Detroit Regional Chamber > Detroit Policy Conference > Rick Haglund: Focus on Prosperity, Not Population Growth, Says Rakolta. He Has a Point.

Rick Haglund: Focus on Prosperity, Not Population Growth, Says Rakolta. He Has a Point.

January 23, 2024

Michigan Advance
Jan. 21, 2024
Rick Haglund

Wealthy Republican industrialist John Rakolta Jr., who co-chairs Gov. Gretchen Whitmer’s population growth council, made an astounding statement at a recent policy conference.

Rakolta said recommendations in the Growing Michigan Together Council’s 86-page report won’t grow the state’s stagnant population despite the report’s stated goal of Michigan becoming a top 10 state for population growth by 2050.

A declining birth rate, “insufficient” international migration and Michigan no longer being a “destination state” for people living in other parts of the country could result in the Wolverine state becoming smaller over the next quarter-century, said Rakolta, a former United Arab Emirates ambassador.

“By 2050, we will be lucky to be the same size state we are today,” Rakolta said at the Detroit Regional Chamber’s Detroit Policy Conference.

Say what?

I think Rakolta is far too negative about Michigan’s prospects for expanding its population. It’s not going to happen overnight, but the growth council’s report outlines many things state policymakers can and must do to boost the state’s population before 2050.

Economists and many of Rakolta’s fellow business leaders say expanding the state’s working-age population, in particular, is critical to the state’s economic competitiveness. That segment of the population is expected to grow by just 2% between 2020 and 2050, while the state will be home 30% more retirees by 2050, according to a University of Michigan population forecast.

A tight labor market is already hurting the economy.

“Michigan’s aging workforce and limited population growth will act as speed limits to job growth” over the next two years, U of M economists said in a November state economic forecast.

Rakolta said a better strategy for Michigan is to work on making those of us already living here more prosperous, not try to lure more people to our Water-Winter Wonderland.

“Let’s not focus on population growth,” he said. “It’s an outcome of what we have to do to increase our prosperity.”

That’s not an indictment of the growth council’s work. The report’s recommendations, which center on boosting innovation, building a lifelong learning system and creating thriving, resilient communities that will become magnets for young talent “are exactly what has to happen for us to increase the prosperity of the state,” Rakolta said.

Specifically, the chairman of industrial construction giant Walbridge, said Michigan needs to boost per capita income and productivity. Bigger incomes in turn will attract more people from other places seeking higher wages, Rakolta said.

The depressing data have been recited repeatedly. Michigan, once one of the most prosperous states in the nation, ranks 39th in personal per capita income. And it ranks 34th in gross domestic product per capita, a measure of productivity.

Much of that has to do with the steep decline of employment and market share by the state’s auto industry.

Michigan’s productivity lags most other states for a variety of reasons, including lack of innovation and not enough high-paying, knowledge jobs. It’s not because the state’s workers are loafing.

“Nobody ever said Michigan was lazy,” Rakolta said. “We have very, very hard-working people.”

But can Michigan become a more prosperous state without a significant population jump? Several policy experts I spoke to said it’s possible.

Well-known urban researcher Richard Florida told me Rakolta is “spot on” in his assertion that Michigan should focus squarely on boosting per capita income growth.

“Yes, it needs to attract more talent,” he said. “But it can do that without an overall focus on just population growth. It is not that population growth is bad. It can be great. But it is a very limited measure of successful economic growth.”

A decade ago, Florida wrote about a study of 350-plus metro areas that found little connection between population growth and economic expansion in those places.

“America’s economic winners are not those places that are growing population fastest, but those that are developing the skills and capabilities that improve their underlying productivity,” he wrote.

Indeed, many states with the highest productivity growth rates are not among those with the fastest population growth, according to the latest federal data.

In a new study, Florida argues that Michigan and other heartland states can create an “innovation economy” that could revive their manufacturing bases and produce hundreds of thousands of high-paying jobs by building closer linkages between their core industries and top-notch universities.

He points to Austin, Texas, a college town that wasn’t much bigger than Ann Arbor in 1970. Metro Austin has since become a major tech hub with a population of 2.4 million — a 500% growth rate since 1070 — while metro Ann Arbor’s population grew by just 60% to 370,000 in that time period.

Rakolta said Michigan’s biggest roadblock to economic progress has long been the inability of policymakers, business and labor leaders, and others to agree on a forward path. He acknowledged that continued squabbling results in the growth council’s report gathering dust on a shelf.

It will be up to Whitmer and her considerable political skills to transform the report into action, starting with her upcoming State of the State speech, Rakolta said.

“I’m hopeful she’ll be robust,” he said. “I’m hopeful — I won’t say confident — that she’s going to look at this and say, ‘This is the moment.’”