Is Michigan a place for economic opportunity?

Added July 25th, 2013 by Judy Putnam | Print This Entry Print This Entry | Email This Entry Email This Entry
Judy Putnam

An eye-opening map in the New York Times this week shows Michigan looking like a few Southern states when it comes to “income mobility’’ — a startling realization for the state that’s often credited with birthing the middle class.

If you are born in the Detroit or Kalamazoo area and your family income falls in the bottom fifth of income, your chances are very slim of moving to the top fifth, a new study concludes.

On the “heat map,” where red shows little mobility and blue shows the most mobility, Michigan and parts of Ohio and Indiana resemble Arkansas and Alabama.

The Times based its map on a ground-breaking study by researchers at Harvard and Berkeley that tracked incomes of the families of children born in 1980 and 1981 and compared the children’s incomes in 2011.

 

“Where you grow up matters,” Nathaniel Hendren, a Harvard economist and one of the study’s authors told the New York Times. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”

The study found that areas with more progressive tax policies, including tax credits for low-wage earners and higher taxes on upper incomes, tend to have more mobility. That offers new evidence that state Earned Income Tax Credits for low-income workers fight poverty and offer a ladder to the middle class. (The study also finds that the size of the middle class, segregation, quality of K-12 education, family structure and social/community ties affect mobility.)

The map clearly shows Michigan has some work to do to make our state a place of opportunity for future generations. Fortunately, the findings in this study also suggest ways to move forward.

Michigan’s tax system is regressive – meaning low-income families pay a bigger share of their income in state and local taxes than higher-income families.

A more progressive tax policy through restoration of the EITC – cut from 20% of the federal credit to 6% in 2011 — and a progressive income tax (Michigan has a flat 4.25% income tax) would mean that where you start in life does not determine where you end.

A national organization, The Opportunity Agenda, explains in a beautiful and simple way why opportunity is important: “Opportunity is a deeply held American value and a precious national asset. At its core, it means that all of us deserve a fair chance to achieve our full potential.”

We need to make Michigan that exciting place once again where hard work means you can step up the economic ladder. We’ll have a stronger Michigan if we succeed.

– Judy Putnam

 

One Response to “Is Michigan a place for economic opportunity?”

  1. Sharon Parks says:

    Judy, you are right on the mark. We tax people into poverty in Michigan and also make it impossible, through other policies, for folks to move up the economic ladder. Cuts in K-12 and higher education, and the lack of a cohesive policy related to adult education and basic skills training hold a lot of people back in Michigan. As a result, they suffer and so does Michigan’s economy.

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