In the Washington Post Jared Berstein and Somin Park have a very good op-ed about the measures that would actually promote U. S. manufacturing. Their claim is that tax policy is not nearly as important as other supportive policies and they use Grand Rapids as an example:
Here’s what Grand Rapids did:
- Michigan devotes more resources than the average state to customized job training programs.
- The local economic-development organization has invested great effort in developing clusters of related manufacturing industries that can work together to identify and solve common problems (e.g., skill needs).
- The local area has a high-profile initiative, Talent 2025, which is trying to improve the area’s skills development from early childhood through adulthood.
- Extensive infrastructure investments have been made in downtown Grand Rapids.
- Local business interests put up funds for extensive subsidies that helped attract the medical school of Michigan State University to locate in Grand Rapids.
The bottom line is this: Before we accept the diagnosis that U.S. manufacturing is toast, there’s way more to do.
While I agree that there are all sorts of measures that could and should be taken by state and local governments to maintain manufacturing employment, IMO they’re conflating two very different things: federal taxes on the one hand and state local taxes on the other. Isn’t is possible that lowering federal taxes, particularly on businesses, could provide the headroom to allow state and local governments to collect additional tax revenue which could be used for the other measures they favor? That’s something that never seems to occur to them.
Additionally, I wish the op-ed (and the underlying paper on which they rely) did more to quantify the effects of the individual actions.
Finally, while Michigan’s tax policies have been pretty stable over the last decade, Illinois has raised taxes multiple times and actually collects more taxes per capita than Michigan does and has higher tax rates of every kind except for their personal income tax (Michigan has a higher individual deduction; I haven’t done the spadework to determine which state actually collects more personal income tax from its citizens). My point is that state and local policies need to be targeted at maintaining manufacturing employment. What are the forces that led Grand Rapids to do that while Chicago didn’t?
When Grand Rapids came up recently, I had a nagging question in the back-of-my-head about what manufacturing Grand Rapids has? I found this list of the top ten employers in GR, most of which are in health services, business services, retail and public schools. Then we get:
7. Steelcase, furniture manufacturer (3,200 employed)
9. Herman Miller, furniture manufacturer (3,100 employed)
https://riverbankfinance.com/blog/the-top-10-largest-employers-in-grand-rapids-michigan/
Perhaps there is something about furniture manufacturing that is more stable than other manufacturing, particularly for business use. Presumably fewer environmental issues as well.
Before manufacturing moved to North Carolina and then to China, Grand Rapids was the center of the U. S. furniture business. I haven’t studied the issue otherwise. I only know that from having been an antiques dealer.
Once upon a time Michigan was dotted by thousands of small manufacturing companies that supplied the Detroit auto companies. That business is all in Japan, South Korea, and China now. I know about this because one of my siblings’ fathers-in-law owned an electroplating business in Holland, Michigan.
That brings up one of the shortcomings of the op-ed. Since 1970 Michigan has lost quite literally thousands of small manufacturing companies. Pointing to its preserving a few is an extreme case of cherry-picking. You can’t just start the clock over again every few years in considering the effects of government policies which is what I think the authors want to do.
It seems to me that the way to assess the effectiveness of GR’s policies is to count the number of manufacturing jobs in Kent County every year since 1970 and try to relate that to policies. I’m guessing that would paint a significantly different picture.
I think I was last in GR and Holland was about five years ago. GR felt like an Omaha, with a lot of white-collar and regional retail. I wouldn’t be surprised if there is manufacturing, but it certainly was not visibly prominent. I also wonder after looking at the wiki entry for the two furniture manufacturers how many of the jobs are actually manufacturing, because both emphasize design as the important part of their brand identity. Overall though, whatever the merit of some of the listed strategies, it certainly feels to me like given the layout of Michigan, a regional hub was going to develop near L. Michicagn, particularly for healthcare. How much of the story is about GR beating out Kalamazoo for that spot?
Holland on the other hand, looked like it gave its harbor over to industry for commercial use. I’m not sure what those uses are; they might be electric utility and some shipbuilding and repair. But the Dutch don’t appear to be nostalgic about recreating a New England fishing village aesthetic. It seems to me that most of the harbors on that Lake have some degree of industrial use, with a few notable exceptions like Saugatuck. BTW/ Herman Miller is in Zeeland, and like Holland is not in Kent County. I wonder how many of the manufacturing jobs are actually in the lakeside counties.
In that last part, I meant _Michigan_ harbors on Lake Michigan. Wisconsin seems similar outside of Door County. Meanwhile Illinois appears to be dedicated to making the Lake an aesthetic feature, not a commercial one, a policy choice.