Michigan: the second best, or third worst performing state in the union, depending on who looks at the data

I don’t put much stock in articles that attempt to rate various communities, states, cities, or what-have-you. Sure, it’s nice when you see your state’s name at the top of a good list, but, for the most part, I just think of these articles as filler. They’re relatively easy to write, people love to read them, and, as far as I can tell, their authors aren’t typically held to any kind of journalistic standard. The writers of these pieces may justify their “findings” with a statistic or two, but, for the most part, I think it’s pretty safe to say that they’re subjective. So, as a result, we see a lot of articles about, the best places to retire, or the best places to raise a family. In the past two weeks, I’ve seen Michigan featured prominently in two such national lists, both of which sought, in one way or another, to rank the economic health of states. One ranked Michigan 48th on a list of the best run states in America. The other declared Michigan’s economic health to be the second best in the nation. Here are clips from both, for your enjoyment.

224/7 Wall Street:

For the second year, 24/7 Wall St. has reviewed data on financial health, standard of living and government services by state to determine how well each state is managed. Based on this data, 24/7 Wall St. ranked the 50 states from the best to worst run. The best-run state is Wyoming. The worst-run state is California.

Comparing the 50 states can be a challenge because they are so different. Some states have abundant natural resources while others rely on service or innovation. State populations also can be more rural or more urban. Some had booming industries that are waning or that have disappeared altogether. Border states with large immigrant communities have populations that are growing rapidly. Many states in the Northeast are not growing at all. All of these factors affect the finances and the living conditions in a state.

Despite these differences, states can do a great deal to control their fate. Well-run states have a great deal in common with well-run corporations. Books are kept balanced. Investment is prudent. Debt is sustainable. Innovation is prized. Workers are well-chosen and well-trained. Executives, including elected and appointed officials, are retained based on merit and not politics.

To determine how well — or how poorly — a state is run, 24/7 Wall St. weighed each state’s financial health based on factors including credit score and debt. We also evaluated how a state uses its resources to provide its residents with high living standards, reviewing dimensions such as health insurance, employment rate, low crime and a good education. We considered hundreds of data sets and chose what we considered to be the 10 most important measurements of financial and government management.

This year, as a new component of our analysis, 24/7 Wall St. obtained additional budget data for each state. Examining the state’s revenue and expenditures, and what each government opted to spend money on, allowed us to determine if a state overspent limited resources, failed to devote funds to an urgent need of its citizens or spent a great deal of money but with poor results. While we did not use expenditures or revenue in our ranking, these numbers reflect how a state is managed. Together with other budget data, living standards and government services, it provided a complete picture of the management of each state….

48. Michigan
• State debt per capita: $2,963 (21st lowest)
• Pct. without health insurance: 12.4% (18th lowest)
• Pct. below poverty line: 15.7% (15th highest)
• Unemployment: 11.1% (3rd highest)

Michigan has arguably suffered more than any state in post-industrial America. The state is one of just four with a credit rating of AA-, although its debt per capita is actually below average. The state ranks among the worst in the country for violent crime, unemployment, foreclosures and home price decline…

Bloomberg:

The Bloomberg Economic Evaluation of the States (BEES) combines statistics on tax collection, personal income, unemployment, home prices, mortgage foreclosures, and the stock performance of public companies in a quarterly index that will allow you to analyze and compare the performance of the 50 states plus D.C…

Michigan’s economy is recovering from the recession at the second-fastest pace in the U.S., lifted by reviving carmakers and local manufacturers, according to a new Bloomberg index that tracks the pace of state growth.

The home to the U.S. automobile industry was topped only by North Dakota, where an oil boom is raising incomes and boosting government coffers at the nation’s quickest rate. California, Massachusetts and Illinois round out the top five in the Bloomberg Economic Evaluation of States Index, which uses data on real estate, jobs, taxes and stock prices to gauge the growth rate in 50 states and the District of Columbia….

BEES tracks growth by compiling data on six components that are given equal weight: job creation, personal income, tax revenue, housing prices, mortgage delinquencies and the performance of Bloomberg stock indexes that track the share prices of locally based companies.

The BEES index, updated quarterly, is a measurement of growth, not absolute performance, so a slowing economy with low unemployment may rank below a battered state on the mend.

Some of Michigan’s improvement reflects the severity of its decline. It ranked last in the BEES index in the decade through 2010, a period when it was the only state to lose population. In September, it still had unemployment of 11.1 percent, two percentage points above the U.S. average.

“Michigan is emerging from, basically, a lost decade,” said Patrick Anderson, chief executive officer of Anderson Economic Group LLC, an East Lansing, Michigan-based consulting firm. “I sense a very cautious optimism in my home state.”

Seventy percent of Michigan employers said they expected the state’s economic outlook to improve over the next 18 months, while only 46 percent expected such gains for the national economy, according to a survey released last month by Business Leaders for Michigan. Mortgage delinquencies dropped at the fourth-fastest pace in the U.S., and personal income and employment growth ranked in the top third, according to data compiled by Bloomberg.

Michigan is benefitting from gains in the U.S. automobile industry, which is reviving after Obama led an $82 billion bailout and General Motors Co. and Chrysler Group LLC emerged from bankruptcy…

Like I said, I’m not sure what all of this means. As these organizations didn’t set out to measure the exact same things, it’s hard to do a side-by-side comparison of results. Still, though, I think it’s interesting that one would put us second from the top, while the other would put us third from the bottom. Make of that what you will.

Oh… and for what it’s worth, I also found it interesting that our Governor’s press release about the Bloomberg ranking neglected to mention the fact that our impressive position was due in large part to actions of the Obama administration. “Michigan was the nation’s second-best performer,” said Bloomberg, “thanks in part to the effects of the auto bailout.” Snyder, however, attributed the designation solely to his administration’s, “aggressive steps to get Michigan’s fiscal house in order, create a fairer tax structure and put families back to work.” He went on to say, “The fact that our shared accomplishments are recognized by one of the country’s premier financial information providers should reinforce our commitment to keep driving forward.” I don’t know that this surprises me any, but I thought that it was worth noting.

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3 Comments

  1. Posted November 28, 2011 at 10:53 pm | Permalink

    I should also add that I don’t know how reputable 24/7 Wall Street is. But, for that matter, I’m not even sure how reputable the ones perceived to be reputable are. After all, did Bloomberg report on the mortgage securities collapse before it happened? Did Bloomberg break the Enron story? Did Bloomberg catch Bernie Madoff?

    In defense of 24/7 Wall Street, they claim on their site to provide content for the likes of: TheStreet.com, AOL Finance and BloggingStocks, The Wall Street Journal online, MarketWatch, StockHouse, MSN Money, AOL Finance, Daily Finance, Time.com, and Newsweek.com. So, I guess it’s not just a blog, like this one of mine.

  2. Edward
    Posted November 29, 2011 at 9:30 am | Permalink

    Maybe there’s a lag between the two studies, with one looking more at historic economic data, and the other focusing primarily on changes over the past quarter. If that’s the case, I don’t see the two studies as being mutually exclusive. It is, however, odd to be named the next to best state with regard to economic health at the beginning of November, and then, just weeks later, to be named 48th on a list of the best run states. (I don’t imagine that the state put out a press release about that one, did they)

  3. Posted November 29, 2011 at 1:27 pm | Permalink

    Either way, neither paints a great picture of Michigan over the last ten years. The best case scenario is that one believes it’s coming around while the other seems to feel like it’s being run as poorly as other unpropitious states.

    “Michigan is emerging from, basically, a lost decade.” Is the closest thing I’ve heard that resembles good news in, well, about a decade.

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