12
GRAND RAPIDS BUSINESS JOURNAL
NOVEMBER 29, 2021
COMMENT & OPINION
GUEST COLUMN Lou Glazer
A knowledge-based economic development strategy
A
year ago, Rivian, which often is described as the Tesla of trucks, announced it was moving its headquarters from suburban Detroit to Irvine, California. The announcement received hardly any Michigan press coverage. And, even more concerning, it garnered no reaction from Michigan’s political and business elites. Two years earlier, Amazon announced that despite big subsidy offers from Detroit and Grand Rapids, no community in Michigan made the final 20 for its Amazon HQ2 and resulting 50,000 high-paid jobs. That received lots of Michigan press attention for a week or so. And statements of concern by Michigan’s political and business elites. But that, too, lasted for a short while and then everyone went back to business as usual. Contrast that to the reaction to Ford’s announcement that it was locating three battery plants and an electric vehicle assembly plant in Tennessee and Kentucky. That announcement generated wall-towall statewide news coverage. And there were alarm bells sounding from Michigan political and business elites. The fact that losing Rivian HQ and Amazon HQ2 generated little or no attention and losing the Ford battery plants generated calls from across the political spectrum for the state to spend oodles more in subsidies for auto companies should not be a surprise. For decades, the Michigan economic development playbook has been first and foremost about being competitive with southern states for auto-related factories. There’s one big problem: That factory-based playbook is decades out of date. Michigan’s factory-based economic development strategy leads to Michigan permanently being a low-prosperity state. The reality is that production jobs (blue-collar factory workers)
are a declining proportion of the labor market, and those jobs now have median wages below the median for all workers. That is true not just in metro Grand Rapids and all of Michigan, but also in states like Tennessee, which we are told is the model Michigan needs to pattern itself after. The high-growth, high-wage segment of today’s American economy is represented by the Rivian headquarters and Amazon HQ2. The American middle class is now dominated by professionals and managers, not by factory workers. Michigan can only return to being a high-prosperity state, a status it enjoyed for most of the 20th century, if it adopts a knowledge-based economic development strategy. The factory-based economic development playbook is dominated by low taxes, particularly low business taxes, and big subsidies to companies for each factory located or expanded in your state. The knowledge-based economic development playbook is anchored by public investments in education from birth through college and creating places where mobile talent wants to live and work. Minnesota, the Great Lakes region’s most prosperous state, for decades has been at the leading edge of developing and deploying a knowledge-based economic development playbook. When you look at the economic well-being of workers in Tennessee and Minnesota, you see clearly that the path to prosperity is in retaining and attracting enterprises like Amazon HQ2 and Rivian HQ. Minnesota has a much higher median hourly wage than Tennessee: $22.41 vs. $18. That goes with a substantially higher employment-to-population ratio: 65% of Minnesotans 16 and older worked in 2020 compared to 56% of Tennesseans. So, Minnesotans work more and earn more than Tennes-
seans. That results in employment earnings per capita of $38,133 in Minnesota compared to $31,751 in Tennessee. That differential is the major contributor to Minnesota being 12th in per capita income while Tennessee is 38th. Production jobs in both Minnesota and Tennessee have median wages below the statewide median: In Minnesota, it’s $19.30 compared to $22.41; in Tennessee, it’s $17.17 compared to $18. Production jobs in both states are a declining share of the workforce. It’s down from 13% in 2001 to 8.6% in 2020 in Tennessee, and down from 9.6% in 2001 to
7.6% in 2020 in Minnesota. The exact opposite is true for the core occupations at enterprises like Amazon HQ2 and Rivian HQ: management, computers and math, architects and engineers, and scientists all are valued. Median hourly wages in those occupations in Minnesota range from $53.61 in management to $34.77 for scientists, and from $42.79 in management to $29.89 for scientists in Tennessee. And the share of jobs in those occupation groups combined have been growing in CONTINUED ON PAGE 13
MI VIEW WEST Garth Kriewall
GRBJ.COM EDITOR
Tim Gortsema: tgortsema@grbj.com DIGITAL EDITOR
Ehren Wynder: ewynder@grbj.com ASSOCIATE DIGITAL EDITOR
Rachel Watson: rwatson@grbj.com STAFF REPORTERS
Danielle Nelson: dnelson@grbj.com Rachel Watson: rwatson@grbj.com Chelsea Carter: ccarter@grbj.com STATE LEGISLATIVE REPORTER
Capital News Service: freedma5@msu.edu GRAPHIC DESIGNERS
Michaela Bunger: mbunger@hour-media.com Robin Vargo: rvargo@geminipub.com CONTRIBUTING PHOTOGRAPHERS
Michigan journalist, kriewall@hotmail.com
Michael Buck, Johnny Quirin ADVERTISING DIRECTOR
Jenn Maksimowski: jmaksimowski@geminipub.com ADVERTISING SALES CONSULTANTS
Todd Anderson: tanderson@grbj.com Jessica Laidlaw: jlaidlaw@grbj.com Renee Looman: rlooman@grbj.com Maddy Messerly: mmesserly@geminipub.com DIRECTOR OF AUDIENCE DEVELOPMENT
Michelle VanArman: mvanarman@hour-media.com
MARKETING & EVENTS MANAGER
Melissa Novak: MNovak@hour-media.com
MARKETING & EVENTS COORDINATORS
Kelsey Cocke: KCocke@hour-media.com Drake Lambright: DLambright@hour-media.com MARKETING & EVENTS INTERNS
Ahmed Aljanabi Dana MacDonald Maryan Toma
CIRCULATION MANAGER Riley Meyers: rmeyers@hour-media.com RECEPTIONIST/OFFICE ASSISTANTS
Elissa Stong
reception@geminipub.com TO ORDER ARTICLE REPRINTS
West Michigan’s push for more affordable housing should soon allow all of our serving staff to live within three ZIP codes of our restaurants!
reception@geminipub.com (616) 459-4545
CIRCULATION CUSTOMER SERVICE
(866) 660-6247
GENERAL EDITORIAL INQUIRIES editorial@grbj.com GENERAL SALES INQUIRIES advertisingsales@grbj.com
GUEST COLUMN Rosalynn Bliss and Scott McLennan
Proposed short-term rental law fuels housing crisis
M
ichigan is in the middle of a housing crisis. Too many middle-income earners are facing rents or home prices that take up far too much of their budgets. Businesses are having a hard time attracting new employees because there is not enough reasonably priced housing in their area, or the homes their employees can afford are long distances from their work. The explosion in the popularity of short-term rental websites like VRBO and Airbnb are making the issue worse by taking single-family rental units and owner-occupied homes off the housing market. Many homes listed on these sites are not just family cottages listed a few weekends out of the year. Investors are buying up dozens of homes at a time and operating them like miniature hotels that are rented out every weekend. It’s a matter of simple economics: Fewer quality homes are available for
full-time residents, which means higher prices for everyone. Rather than help address our housing crisis, lawmakers in the State House approved legislation that threatens to take even more homes off the market and increase housing prices even higher for Michigan families. Driven by misplaced fear that communities across the state will try to outlaw short-term rentals, lawmakers approved House Bill 4277 in the darkness of night that would allow one in every three homes in a community to be turned into a vacation rental. Their 3 a.m. vote completely overturns the careful work communities like Grand Rapids have done to ensure neighborhoods remain intact and there is a balance of housing available for permanent residents as well as visitors. Such policies include utilizing local zoning laws to limit short-term rentals to certain areas and capping the to-
tal number of short-term rentals in a community. To be clear, not every community has the same concerns about losing single-family homes to vacation rentals. Some would welcome more. Others — especially in popular vacation destinations — do not have housing that their teachers, police officers and downtown restaurant workers can afford. This is not to say that vacation rentals are bad. They have been a great way for homeowners to earn extra income, and they have provided new options for tourists wishing to enjoy our great state. But no two communities in this state are alike. University towns
have different housing needs than rural or suburban communities. Lakefront communities have different needs than farming communities. Each one needs to be able to determine how to best fit vacation rentals into their mix of housing options in a way that is right for their own unique needs. We urge our lawmakers to reject the one-size-fits-all approach passed in the State House in favor of legislation that allows for local decisions to stay local when it comes to short-term rentals. Rosalyn Bliss is mayor of Grand Rapids and Scott McLennan is mayor of Rogers City.
Grand Rapids Business Journal (ISSN 10454055) is published biweekly, with an extra issue in December, by Gemini Media, 401 Hall St. SW, Suite 331, Grand Rapids, MI 49503. Telephone (616) 459-4545; Fax 459-4800. General e-mail: bjinfo@grbj.com. Periodical postage paid at Grand Rapids, Michigan. POSTMASTER: Send address changes to Grand Rapids Business Journal, 401 Hall St. SW, Suite 331, Grand Rapids, MI 49503. Copyright ©2021 by Gemini Media. All rights reserved. Grand Rapids Business Journal is mailed biweekly to executives, managers and professionals throughout Metro Grand Rapids and West Michigan. The subscription rates in continental U.S. are: $59 per year; $79 - 2 years; $99 - 3 years. Rates for Canada and U.S. possessions are $84 per year. Subscription rates include the annual Book of Lists and additional special publications. Please inquire for overseas rates. Subscriptions are not retroactive; single issue and newsstand $2, by mail $3; back issues $4 when available, by mail $5. Advertising rates and specifications at www.grbj.com or by request. Grand Rapids Business Journal does not accept unsolicited contributions.
Grand Rapids Business Journal is a registered trademark of GEMINI MEDIA, LLC
LETTERS POLICY: The Business Journal welcomes letters to the editor and guest commentary. Letters and columns must include the writer’s name, address and telephone number. Guest columns do not necessarily reflect the philosophy of the Business Journal.
Letters and columns may be edited for reasons of space or clarity. Please submit to: The Editor, Grand Rapids Business Journal, 401 Hall St. SW, Suite 331, Grand Rapids, MI 49503 or email bjletters@grbj.com.
PUBLISHED BY GEMINI MEDIA, LLC CEO Stefan Wanczyk PRESIDENT John Balardo
