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ESD Economic Outlook: Cautious Optimism

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LIVONIA (WWJ) – Most speakers expressed cautious optimism about the Michigan economy at the Engineering Society of Detroit’s 2012 Economic Forecast for Design and Construction, held Thursday at Laurel Manor in Livonia.

In the first of a parade of economic outlook events held every fall, ESD speakers said a reorganized Detroit Three and higher educational attainment could hold the key to a more prosperous Michigan.

Michigan State University professor Charles Ballard said Michigan used to be “fabulously successful with our manufacturing based economy in the middle of the 20th Century,” but the state lost more than 800,000 jobs from 2000 to 2009.

WWJ Technology Editor Matt Roush spoke with Ballard:

And while the state has gained back 100,000 of those jobs in the last couple of years, Ballard said the key strategy to a better Michigan is “to enhance the skills of our work force.”

In years past, he said, it “really was possible to earn an upper middle class living with relatively modest skill set, and that was fine for then, but the world has changed in ways that really reward those at the top of the skill distribution.”

That doesn’t necessarily mean advanced college degrees for everyone, Ballard said, but for the most part it’s at least some training beyond high school in a technical skill in high demand.

He called for more early childhood education, spend more time in K-12 education, and ensure post-high-school training. And he said he’d raise taxes to pay for it, since we have “greatly reduced the fraction of our economy that goes to taxes” in recent years. Specifically, in Michigan, that means extending the state sales tax to services and entertainment and a graduated income tax in which higher incomes are taxed at a higher rate.

“Those at the top of the income distribution have done fabulously well, even in Michigan, and the average worker has not, (so) I do believe we should have a discussion about income inequality, and I think the income tax should be part of that discussion,” Ballard said.

Other speakers covered other parts of the economy. Peter Strazdas, associate vice president for facilities management at Western Michigan University, described his campus’ numerous building projects, which he toured in amazing three-dimensional flythroughs. He said such graphic representations both help “sell” projects and avoid design mistakes.

And Mark Birmingham, industry analyst at the Center for Automotive Research in Ann Arbor, said there was reason for optimism in the auto sector despite persistently high unemployment.

That’s because a restructured Detroit with retiree health care costs off its books and a tiered wage structure is now able to turn a profit at much lower sales volumes.

All of the presentations will be available on the ESD Web site, www.esd.org.

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