Workers in Minnesota see wage gains, while workers in Michigan see steady wage losses

Aug 29, 2014

Well, it’s Labor Day weekend, unofficially known as the last weekend of summer, and this in itself seems horribly unfair.

Weren’t we still shoveling snow a few weeks ago?  Anyway, when it comes to things not being fair, those who work for a living know that all too well.

Especially, that is, if they have limited education or work in manufacturing jobs. I’ve just been reading a fascinating new Labor Day report issued by the Michigan League for Public Policy. It’s focus is on continuing wage disparities between men and women – the famous gender gap.

That’s an important issue, but to me it wasn’t the most significant thing in this report. What this report really does is illustrate how devastating the last 35 years have been for Michigan’s traditional blue-collar workers.

Even more important, the authors of this report show decisively that most of the policies our leaders have been following are wrong.

Credit Michigan League for Public Policy

They contrast Michigan with Minnesota, a state that has been getting it right. And they supply the facts and figures to prove it. We all know that the auto industry has been in decline.

But something else happened too. For a long time, wages tended to rise with productivity. However, starting about 1979, that began to change. Productivity continued to rise. Yet average wages, adjusted for inflation, fell.

The long-term effect has been devastating. In this state, only those workers with advanced degrees are doing better than they were 35 years ago.

The median wage of workers with only a high school education has fallen by nearly one-third. Workers who didn’t graduate from high school saw their median wage nearly cut in half. Even those with bachelor’s degrees saw their wages fall 4%. And we are talking only about those still employed.

Many aren’t even working. And how have our leaders responded to this crisis? By ending welfare, sharply reducing the Earned Income Tax Credit, and making higher education harder to get. We have indeed significantly cut taxes.

"Michigan's wage declines are the result of both a shift in the global economy and, most importantly, of policy choices that have hurt its working men and women."-- Michigan League for Public Policy report

But there’s been no evidence this has led to a huge number of new jobs. This report contrasts our situation with Minnesota, our neighbor in the Upper Midwest.

In Minnesota, the overall median wage has gone up over the past 35 years, and gender disparities have dramatically lessened as well. The economy there is profoundly better in virtually every way.

What happened?

To quote directly, “While manufacturing was declining, the knowledge-based sector of the economy was expanding, and Minnesota was able to take advantage of it.”

Minnesota has higher taxes than Michigan, and this clearly helps it do more for its citizens.

Minnesota has a progressive state income tax rate. Rich pay more, poor folks less, and Minnesota’s top investment priorities are education, the social safety net, infrastructure and public transit.

The Michigan League for Public Policy concludes “Minnesota’s wage gains are the result of the state’s resolve to invest in the public good.”

Michigan’s losses are “the result of both a shift in the global economy and, most importantly, of policy choices that have hurt its working men and women.”

We might, this Labor Day weekend, think about that.

Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.