A Little Rusty
My Growing Qualms with Gretchen Whitmer
A few weeks ago, Michigan Governor Gretchen Whitmer came to Washington. She gave a speech about revitalizing American manufacturing, which was likely intended to elevate her profile for a future presidential run. In that speech, she advocated for more federal investment in Michigan factories, primarily via an increase in Defense spending.
Whitmer’s visit went viral for a few unfortunate reasons. In her remarks, she took a nuanced line on tariffs that my corner of Twitter found both soft and feckless. Her words were quickly spun by Right-wing media as outright support for President Trump and his policies. The Governor then went to the White House to beg Donald Trump to exempt Michigan’s auto industry from his poorly-designed tariff scheme, and the President sprung a room full of photojournalists on her in a sort of news ambush. That resulted in this embarrassing photograph which overshadowed much of the Governor’s message.
As a Michigander, a Democrat and a genuine Big Gretch stan, I followed all of this closely. I watched the footage and took notes on Governor Whitmer’s speech. There was one line in particular that represents most of the qualms I have with Gretchen Whitmer.
Early in the Governor’s speech, she outlines the stakes for Michigan’s manufacturing industry by claiming that “20% of [Michigan’s] economy is tied to the auto industry.” This isn’t the first time she’s used this statistic. In January, Governor Whitmer gave a speech at the Detroit Auto Show where she said “today, almost 1.2 million jobs, a fifth of Michigan workers, are employed directly or indirectly by the auto industry.” The stat has been repeated by numerous newspapers, including the Wall Street Journal and Bridge Michigan (a reputable local news magazine).
But . . . is that statistic true? 20% feels high to me – Where does this claim come from? What does it actually mean for your job to be “tied to” the automotive industry? And are 1 in 5 Michiganders currently assembling a Ford F-150 right now?
The answer is no. It is not true that 20% of Michigan’s jobs are tied to the auto industry. Allow me to explain the dumb rabbit hole that I have been boroughing through for the past three weeks.
I’ve managed to tie this claim back to a report that was put together by “Public Sector Consultants,” (PSC) a Lansing-based lobbying firm working on behalf of the Michigan Auto Industry’s official advocacy group “MichAuto.” To be completely transparent, I vaguely recall submitting a job application to PSC after graduating college. I knew I wanted to do political work in Michigan and they seemed as good a firm as any. I don’t think they emailed me back. - Anyway, I read MichAuto’s 2024 Report and their 20% statistic is total bullshit.
Right off the bat, MichAuto’s measurement includes employment in the entire transportation sector, including ships, planes, and trains. The authors of the report take care to measure “Michigan’s Mobility Industry,” as a whole, not just the auto industry. It’s explicitly incorrect for Governor Whitmer to attribute the 20% number to the auto industry alone.
To be fair to the Governor, she does argue that we should revitalize manufacturing across the entire transportation sector. In her Washington speech, she specifically called for more plane manufacturing and more shipbuilding. She might be remembering the stat incorrectly but she is echoing the general spirit of the MichAuto report. That said, the Governor holds a lot of power over people’s everyday lives, and she has gotten this statistic wrong, in public, on multiple occasions. If she does believe that one in five Michiganders owe their jobs to the auto industry, that’s a pretty impactful misunderstanding.
Especially because there are even more problems with this misleading statistic. For one, what does it mean for 20% of Michiganders to be employed in “Michigan’s Mobility Industry?”
If “Michigan’s Mobility Industry” sounds like a vague, broadly-defined, nonsense term, that’s because it is. MichAuto appears to be counting everyone from car insurance brokers, to municipal bus drivers, to gas station attendants, to limousine rental drivers, to post office mail couriers as “directly employed in Michigan’s Mobility Industry.” Meaning, the person that sells you cigarettes and lotto scratchers is placed in the same category as union workers assembling automobiles.
This probably doesn’t need to be said but there are plenty of states with no car factories that still have gas stations, post offices, and even limo drivers! Governor Whitmer is citing this MichAuto report to argue for more transportation-related manufacturing investment but that’s simply not what the report measures.
It is possible that the MichAuto report, with its expansive definition of mobility jobs, could be useful for some sort of public policy analysis. But it is certainly not useful for measuring the importance of auto manufacturing in the state of Michigan. Following the logic of this report’s data, you could offer everyone in the state a free hot air balloon ride, and it would result in plenty of new jobs in “Michigan’s Mobility Industry.” But I don’t think anyone would agree that your whimsical balloon subsidy had successfully revitalized blue collar manufacturing.
The MichAuto report claims that 90.6% of those that work in “Travel Arrangement and Reservation Services” are directly employed by Michigan’s Mobility Industry. Now, I can’t tell you for certain which 9.4% of that industry they decided they couldn’t claim. But I can tell you that the Travel Arrangement and Reservation Service industry includes travel agents, tour operators, hotel reservation websites, companies that sell you tickets to live concerts (like Ticketmaster), and “condominium time-share exchange services.” None of those people are working an assembly line.
That’s just a fraction of the people that MichAuto claims are directly employed in the Mobility Industry. The 20% figure also includes workers that are “indirectly employed in Michigan’s Mobility Industry.” That category inexplicably includes most of the people doing real estate in Michigan and a good deal of the state’s restaurant staff. Personally, I don’t think we should steer the Pentagon’s shipbuilding budget based on the number of waitresses in any given state.
I should emphasize for the nerds in my audience that the “indirectly employed” category is different from employment induced by the economic activity that the transportation sector generates. About one third of MichAuto’s 20% figure (28.9% of it) is attributed to economic activity that is generated by the household spending of those employed (directly or indirectly) in Michigan’s Mobility Industry. In that category MichAuto claims about 7% of all hospital workers in the State.
And you know what? If we’re going to use induced demand to argue that Ford, Stellantis, and General Motors are responsible for hospital employment in Michigan, I feel like we should commit to the bit. The large vehicles that these automakers assemble (like F-series pickups, RAM Trucks, and the GMC Sierra) are eight times more likely to kill a child than smaller vehicles. And when compared to all vehicles, hospital charges are highest among those struck by these kinds of trucks. In this specific case, I feel like MichAuto is undercounting the number of hospital employees that can be attributed to Michigan’s Mobility Industry. We can keep juicing this number; Public Sector Consultants, if you still have my resumé, please, reach out!
The truth is that Michigan’s automotive industry does not support 20% of the state’s jobs. I am pretty skeptical that “Michigan’s Mobility Industry” supports 20% of the state’s jobs either but, given that term is a made up phrase designed specifically to serve MichAuto’s needs, I guess I can’t argue with them. According to the Bureau of Labor Statistics, 3.7% of Michiganders work in Auto and Parts Manufacturing.
Is it possible that each of those jobs “created” four and a half more jobs through economic spillover effects? Maybe – but in the same speech where Whitmer used the 20% statistic, she also claimed that “every single auto job supports three others in the community.” Three does not equal four and a half.
It’s important to get these facts straight; there’s a big difference between 20% and 3.7%. When the Governor makes decisions about where to spend money, she needs to have a realistic understanding of what her constituents actually do for a living. I fear that she is spending taxpayer dollars on a mirage.
If you listen to her Washington speech, it’s clear that Governor Whitmer is obsessed with revitalizing manufacturing in Michigan. She explicitly touts a $40 million investment that led to the creation of 93 jobs in plastics manufacturing near Saginaw. This anecdote is in character for Whitmer; throughout her political career, she has supported over $16 billion in corporate subsidies, almost all of which were for manufacturing firms. In 2022, she gave $660 million in taxpayer funds to General Motors. And, according to the Site Selection Group, Michigan gave out more corporate subsidies than any other state last year.
The return on these investments is questionable. For one, manufacturing jobs in Michigan have not returned to pre-COVID levels, and they remain 33% lower than they were 25 years ago. At the same time, manufacturing GDP remains on a decades-long upward trajectory, meaning Michigan’s factories are still making plenty of valuable goods, even with fewer people. This is partly because of automation and partly because the kinds of goods that are being manufactured in the state are more advanced than they used to be.
There’s a temptation to see increasing productivity, coupled with decreasing employment, as a story of corporate greed. Big companies see that they can manufacture the same amount of stuff with fewer people, so they downsize. That explanation is too simple.
I think what’s happening is that Michigan became too rich to support its low-wage manufacturing sector. The people working in the General Motors plants created vibrant communities, built great schools, and educated their children. Those children had stronger educational prospects than their parents and were able to compete for higher-paying jobs. Working the assembly line is difficult and monotonous, so workers with the option to leave pursued white collar desk jobs in air-conditioned buildings. Those that stayed in the factories suddenly had more leverage over their employers; they demanded better wages and conditions. And they won concessions.
Companies did their best to keep costs under control by investing in automation. But employing Michiganders kept getting more expensive as the state kept getting richer. Companies that could transition into advanced higher-margin manufacturing, did so. Those that couldn’t moved their production to poorer states, like Kentucky and Tennessee. Some even went to Mexico.
Governor Whitmer’s subsidy program is focused on bringing back low-paying factory jobs. The median job provided through the Governor’s manufacturing subsidies pays $50,689 a year. That means over half of the jobs that the Governor has incentivized pay a lower amount than Michigan’s current per-capita income of $63,221. And each one costs Michigan taxpayers $29,000 apiece. The state government is taxing its productive white collar office workers to incentivize less-productive blue collar factory jobs. To what end?
In 1999, Michigan ranked 19th in the country for per-capita income. Over the past 25 years, the state has dropped to 39th. This isn’t because per-capita income has gone down; on the contrary, it’s only increased. Michigan is falling behind because other states have embraced higher-paying industries, which has led to faster income growth. The Governor’s subsidies, just like Trump’s tariffs, are motivated by a desire to preserve the industries of yesterday. And, just like Trump’s tariffs, they make Michigan poorer by slowing the economic transition that other states are embracing.
To be frank, I don’t see how subsidizing low-wage manufacturing jobs gets us anywhere in the long term. These subsidies are designed to help Michigan compete for low-wage jobs against states like Alabama and Mississippi. But Michigan is richer than those states! Michigan should be competing for high-wage jobs against California, Illinois, and New York. These subsidies are a step backwards. Which is why other Democrats, including Mallory McMorrow (who is now running to replace Michigan Senator Gary Peters), have advocated for reforming them.
Governor Whitmer’s economic agenda is tied up in a nostalgia for an economy that barely exists anymore. And her hyperfocus on cars appears to be based, at least in part, on a nonsense report crafted by auto lobbyists. I’d like to think that the Governor is simply misinformed about the nature of the Michigan economy, but her rhetoric leads me to think that she is genuinely car-brained.
Governor Whitmer closed her January speech at the Detroit Auto Show with this:
“If we bring jobs home, fix the damn roads, and work with our trading partners, we can drive towards a brighter future where our people and our auto industry succeed. . . Michigan is the auto industry, and the auto industry is Michigan. Our fates are linked. So, let’s pave the road ahead, together.”
I find this to be a particularly sad vision for the future of Michigan. I don’t want the place where I grew up to be “linked” to a declining industry. I don’t want another century of squabbling over outsourcing. I want to build liveable cities. I want to tear the eight-lane highways out of our downtowns. I want to build high-speed rail between Detroit and Grand Rapids. I want a positive vision for growth. I want Michigan to step into the future.
Instead, we’re doubling-down on the past. From day one, Whitmer’s primary campaign promise was to “fix the damn roads.” Upon taking office, she proposed paying for road construction with a dead-on-arrival 45 cent per gallon increase on the state’s gas tax. The legislature correctly identified that such a move would be politically suicidal and shut down the Governor’s proposal. Whitmer then borrowed $3.5 billion to spend on road repairs, nearly doubling the $3.9 billion that the legislature had already budgeted. This gave the state five good years of road construction, in exchange for 25 years of debt payments. Michigan taxpayers have locked into car dependency under Gretchen Whitmer and will continue to pay interest on these bonds through 2049.
The five years of debt-financed road construction are over now and, despite over 20,000 lane miles worth of repairs, the Whitmer Administration is still unsatisfied with the state of Michigan’s roads. Democrats no longer have a legislative trifecta, so Whitmer has to cut a deal with Republicans if she wants to continue her roadwork initiative. Both parties agree that this will require another $3 billion from taxpayers, every year, forever. They’re currently in negotiations to try and find that money; Republicans are asking the Governor to cut her corporate subsidies to pay for the roads. We’ll soon see which part of the Whitmer agenda is most important to her.
No matter what wins out, it is clear that cars, car manufacturing, and car-dependant infrastructure are the Governor’s top priority. When the auto industry wants money, she does her best to find it.
That dogmatism comes at a cost. In my lifetime, governors from both parties have squandered time, energy, and billions of taxpayer dollars trying to bring back factory jobs that simply continue to decline. In the meantime, we’ve missed out on explosive growth in the tech, healthcare, and white collar service sectors. Other states have surpassed Michigan, as its leaders have repeatedly thrown good money after bad.
We cannot reverse trend without reversing course.
There is a better way.
Grand Rapids, Michigan is the second-largest city in the state. It’s also the second-fastest growing city in the entire Midwest (after Indianapolis). While Detroit has consistently declined and the rest of the state has stagnated, Grand Rapids is growing at a clip of over 6% year over year. What is its secret?
According to the latest Grand Rapids Chamber of Commerce report, the city “is benefitting from a smaller exposure to automotive manufacturing, which was a drag on parts of West Michigan during 2024. . . The diversification of Grand Rapids’ economy into a variety of industries continues to show positive benefits.” Grand Rapids’ growth is driven by a plethora of economic sectors, including construction, wholesale trade, various services, and even the arts. Notably, in the last year the service sector grew 6.4% faster in Grand Rapids than manufacturing did.
Instead of chasing the past, Grand Rapids is trying to build a metropolis for the future. The city seeks to build a downtown that young college-educated knowledge workers actually want to live in. It installed bike lanes and a river walk, both of which are regularly expanding. It invested in Bus Rapid Transit, with innovative stop designs. Grand Rapids’ bus ridership per capita is nearly 40% higher than Detroit’s and growing.
The city is building housing faster than it’s adding people. And targeted investments in local universities and research institutions spurred private funding for life science innovation. This grew into Grand Rapids’ “Medical Mile,” which has brought billions of dollars into the city and completely reshaped its skyline. Grand Rapids’ focus on liveability is driving results; young people are moving there and the median age is four years younger than it is in Detroit.
Grand Rapids represents a different model for what the state of Michigan could be. It’s a city that has rejected the old Eastern Michigan rust belt identity in order to build something new. It’s a place that focuses on fundamentals, like using taxpayer dollars to provide reliable, efficient, government services. Grand Rapids is not a utopian society; I have a lot of ideas about how I’d improve it. But it’s a place that prioritizes progress over nostalgia.
Michigan’s leaders should look to Grand Rapids and expand on what’s working, instead of doubling-down on what isn’t.