Michigan’s Talent Gap is a Business Risk and a Strategic Opportunity

• Workforce readiness is no longer a long-term issue; it’s a near-term business risk, with 88% of manufacturing executives expecting disruption from talent shortages. 
• Persistent gaps in literacy and foundation skills threaten Michigan’s talent pipeline, making earlier, real-world connections between education and employers critical. 
• Fragmentation is holding back progress, not a lack of effort. Disconnected systems and duplicated efforts limit impact. 

Michigan leaders are confronting a stark reality: talent shortages and rapidly shifting skill needs are reshaping the state’s economic outlook, and the urgency to respond is growing. 

During the 2026 Mackinac Policy Conference, SME’s Jeannine Kunz highlighted a growing mismatch between available talent and the skills employers need, citing that 88% of manufacturing executives expect operations to suffer due to skilled worker shortages. At the same time, the “half-life” of skills continues to shrink — now less than five years across industries and closer to two in AI-driven fields. 

“Workforce readiness is the foundation of AI strategy,” Kunz said, emphasizing that continuous upskilling is essential to staying competitive.  

As states compete for investment, workforce strength is increasingly shaping where businesses locate and grow. Kunz stressed that workforce development must be treated as a true strategic priority, complete with clear objectives, accountability, and defined outcomes. While many states recognize its importance, far fewer have cohesive plans, creating an opportunity for those that act decisively to gain a competitive edge. 

At the same time, workforce development is not a single issue to solve, but a system to align — connecting talent, employer demand, and the organizations that bridge the two. 

“No one organization can solve this alone,” Kunz said.

But those challenges start earlier in the pipeline. 

Rep. Nancy DeBoer (R-Holland) highlighted that workforce gaps begin well before students enter the labor market, pointing to persistent issues in literacy and foundational skills. 

Seventy-six percent of Michigan eighth graders are not proficient in reading or math, an issue she described as the “elephant in the room.” 

According to DeBoer, lawmakers are advancing reforms to strengthen literacy instruction, improve student attendance and engagement, reduce classroom distractions, and shift toward competency-based learning models. 

She also pointed to programs like the Positivity Project, which improve school culture and reduce attendance issues by building character and student engagement. 

“When we add business to education, it becomes application,” DeBoer said, stressing the importance of connecting what students learn to real-world careers.

Michigan continues to lose a significant share of its graduates, including thousands of international students, after they complete their education. 

Panelists agreed that the issue is not just about opportunity, but about connection. Students must see their value early and understand how their skills translate into careers, or they will look elsewhere. 

Kunz added that stronger employer engagement is critical, especially before graduation. Early exposure to career pathways increases the likelihood that graduates will stay in-state. 

Despite significant investment, workforce development has been slowed by a lack of coordination. 

“There’s almost no shortage of people trying to support this challenge,” Kunz said. But too often, organizations duplicate efforts rather than building on existing work, “running the same mile 500 times.” 

This creates a system that is difficult for employers to navigate. As moderator Greg Handel of the Detroit Regional Chamber noted, what is often called a “system” is actually a set of disconnected entities that must work together more intentionally. 

To move forward, panelists called for stronger collaboration across education, industry, and government, paired with more connected pathways for students. 

“This is a bigger lift than any one organization can solve,” DeBoer said. 

This session was sponsored by SME.