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How much can a governor really affect job creation?

Oct 13, 2014

Politicians like to take credit for improving the economy, and challengers like to blame sitting officials for damaging it. In the race for governor in Michigan there have been plenty of both those kinds of accusations. Lester Graham with Michigan Watch examines how much politicians can really affect the economy.

Outside a Michigan WORKS! employment office, I asked a few unemployed people if they thought any state politician could make a difference in creating jobs.

Davina Carey has been out of work since June. “Hopefully," she said, laughing. "I mean, I don’t know.”

"Well, I’m not sure," said Lashon Graham (no relation to this reporter), "but I hope so. Hopefully somebody will come along with an idea."

Thomas Knight felt politicians could make a difference. "I would say they would have a very influential effect," Knight said.

That hope might be misplaced.

Certainly incumbent Republican Governor Rick Snyder has been trumpeting job creation as he did on a recent public radio Michigan Calling program.

“We’ve done great work: 300,000 private-sector jobs being created, in terms of personal income coming back, just home prices. We’re the number one state in the nation for increases in home values in this last year. That’s a great sign that things are coming back in our state. Many good things going on and many great things still to come,” Snyder said.

Governor Rick Snyder taking questions from news media.
Credit Courtesy: Michigan Municipal League

The governor says his business tax restructuring, the Right to Work law, new exemptions in personal property tax, and fewer regulations on businesses have created an environment that encourages job growth.

The 300,000 jobs that have been created is an impressive accomplishment, but keep in mind Michigan lost something like 750,000 jobs during the decade-long recession in the state.

Don Grimes is an economist at the University of Michigan. He says once you factor out the effects of the improving national economy and the resurgence of the auto industry, there’s not much credit to take.

“You’re probably looking at about a 10,000 to 15,000 job gain each year that cannot be explained by the national economic growth or cannot be explained by the strong performance of the auto industry. And that’s sort of a maximum that Governor Snyder can be really claiming is in the nature of 10,000 to 15,000 jobs,” Grimes said.

Grimes added Michigan’s economy is recovering faster than many states, although the household median income is still far lower than it was before the recession.

Democratic challenger Mark Schauer, in a statewide public radio call-in program, said Snyder’s changes have actually only benefited the rich.

“Our current governor’s economic strategy was trickle-down economics. That’s exactly what it was,” Schauer said, adding the result has hurt the middle-class.

“His corporate tax restructuring amounted to a $1.8 billion corporate tax giveaway. (It) wasn’t tied to job creation. I mean ... we still have one of the highest unemployment rates in the country and CNN Money just reported Michigan has one of the five worst economies,” Schauer said.

Challenger Mark Schauer speaking to supporters.
Credit Lester Graham / Michigan Radio

The Democratic challenger says he’d eliminate the higher taxes on all retirees, the working poor, and the middle class. He says the improvement would mean a better economy and more state revenue. At the same time, he says he’d cut waste in state agencies.

The economist Don Grimes says Governor Snyder –like any politician – is going to keep pointing to the improvements.

“If you look at the unexplained growth in Michigan since the recession, Michigan is probably in the top five states in the country instead of being at the bottom like we were in the 2000s. So, I don’t know how much credit you want to give to him –I’m sure he’s going to claim as much as he can get- but, there clearly has been a very big improvement in the performance of Michigan,” Grimes explained.

But, Michigan was in a much deeper economic hole than most states which explains why its unemployment is among the worst in the nation.

So, when we see Michigan improving faster than other states, you have to keep in mind that Michigan has a lot further to go to recover. And, so far, there's little evidence that Michigan's political maneuvers are contributing substantially to that recovery.