JOBS (Update: Knowledge-Based Economic Sector @The Shape of Things to Come)

State needs knowledge based jobs

Study says that will help improve Mich. economy

By John Gallagher Detroit Free Press Business Writer

   Michigan needs to shift its economy more toward the high-paying knowledge-based services if it hopes to improve its long-term economy, a new study has said.

   The nonprofit Michigan Future has published its latest report by the think tank’s president Lou Glazer and University of Michigan economic researcher Don Grimes of U-M’s Institute for Research on Labor, Employment and the Economy.

   The report, “The New Path to Prosperity,” compares economic data from 1990 and 2011 in Michigan, Minnesota, and the U.S. in general. Its conclusions: Knowledge-based industries such as science, technology, engineering and other backgrounds will produce more prosperity in years to come than traditional manufacturing.

   “What we are confident of is that, primarily due to the ongoing force of globalization and technology, the American economy will become more and more service, rather than goods-producing, based,” the authors wrote. “And in that economy, knowledge-based services are almost certain to be where job growth is the strongest and average wages are the highest.”

   Throughout the U.S., the manufacturing sector shed more than 5.7 million jobs between 1990 and 2011, while knowledge-based services gained more than 16 million jobs during that same period, the report said.

   In the same way, private sector earnings per capita declined during that same period while employment earnings per capita in knowledge-based service grew by 52%.

   Comparing the economies of manufacturing-based Michigan and knowledge-based Minnesota, the report noted that “Minnesota far outperformed Michigan in growth in employment, personal income and private sector employment earnings per capita over the two decades.”

   Among specific statistics: From 1990-2011, employment grew in Minnesota by 29% compared with 7% in Michigan. Also, per capita income adjusted for inflation grew by $11,300 in Minnesota over the two decades compared to growth of $4,712 in Michigan.

   “Knowledge-based services now are the center of mass middle-class American jobs,” the authors wrote. “The lesson Michigan needs to learn is also clear: The places that are doing best today and almost certainly will do the best in the future are those states and regions that are concentrated in knowledge-based services, not factories or any other sectors of the economy.”

   Contact John Gallagher: 313-222-5173 or gallagher@freepress.com  .