Personal income erodes in Michigan

Recession-worn state on four-year slide, Census Bureau says

Francis X. Donnelly and Mike Wilkinson / The Detroit News

Michigan was just one of five states where personal income fell last year as the state saw its ranking drop to 30th in the nation, according to a Census Bureau report released Monday.

The report shows how far the state has plummeted during its lengthy recession. It ranked 16th in 2000.

With personal income reflecting Michigan's standard of living, the steep drop shows how residents' way of life has declined, economists said.

Median income in Michigan fell 2.5 percent last year, from $49,807 to $48,591, according to the census. Nationally, it fell 1.2 percent, from $52,673 to $52,029.

It was the fourth year in a row that income dropped in Michigan.

And it's likely to get worse, according to fiscal experts, because the census figures don't reflect this year's travails, which includes a skyrocketing unemployment rate of 15.2 percent.

"Michigan is in a world of hurt," said Don Grimes, an economist at the University of Michigan. "That's no big surprise. It will take awhile to recover."

Before its eight-year recession, Michigan had long bucked an economic truism: A state's income ranking was directly tied to its residents' education level.

The state's auto factories allowed workers, despite their lack of college degrees, to make more money than the national average.

But the Big Three are dealing with fiscal calamity, workers have lost their jobs or seen their paychecks shrink, and the state's income ranking is dropping to a level in line with its blue-collar work force.

Michigan's education level ranks 35th in the nation, according to the census.

"Where do I go from here?" asked Jeff Chalmers, 54, an unemployed Warren resident with only a high school education who lost his job as a General Motors assembly line worker. "What else can I do?"

The reasons for Michigan's tumbling income are known to anyone collecting or trying to collect a paycheck in the state.

First is the imploding auto industry, fiscal experts said. Second is the pain being felt by all the industries that depend on the car companies.

Also contributing is the national bust in construction and real estate, experts said.

Ever-growing toll on state

The annual American Community Survey, which replaces a census report that gauged national demographics once a decade, shows how Michigan's lingering recession has taken a bigger bite out of the state each year.

It reveals that fewer residents owned homes last year and more college graduates are leaving the state.

The number of renters in the state jumped to 26 percent as job losses and foreclosures chased residents from houses.

The median value of homes in Michigan dropped again last year. It has fallen 13.4 percent since 2006, from $174,678 to $151,300.

The median value of homes in the United States has tumbled 6.3 percent during that period, from $210,958 to $197,600.

"The whole issue is the continuing restructuring of the auto industry," said Xuan Liu, data manager for the Southeast Michigan Council of Governments, which provides planning advice to local communities.

"Their market share went down dramatically in the last decade. Those jobs are mostly gone and aren't coming back."

Meanwhile, the number of residents who have a college degree and left the state rose from 38.8 percent to 40.7 percent last year, according to the report.

The census figures show how the recession was no longer restricted to Michigan.

In 2007, Michigan was the only state that lost income.

Last year, it was one of five states and two had higher losses. Florida experienced a 3.9 percent loss in income and Indiana dropped 2.8 percent.

"We have the same problem Florida does," said Marcus Parker, a real estate agent from Troy. "No one can buy a house."

Education a factor in trend

The income figures in Michigan suggest that the income drops were connected with the education level of residents.

In Metro Detroit, the two counties that saw the biggest drops in income were Wayne, 3.9 percent, and Macomb, 3.1 percent.

Those two counties also have the lowest number of residents with a bachelor's degree or better. In Wayne, 19.5 percent of residents have at least a college degree while 22 percent of Macomb residents have one.

fdonnelly@detnews.com (313) 223-4186