American Society of Employers’ (ASE’s) Quarterly Economic & Employment Survey results for second quarter 2017 shows declining optimism among Michigan employers

The American Society of Employers (ASE), one of the nation’s oldest and largest employer associations, has released its 2017 Quarterly Economic & Employment Survey – Second Quarter results.

Highlights of ASE’s 2017 Quarterly Economic & Employment Survey – Second Quarter:

• Michigan employers have grown less optimistic about the future business outlook compared to data collected earlier this year:
o According to this most recent survey, the percentage of employers who anticipate improvements to future business conditions is at its second lowest point since 2009 at 26%.
o The percentage of employers who report that their future business outlook has worsened compared to the previous six months is at its highest point since 2009 at 17%.
• Despite the less optimistic business outlook, the six month employment outlook remains largely unchanged from data collected in the previous quarter. 86% of organizations expect hiring levels to stay the same or increase compared to the past six months. Nearly a quarter of employers anticipated increased hiring compared to the previous six months.
• Personal reasons and advancement and promotion opportunities continue to be the two highest cited reasons for voluntary separations at 48% and 44% respectively.
• Exempt turnover was at an all-time high in May at 2.83%. This typically peaks in the 2nd or 3rd quarter.

The survey results were announced by ASE President and CEO, Mary E. Corrado. “The data shows that employers may be experiencing some economic headwinds curbing the expectation of future growth. This is the result of rapidly changing and uncertain political and policy changes. However, the employment indicators suggest that most Michigan businesses are maintaining, or increasing, hiring levels in order to meet demands,” she stated.

Background information on the ASE 2017 Quarterly Economic & Employment Survey – Second Quarter

• 121 organizations from across Michigan participated.
• Organizations with one to 500 Michigan employees made up more than 85% of the survey sample, while organizations with 501 to 1,000 Michigan employees represented 3.3% of the sample. The remaining 11.6% of the sample comes from organizations with more than 1,000 Michigan employees.
• A variety of industries are represented, with manufacturing organizations representing just over 62% of the survey sample.

To obtain a copy of ASE’s 2017 Quarterly Economic & Employment Survey – Second Quarter, contact ASE’s Compensation and Benefits Surveys department at surveys@aseonline.org or 248.223.8051. This survey is available free of charge to ASE members and is $525 for non-members.


About the American Society of Employers (ASE) – a Centennial Organization
The American Society of Employers (ASE) is a not-for-profit trade association providing people-management information and services to Michigan employers. Since 1902, member organizations have relied on ASE to be their single, cost-effective source for information and support, helping to grow their bottom line by enhancing the effectiveness of their people. Learn more about ASE at www.aseonline.org.

 

Media Contact: Heather Nezich, Communications Manager, ASE, 248.223.8040, hnezich@aseonline.org

Michigan Implements Positive Corporate Tax Reform

The Tax Foundation

Michigan lawmakers approved significant corporate tax reform last year that went into effect at the beginning of 2012. Previously Michigan had a dual corporate tax system called the Michigan Business Tax (MBT). Under the MBT corporate profits were taxed at a rate of 4.95 percent, and all transactions were taxed at a rate of 0.8 percent (a gross receipts tax, or GRT). In addition, there was a 21.99 percent surcharge on the total tax liability from the MBT. We had been critics of the MBT, specifically the gross receipts tax, since it was implemented in 2008. GRTs are an outdated, economically damaging tax that leads to tax pyramiding (read more here).

But in 2011, recognizing the mistake, the Governor proposed and lawmakers approved a significant package of corporate tax changes. Most importantly, they eliminated the GRT, implemented a flat 6% net income tax (a tax rate which is very close to the previous rate after accounting for the 21.99% surtax), and broadened the tax base by eliminating tax preferences. These reforms were set to come online beginning in 2012.

The Tax Foundation’s State Business Tax Climate Index measures which states have the most neutral, simplest, most business-friendly tax structures. In the most recent edition of the Index, which reflects tax law that applied on July 1, 2011, before Michigan’s reforms were implemented, Michigan ranked 18th overall (and 49th on the corporate income tax component). If Michigan’s tax reform had been in effect on July 1, 2011, the state would have ranked 12th overall (and 7th on corporate income tax component). While the state’s actual rank in the next edition will depend on changes other states may make between now and then, it is clear that this set of reforms is a major improvement for Michigan’s business tax system.

Effects of Michigan’s Corporate Tax Reform on Their State Business Tax Climate Index Rank
FY2012 Index Rank Rank With Reforms*
Overall 18th 12th
Corporate Tax Component 49th 7th
*Rank if Reforms Been in Effect on July 1, 2011, the first day of the standard 2012 state fiscal year.

Note that we wrote about the reform when it was still in the proposal phase last year, and at that time provided an estimate of how much it would improve Michigan’s ranking on the Index. But now that the reform has been implemented in its final form we thought it would be good to update our estimate of the reform’s impact. The new estimate differs from last year’s because, as is common with tax policy proposals, it developed and became more defined over time.

Finally, it should be noted that Michigan’s reform also included some changes to the personal income tax, most of which do not come on line until 2013. These changes are not included in the estimate above.

Michigan Business Climate Better Than Reported

In a January 15th Detroit Free Press article titled “Michigan’s bad business climate reputation is hard to discard,” Tom Walsh reflects on an article in the January 2012 edition of Site Selection magazine.  Site Selection reported on a survey of 12 site consultants at the Mid-America Economic Development Council (MAEDC) conference held in December 2011.  Based on that survey, Indiana, North Dakota, Nebraska, and Iowa were ranked as having the best business climates in the Midwest; Michigan ranked last.  Walsh quotes one of the consultants as saying, “Michigan’s national reputation is very poor and has been for a long time…Michigan could do a complete reversal of course, and it would still take 10 years to reverse its reputation.”

First of all, the consensus of 12 site consultants should be taken with a grain of salt.  The collective opinion of 12 individuals is a very limited survey sample from which to draw broad conclusions, even about subjective perceptions.  As Sandy Baruah poignantly noted in Walsh’s article, perception and reality often differ.

The reality of the situation in Michigan is considerably more optimistic and other Site Selection rankings and surveys confirm this.  Site Selection administered a similar business climate survey two months prior to the 12-man MAEDC survey, collecting 150 responses.  This survey, the annually published Executive Survey of Site Selectors (ESSS), ranked Michigan 21st in perception of overall business climate.

Moreover, when Site Selection paired the subjective ESSS rankings with five objective data points to compile their 2011 Top State Business Climate Rankings, Michigan’s rank improved to number 15, an honorable showing considering what our state has gone through in the past 10 years.   In contrast to the perceptions of the 12-consultant survey, only two other Midwest states ranked higher.

Furthermore, one of the five data points in the 2011 rankings considered Michigan’s 2011 tax climate.  Considering that Michigan has since replaced its Michigan Business Tax (MBT) with a new flat 6% business tax, as Walsh points out, there is a real possibility that Michigan might crack the Top 10 in 2012.  And cracking the Top 10 will not take 10 years to reverse Michigan’s reputation.

The takeaway here is obvious: the general consensus of 150 site selectors, backed by data, carries much more weight than that of 12 site selectors without data, and the latter should be paid limited or no attention in light of the former.  Michigan has had its misfortunes, but the time has come to focus on the overwhelming number of good things happening in this state, including improved rankings in Site Selection magazine and national recognition from organizations like the Brookings Institute.  A little research will refute much of the bad publicity that’s out there and open the eyes of many to the opportunities that lie in Michigan.