen states have more attractive business tax climates than Michigan, as ranked by the Tax Foundation.

The COVID pandemic has shown that high-education attainment workers can perform their jobs from just about anywhere, and many are doing them from where they want to live, not where their employers’ cubicle farms are located.

– Rick Haglund

But Padden is correct that Michigan policymakers have long been more concerned about lowering business costs than attracting talent, particularly young four-year college degree-holders.

And it continues today. After Ford Motor Co. announced in September that it was spending $11.4 billion to build an electric pickup truck assembly plant and three battery plants in Kentucky and Tennessee, the major topic of discussion is how much money we should throw at auto companies to lure their electric vehicle investments to Michigan.

Padden said Michigan should have pursued Minnesota’s policies that have made it one of the most economically successful states in the Midwest.

Decades ago, policymakers there invested in boosting education attainment, building light rail in the Twin Cities, enhancing recreational assets and other placemaking initiatives.

Minnesota’s population jumped by 7.6% between 2010 and 2020, the fastest growth among Great Lakes states. Michigan’s population grew 2% in the same period.

Michigan’s slow population growth will result in the state losing a valuable U.S. House seat, while Minnesota will retain its eight slots.

“If 20 years ago Michigan had pursued Minnesota’s path, I think there would be at least a strong chance that we would not be looking at losing a congressional seat,” Padden said.

But Michigan has a rare opportunity to become cool.

State and local governments are getting billions of dollars in federal American Rescue Plan and infrastructure cash, much of which can be used for placemaking efforts.

And while Granholm’s “Cool Cities” initiative didn’t blow us away, there’s been progress, with a number of cities still incorporating the slogan in their marketing efforts.

Some say the policies of Granholm’s successors embraced the importance of place, including former Gov. Rick Snyder’s Regional Prosperity Initiative and Gov. Gretchen Whitmer’s MiEconomy plan.

“Cool Cities was really about the recognition of the role communities play in attracting and retaining talent, Gary Heidel, acting executive director of the Michigan State Housing Development Authority, told me. “It really did change the thinking in the state about those things.” 

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Rick Haglund
Rick Haglund

Rick Haglund writes the "Micheconomy" column for the Michigan Advance. He's a former reporter and business columnist for Booth Newspapers, now the MLive Media Group, with extensive experience covering Michigan’s economy and the auto industry. He now works as a freelance writer based in Southeast Michigan.