Jobs, child care, taxes challenges facing Michiganders

Job shortages have reached crisis levels in Michigan, Bridge Michigan reported on Monday. The report also said the state has steep and perhaps dangerous shortages across a range of critical jobs.

While Michigan Gov. Gretchen Whitmer’s Administration has pumped nearly $700 million in programs and grants in the past two years to address the problem, there is no indication of success. There has been no shortage of organizations, news outlets and institutions releasing studies on why Michigan continues to decline in population and prosperity. What they reveal is that the primary causes for Michigan’s decadeslong decline is due to state policies across a wide spectrum, ranging from political instability to tax policies, low wages across the board and increasing housing costs in the face of a housing shortage.

For instance, the Michigan Economic Development Corporation on Nov. 16 published a release stating that Whitmer spent three days in California to secure investments in the semiconductor industry that will create what the MEDC says are high-paying jobs and also to bring that critical supply chain to Michigan. But it is the middle class workers who hold those jobs that are hardest hit by the state’s tax policies.

A Dec. 9, 2022 report published by Kiplinger titled “10 Least Tax-Friendly States for Middle Class Families,” placed Michigan at No. 9.

The report states that the 4.25% flat (income tax) rate in Michigan is higher on middle-class families than in most other states. By comparison, the state income tax range in neighboring Wisconsin is 3.54% up to $12,760 for single filers and up to $17,010 for those filing jointly. The rate jumps to 7.65% on taxable income over $280,950 for single filers and $374,600 for joint filers.

While in Michigan, middle-class families pay the same flat rate as upper income families, and property tax is well above the national average. For a home worth $300,000, Kiplinger states, property tax is estimated at $3,972. But it is becoming more difficult to afford a home in Michigan, even if one can be found.

Michigan’s Statewide Housing Plan, published in 2022 by the Michigan State Housing Development Authority, notes that home prices increased 84% between January 2013 and October 2021. That compares to a national average of 48% during the same period. According to redfin.com, in October 2023, home prices in Michigan had increased another 5.4% compared to 2022. In October, 36% of homes in Michigan sold 5.2% above the list price.

Forbes Advisor reported in October that Michigan experienced a red-hot real estate market during the pandemic as people reallocated funds to housing and took advantage of low interest rates. Now, with rising rates, fewer people are selling their homes. That has reduced inventory but not prices, as buyers compete for fewer properties.

As the state government seeks ways to bring more middle-class jobs to Michigan in the face of declining population, there are few strategies to raise low-income families into the middle-class.

According to the 2023 ALICE Report (Asset Limited, Income Constrained, Employed), of the 20 most common occupations in Michigan in 2021, 70% paid less than $20 per hour. Most of these jobs saw an increase in the median wage. For example, the median wage for cashiers increased by 4% from 2019 to $11.38 per hour in 2021. But, the report states, given that the wage was low to begin with, cashiers still had the largest percentage of workers who lived below the ALICE Threshold in 2021. The wage to cover the ALICE Household Survival Budget for a single adult was $12.97 per hour working full time, or for a family with two adults and two children, a combined wage of $29.51 per hour. The Federal Poverty Level is listed as $12,880 for a single adult ($6.19 per hour) and $26,500 for a family of four.

While there were ALICE workers in all sectors, of the most common occupations, those with the highest percentage of workers below the ALICE Threshold in Michigan in 2021 were:

• cashier

• personal care aide

• fast food

• counter worker

• cook; laborer and mover, and

• waiter and waitress.

ALICE represents the growing number of families who are unable to afford the basics of housing, child care, food, transportation, health care and technology.

“These workers often struggle to keep their own households from financial ruin, while keeping our local communities running,” ALICE states. This group also has suffered with child care costs since the pandemic. For families with two children, child care is often the most expensive item in their budget, even more expensive than housing.

With a median hourly wage of $11.53 in Michigan in 2021, 31% were below the ALICE Threshold. And with staffing and demand fluctuations, many child care providers went out of business during the pandemic. Lack of care remains an obstacle for working parents.

Bridge Michigan reports that there is a shortage of 9,000 child-care workers in Michigan. Vacancies have an outsized impact on the economy — when child care centers lack staff they can’t accept as many children, which can force parents to stay home rather than accept income-producing jobs.


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