What Will be the Economic Impact of Jennifer Granholm Leaving Office?

Who will hold the "creating cool" conferences?   Who will launch embarrassing economic development campaigns centered on telling everyone that Lansing is a "cool city"?   Who will give tax credits to convicted felons while raising taxes on everyday citizens?

Jenny did me a favor, though.   I was driving home the other day, and got to listen to her speech at the Brookings Institution.  Honestly, can't remember if it was C-SPAN radio or NPR, but she was as entertaining as ever.   She was pressed about creating jobs, and after ummingg and uhhhing her way through five minutes of Q&A, she started breaking out her old "attract young workers", "make cities places young people want to live" line that's served her terribly since she took office.   Guess she had to break it out one last time for tradition's sake.

Now the interesting thing to see will be the benefit to Michigan of not having her there next year.   Perhaps the new governor will understand that ribbon cutting ceremonies for 100 new jobs mean little when you've lost 10,000 in the past six weeks.     Perhaps businesses will be less terrified of actually moving to a state where the governor wants to tax you to death for making an actual product that can be sold in a store, but will offer you a tax credit if you hire three 25 year old Javascript developers to help build your website.

She'll be gone soon, which should bring hope to Detroit, Michigan, and anyone who appreciates common sense economic growth. 

Michigan Factory Employment Down 450,000 Over the Last 10 Years

While Obama, Biden, and the Queen of Economic Disaster Jennifer Granholm attend ribbon cutting ceremonies for factories that will employ a few hundred, Michigan has lost manufacturing jobs by the hundreds of thousands. An interesting article at MLive.com highlights how many of the new "advanced manufacturing" jobs are simply coming in a too slow a pace to dent the unemployment rate. Rick Haglund, the author of the story, writes:

While advanced manufacturing is important to Michigan's economy, it's not likely to produce more than about 10 percent of the state's total jobs.

This is tied to the challenge I've written about here of capex per job created rising faster than inflation. It wasn't in Michigan, but when Toyota built its Princeton, Indiana plant in 1998, it needed $350,000 in up front capital outlays per operating job created. But it's new Prius plant in Blue Springs, Mississippi will need $650,000 of capital investment per job created.

The solution is not some clever educational program or to attract "creative" workers. But rather to cultivate industries, like wind turbine production, where manufacturing is far more labor-intensive, and requires less than $200,000 in capex per operating job created.

Big Economic Development Win for Greenville/Spartanburg Region

Big win for Laurens County, SC, which is about 30 minutes south of Greenville, SC, with the ZF Group announcing a $350 million plant where the German manufacturer will produce auto transmissions. One of the company's largest customers, BMW, has a facility nearby in Spartanburg.

One of the most interesting aspects of this new plant is the level of employment it will support per capital dollar invested. It's expected to create 900 jobs once it's fully up and running, or one job for every $390,000 of capital invested. This is fairly labor-intensive for modern manufacturing, and quite a bit lower than the $650,000 of capital Toyota will spend for every job it creates at its new Corolla and Prius plant in Blue Springs, Mississippi. It's also far more jobs per capital dollar than the Dow Kokam battery plant in Midland, Michigan, which Joe Biden and Jennifer Granholm have been treating like an economic savior, yet will only create one operational job for every $1 million of capital invested. The ZF plant will need more than 2.5x as many workers per dollar invested than that heavily publicized battery plant.

South Carolina, which has struggled during the recession, has also stayed focused. There haven't been any silly "cool cities" campaigns in Columbia, Greenville, or Charleston, and it's continued to recruit manufacturers, and not fallen for any of the creative city Richard Florida hype. In addition, it's now putting together supply chains of one producer selling to another, which is far more sustainable economically than creating yet another "urban artists neighborhood".

The Workplace of the Future

Been reading a lot lately about changing workplaces. It seems a lot of urban pundits, especially the BS artist whose last name is also a coastal state, have just woken up to the world those of us in the tech industry have been living in since 1995. Actually funny to read all the stories about "results-oriented work environments", working from coffee shops, and casual dress. When I see these, I feel like I should be able to click on the Top Stories link, and get the latest breaking news on the President's affair with Monica Lewinski.

While urban pundits only have something to write about if things are changing, one thing that's not changing is simple economics. And one of the most fundamental economic principles for cities, employers, and employees, is that you're usually better off owning a scarce resource than an abundant one. And there is no shortage of nonsense being published today about 1990s-style work arrangements that aging pundits have just picked up on. And as I've written many times, Jennifer Granholm and many in the econ development industry are very impressed, and are preparing their cities and states for the economy we had in 1997.

The workplace of the future is still a place, not an Internet connection. Because for every new T-1 that gets installed, face-to-face becomes an even scarcer commodity, especially where that human interaction does not depend on any sort of connection to the Internet. Nurses, part of an incredibly fast growing profession, aren't meeting their clients at Starbucks, 3rd grade teachers are not turning their classroom into "ROWEs" where students only have to show up if they have a meeting with another kid. And health care and education are now a quarter of the economy and growing.

The workplace of the future exists today, and anyone who's smart isn't moving to Portland or some other slacker city urban pundits can't stop fawning over, but is looking for a job where they will have to interact physically with the people paying the bills, whether they're clients, patients, or students. Face-to-face is only going to become scarcer, not unlike Javascript skills were in 1998, except it's not going to be outsourced to Bangalore, unless you decide to visit India. So smart people today are not planning a tech startup, but rather thinking about how they will build on the scarce resource of face-to-face contact.

Not all face-to-face jobs will pay well, but at least working face-to-face can prepare you for future jobs that require that skill. Sitting in Starbucks writing a blog won't.

The workplace of the future doesn't look that exciting from a let's-hype-some-trend perspective. Restaurants, hospitals, and schools are far too mundane for the chattering class to start talking about. But the foosball playing, cappuccino machine-in-the-office companies we read about now are just implementing the workplaces of today. Trying to recruit such companies does little to prepare a city for the future.

What Makes a City Cool? Not Telling Everyone You're Cool

Grand Rapids should really benefit from Jennifer Granholm's departure. Another "are we cool enough?" debate has broken out on the Grand Rapids Press website, after an article in its horribly named "Michigan 10.0" series started pondering Western Michigan's ability to be cool. It was followed with a story about ArtPrize, a local arts event, written in the context of making Grand Rapids a destination for the "creative class". It has also re-ignited debate on the website's message boards about how to build the local economy.

I say at this point, Grand Rapids is descending from sounding like a foolish place that actually listens to Richard Florida's bullshit, to one that sounds like a wannabe Jeff Spicoli. When you can't showcase local art without wondering if that makes you a cool city, you might as well just have the mayor skateboard around town asking 18-29 year olds if they're 420 friendly.

Grand Rapids, please stop. I've never advocated book burning, but if that's what it takes, create a bonfire with all the copies of "The Creative Class" you should be torching. Other industrial cities are looking at ways to rebuild their economies, and in spite of tremendous challenges, you don't see Youngstown acting like a 15 year old who can't make the cheerleading squad.

It's All Relative When You Border Michigan

Indiana Commerce Secretary Mitch Roob has been put on the defensive by his legislature regarding IEDC (Indiana Economic Development Corporation) tax credits. A particular issue is the 42 failed projects awarded tax breaks totaling about $10.3 million since 1994, for which the state is pursuing collections.

What's funny about this is the stark contrast to the circus in neighboring Michigan. Indiana's fretting over a program that over 16 years, and over 1,000 projects, has given $10.3 million in tax credits to 42 initiatives that didn't create the jobs expected. Contrast that to Jennifer Granholm, who gave away $9 million in a single project to a felon, and had a press conference to showcase the thing.

Whoever Michigan's next governor is, he should check out what's going on over his southern border. The fiscal discipline alone could be enough to entice many employers.

Jennifer Granholm - Tax Credits for Embezzlers

Another sad story for Michigan economic development involving Jennifer Granholm. Michigan is poised for a rebound in job growth just from her departure. Her lame, expensive attempts to attract "cool" companies to "cool cities" have backfired and made the state look even worse than it really is.

Now that she's on her way out, a GOP candidate says its time to tear down the Michigan Econ Dev Corporation, or MEDC, which has handed out taxpayer money to new employers, just so Granholm can hype a 120 job showcase project for every 10,000 jobs that leave her state. But a recent story from Michigan Capital Confidential mentions something even worse than her embarrassing, taxpayer-funded "Creating Cool" conference.

In March, it was revealed that the MEDC had offered a $9.1 million deal to a company run by a parolee who is a convicted embezzler (and who has since been locked up again for another fraud charge). Gov. Jennifer Granholm had held a press conference to praise the deal, with the embezzler on the stage with her.

She is so inept. Whether replaced by a Democrat or Republican, Michigan will undoubtedly show signs of improvement once she's gone.

Skin Care Specialist Now a Top 10 Growth Profession

Mundane personal service jobs are becoming some of the fastest growing professions. In the past, I've written about some of the "cool" and "creative" jobs defining the future, such as nail care, social work, and teaching. Employment in these sectors correlates more strongly to having a vagina than to having an advanced degree, but they are way too boring for any urban pundit to start writing about.

While I don't think its author is going to get a promotional poster at Barnes & Noble, the Department of Labor's Occupational Outlook Handbook has some interesting findings. It ranks the top 10 growth professions for the next 8 years, and coming in at #8 - skin care specialist. Yes, for all the hype about "creative classes", "knowledge workers", and other sorts of nonsense, skin care is now a leading growth profession.

In addition to skin care, athletic trainer makes the list, as does home health care aide. Even the engineering jobs are mostly angled towards people and medicine, as opposed to faster computers or communications. Only 2 of the top 10 professions have anything to do with finance or IT. Makes me wonder if Jennifer Granholm will invite a skin care professional to speak at the next Michigan "creating cool" conference.

Economic Development Executives Are Starting to Sound Like 15 Year Old Girls

In economic development, the let's-call-our-cities "cool" nonsense has gotten so bad, I'm going to make this a regular feature. I'll provide examples of silly, embarrassing economic development efforts that were actually created by adults, but sound like they came from a 10th grade social studies project.

And no better place to start this off than with Michigan's "cool cities", an initiative which shows what happens when you combine the strategies used by 8th graders to become more popular, with the recommendations of a Richard Florida book. Jennifer Granholm, the queen of job destruction, won't let up, and actually held a "creating cool" conference. It's not clear from the press release if it was held before or after cheerleading practice.

Governor Granholm, 1995 is on the Phone for You

One of the most embarrassing attempts at economic development over the last five years has been Michigan's Cool Cities initiative. The state woke up to the Internet boom about four years after the industry went bust, and decided in 2003 to focus on attracting creative workers, not just industrial companies.

This strategy, adopted by just about every other state in the mid-90s, meant showcasing lifestyle benefits, and referencing the work of every author who had written some "knowledge worker" hype piece in 1995. Needless to say, Flint hasn't become the next Austin, and VCs have yet to start camping out in Grand Rapids.

Just to make sure this silly economic development strategy fails, jittery Lansing Mayor Virg Bernero (seriously he's like Tweak from South Park) is telling anyone who'll listen that we need to re-write all of our trade agreements and stop letting all those foreign imports into this country. I understand that the mayor, who really should switch to decaf, is trying to protect the autoworkers who voted for him and the unions who funded him. Problem is if you're trying to attract new workers and new industries, chances are really good they're going to have customers overseas, and will need those trade agreements to sell products.

Much like the Internet bubble, it's time to put Cool Cities into the history books. Lansing has every right to protect its current workers from foreign competition. It just needs to stop expecting people who sell to foreigners to move there.