As is the case with all scams, they propagate by constantly rebranding themselves — changing their name every so often. And that’s exactly what Gov. Snyder has done in his latest campaign ad titled “Michigan’s Road to Recovery.” No longer the “one tough nerd”, he’s now a bean-counting “accountant.”
But it’s not just Snyder himself who’s assumed a minty-fresh nom de guerre, he’s also given a make-over to his failed economic policies.
The ad refers to building a “strong foundation” as the key to economic recovery, which he claims is “what you have to do first.” Snyder’s massive corporate tax cuts, paid for through increased taxation on individuals and families, along with (contrary to the his claims and calculations) a sizable reduction in dollars flowing into classrooms — are the shifting sands of the governor’s foundation. It’s unlikely working families would agree that his policies will underpin their future financial stability — yet Snyder went on to explain in his characteristically simplistic tone:
“We’re on the road to recovery for every Michigander. You might not feel it yet, but you will soon.”
“Strong foundation” — sound familiar? How ’bout for example, supply-side economics, laissez-faire, trickle-down theory, Reaganomics — and a personal favorite, borrowed from the 1890s, the horse and sparrow theory. The latter works like this: If you feed the horse enough oats, some will pass through to the road for the sparrow. Perhaps that’s what the governor means by “road to recovery” — a prescription for Michiganders to eat, er, road apples.
“If he continues to just tread water or act like all he has to do is be governor, I think he’s going to have real problems on November 4.”
Punditry and politics aside, what do serious policy wonks predict for Michigan’s working families?
Let’s start with the compromise legislation to increase the minimum wage in Michigan which took effect this week. Although the new law indexes the state’s minimum wage to inflation, the starting point for the phased-in increases does not accurately reflect decades of inflationary pressure, leaving Michigan workers at a distinct disadvantage well into the future.
The Michigan League for Public Policy issued a report this week, Pay Falls for Low-Wage Men, yet Women Still Far Behind. Their research found that working class males have lost significant earning power, when adjusted for inflation, and women are still lagging far behind:
Back in 1979, the typical low-wage man in Michigan earned an inflation-adjusted wage of $17.23 per hour. Full-time year-round work at that wage was enough to allow him to support a wife and two children.
Low wages are a contributing factor to the persistence of a gender wage gap – which is the difference between men’s and women’s earnings, expressed as a percentage of male earnings. Over the past 35 years, the wages of men have dropped significantly (31% for low-wage men, and 16% for mid-wage men). At the same time, women’s wages have increased slightly (4% and 10%, respectively).
Despite dramatic wage losses for men and some gains for women, Michigan women earn just 74 cents for each dollar a man earns. The gap is even bigger for women of color: 67 cents for African American women, and 54 cents for Latinas.
The compromise on minimum wage has set the state up for continued failure.
Looking back another decade, in 1968 when the prevailing minimum wage was $1.60, it equaled the purchasing power of $10.71 in 2013 dollars. It’s hard to believe it now, but that was enough money to survive on 46 years ago. Minimum wage earners in Michigan have lost nearly one-third of their purchasing power over the ensuing years. In another recent report, Raising the Minimum Wage: Good for Working Families, Good for Michigan’s Economy, published prior to the compromise law, the MLPP put it this way:
Since 1968, the real value of the minimum wage has dropped by 31%, despite nominal increases from the mid-1970s to 2008. If no steps are taken to increase and protect the value of the minimum wage, by 2024 its real value will be just $5.81 in 2013 dollars, an additional drop of 15%.
Instead of addressing the problem, Michigan took baby steps, and is selling its citizenry, and its economy, short with a minimum wage that hasn’t kept-pace with the value of the dollar. As more and more families slip into poverty, the state’s businesses suffer too.
So, how then does Michigan size-up against states with differing economic policies? The MLPP studied those numbers too — weighing midwest states’ statistics and economic policies. Minnesota’s flourished, while Michigan tanked. What made the difference?
Make no mistake, Michigan has a deeper and longer recession to claw its way out of, but instead of looking for new economic growth models, the Snyder administration took a trip down memory lane and gave tax subsidies to manufacturers who had little intention of investing back in the state. In fact, the governor’s $1.8 billion corporate tax give-away resulted in, by the governor’s estimate, 300,000 new private sector jobs — costing the state $6,000 per new job annually. This does not factor-in the substantial loss of public sector jobs in the state, nor the quality of the new jobs.
Michigan simply lacks a forward-looking economic plan and a progressive tax structure necessary for success. The conclusive statements on the MLPP report say all we need to know:
While deindustrialization and the near collapse of the domestic auto industry were, to some extent, unavoidable and greatly impacted Michigan’s economy – something that Minnesota was mostly spared – that alone did not set these two states is such diverging economic paths. Policy choices have played an important role in their differing outcomes.
Minnesota is a high-tax state, which enables it to invest more in its residents. Since the early 1970s, Minnesota lawmakers have made the conscious choice to implement and protect various tax and fiscal reforms – collectively known as the “Minnesota Miracle” – that succeeded in curbing disparities in the quality of public education, and shifted more of the burden of financing local governments from property taxes to state income and sales taxes.40 Minnesota has a progressive state income tax rate that varies between 5.35% and 9.85%, with the higher tax rate reserved for wealthier Minnesotans. In contrast, Michigan has a flat income tax rate of 4.25%, which applies to everyone – rich or poor. In combination with other state and local taxes, Minnesota’s tax structure allowed it to collect $5,016 in taxes, per capita, in 2011. In contrast, Michigan’s combined state and local taxes, per capita in 2011, was just $3,655. Minnesota’s enhanced ability to collect revenue also allows it to spend more on services for its residents compared to Michigan: $4,443 per capita in Minnesota vs. $2,813 in Michigan.41
Minnesota’s spending priorities include early childhood education, K-12 education, higher education, the state’s social safety net, infrastructure and public transit – all of which are funded much more generously than in Michigan,42 and all of which help prepare its workforce for the demands of the modern global economy and give Minnesotans a chance to succeed – even in bad times.
The stark differences in wages seen in Minnesota and Michigan, therefore, should not come as a surprise. Minnesota’s wage gains are in great part the result of the state’s resolve to invest in the public good, while 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.
How ’bout them apples?
Post Script: As long as we’re talking about roads, 25 minimum wage fast food protestors were arrested in Flint today — for blocking the road in front of a McDonalds. Video here, courtesy of Nayyirah Shariff.