Michigan at a glance

/ Source: National Journal

When Alexis de Tocqueville on his travels to America in 1831 wanted to visit the frontier, he went to the Michigan Territory. He traveled in a boat across Lake Erie, as other Frenchmen had for nearly 200 years. French explorers and missionaries sailed the Great Lakes and slapped their version of Indian names on the landscape, which is why Michigan’s ch is pronounced like sh and why Mackinac is pronounced with a silent final c (but Michiganians don’t carry it to extremes: Detroit ends with a robust English oit). Michigan was not effectively occupied by the United States until 1796, and was bypassed in the initial westward rush into Ohio, Indiana and Illinois. Tocqueville was still able to travel through virgin woods occupied by Indian tribes, but only barely; in the 1830s Michigan was settled in a rush by Yankee migrants from Upstate New York, who cut down trees and built farms and neat New Englandish towns complete with schools and colleges. Politically, Michigan was full of Yankee reformers who hated slavery, manned the Underground Railroad, promoted temperance and in 1855 gave Michigan a constitution that banned (as it does to this day) capital punishment. Michigan was one of the birthplaces of the Republican Party, which was founded in Jackson in 1854 (Ripon, Wisconsin, also stakes a claim as the party’s birthplace) and swept the state in the elections later that year. Until 1929, Michigan was one of the most Republican states in the nation.

After the Civil War, Michigan developed an industrial economy. Its Lower Peninsula was mostly covered with trees, and lumber was the first boom industry on which Michigan overrelied; forests were clear-cut or swept by blazes like the 1881 fire that burned out half the Thumb. In the late 1800s, huge copper deposits were discovered on the Keweenaw Peninsula, which juts from the Upper Peninsula into icy Lake Superior; immigrants from Italy and Finland, Cornwall and Croatia came to work in the mines. Then came the auto industry. A combination of accident and shrewdness, of bankers willing to finance auto startups and the prickly genius of Henry Ford, ensured that America’s fastest-growing industry for the first 30 years of the 20th century was centered in Michigan. Detroit became a boomtown—the nation’s fastest-growing major metropolitan area after Los Angeles—zooming from 426,000 in 1900 to 2.2 million in 1930 (it was 4.2 million in 2000). The auto industry drew labor from the Outstate Michigan, from southern Ontario and from the farms of Ohio and Indiana. It attracted Poles and Italians, Hungarians and Belgians, Greeks and Jews. During World War II and after, it brought whites from the Kentucky and Tennessee mountains and blacks from Alabama and Mississippi. This influx of a polyglot proletariat eventually changed Michigan’s politics. The catalyst was the Great Depression of the 1930s and the company managers’ desire to use machines efficiently, treating employees as extensions of machines and with great distrust. The results were the 1937 sit-down strikes organized by the new United Auto Workers (UAW); management and labor fought, sometimes literally, for pieces of what both sides feared was a shrinking pie. The UAW won and organized most of the companies after Democratic Governor Frank Murphy refused to send in troops to break the illegal strikes. In the years that followed, autoworkers became a heavily Democratic voting bloc.

Michigan politics became a kind of class warfare, conducted with a bitterness that split families and neighbors. The union mostly won, because demographics benefited the Democrats: autoworkers and post-1900 immigrants produced more children than did Outstate Yankees or management. After Walter Reuther’s election as UAW president in 1947, voters elected young, liberal G. Mennen Williams governor in 1948. By 1954, the Democrats, closely tied to the UAW, seemed to have become the natural majority in the state. As growth continued, economic issues became less bitter; by the early 1960s, the class-warfare atmosphere had dissipated. A Republican former auto executive, George Romney, was narrowly elected governor in 1962, and Henry Ford II joined Reuther in backing Lyndon B. Johnson in 1964. Romney and his successor, William Milliken, accepted the welfare-state policies endorsed by the UAW leadership and the Democrats. The state government was one of the nation’s most generous, and not just to the poor and the unemployed: it supported one of the nation’s most distinguished and extensive higher education systems, built state parks and recreation areas, and pioneered efforts to end racial discrimination.

This system, which had seemed eternal, came crashing down with the collapse of the domestic auto industry after the oil shocks of the 1970s. Union-management relations had been static since 1941, and there had been no major technological changes in American autos since the automatic transmission in 1940. Michigan incomes had grown as Americans grew more affluent; the one-car household became the two-car household, and consumers enjoyed the tail fins and chrome of new car styling. But in 1979, this big-unit economy went bust. It became startlingly clear that the Big Three automakers and the UAW did not have a captive market, Americans did not have to buy a new full-sized American-made car every two or three years, and foreign competitors were producing better and cheaper cars that were more responsive to changes in gas prices and consumer preference. Big business and labor, so well adapted for growth in the quarter century after World War II, proved poorly adapted for the quarter century that followed. Auto employment in Michigan fell from 437,000 in October 1978 to 289,000 in October 1982. Chrysler nearly went bankrupt, Ford was in financial distress, and General Motors posted its first losses in years.

The collapse of the big-unit economy after 1979 forced the state to experiment. The first to try was Governor James Blanchard, a Democrat elected in 1982 with a record of supporting big units. His major achievement in eight years in Congress was managing the Chrysler bailout in the House. Blanchard worked to build a small-unit economy; he was proud of his efforts to stimulate high-skill, capital-intensive, flexible manufacturing, and he used $750 million of state pension funds as venture capital for manufacturers of items from tape drives for microcomputers to fiberglass coffins. Dodging his traditional labor allies, Blanchard made it clear that Michigan must learn how to nurture growth and that workers, instead of seeking more vacation and earlier retirement, would have to hustle and work harder than ever before. The second experiment came from John Engler, the Republican who beat Blanchard in 1990 and was resoundingly reelected in 1994 and 1998. Engler believed in less government activism and industrial policy; he cut taxes more than 30 times; welfare rolls were cut by more than two-thirds. Engler pressed for public school choice and charter schools, changing state pensions from defined benefits to defined contributions. Throughout the second half of the 1990s, the economy boomed. The auto industry, once an employer of thousands of low-skill workers, became high-tech; the number of unionized auto workers fell to 250,000 in 2000, but jobs required much higher skills and auto workers’ earnings averaged $60,000. With the auto companies requiring high standards and speedy turnaround from subcontractors, Michigan became the home of almost all the nation’s auto parts engineering centers and of much of the nation’s large-scale manufacturing experts. Michigan’s population rose 7% in the 1990s after staying even in the 1980s; median household incomes rose 5% after inflation. Large parts of the state—the western and northern suburbs of Detroit, greater Grand Rapids, the northwest corner of the Upper Peninsula—were unmistakably booming. The one glaring exception was the city of Detroit. Detroit’s population fell to 951,000 in 2000, almost exactly half its 1,849,000 in 1950. Starting with the riot of 1967, crime rates in Detroit were enormously high for 25 years, and much of the city simply vanished—houses abandoned or burned down, commercial frontage with nearly 100% vacancy rates, the downtown a beleaguered fortress surrounded by blasted-out square miles. Detroit began rebounding in the 1990s and after: crime and welfare rolls were down, new stadiums and gambling casinos, even some new housing, were built downtown and old theaters refurbished.

But since 2000 Michigan has been in economic trouble again. The first signs came in 2000, when the state’s unemployment rate rose above the national average for almost the first time in seven years; employment peaked at 4.93 million in January 2001. But while most of the rest of the country recovered from the brief 2001 recession, Michigan hasn’t. Employment rose only to 4.74 million in September 2005 and sagged to 4.72 million in December 2006: 200,000 below that five years before. Unemployment spiked to 7.2% in December 2006. The number of unemployed more than doubled from February 2000 (165,000) to December 2006 (366,000). The problem can be pinpointed: the woes of the Big Three auto companies. From 2000 to 2007, the state lost 275,000 manufacturing jobs—a 26% loss. The losses came as the Big Three, facing big losses, squeezed their Tier 1 and Tier 2 subcontractors hard; many of these companies, which had grown more supple and adaptive in the 1990s, cut their payrolls and some went bankrupt—notably Delphi, a spinoff from General Motors. Then as SUV sales plummeted, the Big Three started cutting jobs as well. In 2006 GM announced a 35,000 cutback; Ford announced it was closing 14 factories; Ford and Chrysler started wringing concessions on work rules from the United Auto Workers. The auto manufacturing sector accounted for just 5% of Michigan’s jobs in 2006, but produced 75% of job losses. With Ford facing record losses and GM and Chrysler restructuring in early 2007, more seemed in store. Governor Jennifer Granholm, a Democrat elected by a narrow margin in 2002, encouraged “cool cities” developments and arranged for tax breaks for new Big Three facilities, but was unable to rescue the economy from the damage done by the implosion of the Big Three; still she was reelected by a robust 56%-42% margin in 2006 over former Amway CEO Dick DeVos, who called for lower taxes and a more business-friendly climate. She blamed the state’s economic woes on the Bush administration’s unwillingness to do anything for the auto industry and on foreign trade agreements.

Michigan’s unemployment since 2000 has not been nearly as high as in the early 1980s, or in the recessions of 1970 and 1958. But that’s partly because a lot of people, as in the early 1980s, aren’t sticking around. Michigan’s rate of net internal migration was a negative 3.8% between 2000 and 2006—higher than any other state except Louisiana, New York and Massachusetts. Educated young adults in particular seem to be leaving; Michigan has a higher than average percentage of high school graduates but lower than average percentage of college grads. Nor has it attracted large numbers of immigrants; the population is 3% Hispanic and 2% Asian. The old UAW-Big Three model—high pay and exceedingly generous health insurance, strict work rules and huge retirement costs—seems clearly to be unsustainable, yet many who remain in Michigan seem to yearn for its golden days to return. As a report of the liberal Brookings Institution put it, “What was once the most dynamic, innovative economy in the country is now a change-averse economic culture, with low entrepreneurship and new business creation levels, and sticky attitudes of entitlement and belief that things should stay as they were.” Much more than coastal Americans, they continue overwhelmingly to buy Big Three cars (45% own a GM car, 39% Ford, 22% Chrysler) and put lots of mileage on them; some 725,000 hunters drive up north every November for the start of the deer season and Detroit’s three casinos and the 17 tribal casinos Outstate have made Michigan the fourth largest casino state. But plunging real estate prices and half-empty restaurants leave little doubt that Michigan is in trouble; polls in 2006 showed three-quarters of voters believed the state was moving in the wrong direction. But there seemed to be no consensus on how to turn things around.

From the 1930s through the 1980s, politics divided Michigan between labor and management, and between the Detroit metro area and Outstate. In 1960, John Kennedy carried three-county metro Detroit 62%-38% and Richard Nixon carried Outstate 60%-39%, for a 51%-49% Kennedy victory. In 2004 John Kerry carried the three-county metro area 56%-43% while George W. Bush carried the rest of the state, which now casts 61% of the vote, by only 52%-47%, for a 51%-48% Kerry victory. Kerry’s lead in the metro area came almost entirely from the city of Detroit, which cast only 7% of the state’s votes but voted 94% for Kerry. In the industrial Michigan of 1960, economic status—and more specifically, union membership or non-membership—tended to drive party preference. In the Michigan of 2004, economics played some role, but more often cultural attitudes drove voting behavior. Kerry carried affluent Oakland County, where many upscale voters moved toward the Democrats in the 1990s on cultural issues. Bush carried Macomb County, historically more blue collar and Democratic, though pretty affluent now, which in the 1970s and 1980s trended away from Democrats on cultural issues. The Grand Rapids area, with its large Dutch-American population and many Christian conservatives, voted heavily Republican. The industrial Flint, Saginaw and Bay City areas, where unions remain relatively strong, voted heavily Democratic, as did the areas around Lansing, the state capital, and Ann Arbor, home of the University of Michigan. The Upper Peninsula, historically Democratic, voted for Bush. In Detroit and heavily Democratic areas, turnout in 2004 increased relatively little over 2000; it increased most in the suburban ring around Detroit, but not enough for Bush to overtake Kerry. In 2006, despite DeVos’s expensive self-financed campaign, a beleaguered Michigan turned to the Democrats. Granholm’s 56%-42% win was echoed by the 57%-41% reelection margin of Democratic Senator Debbie Stabenow. Democrats recaptured a majority in the state House, held by Republicans since 1994, and ran what turned out to be competitive races in four Republican congressional districts. Senator Carl Levin, Michigan Democrats’ most popular statewide official, announced shortly after the 2006 election that he would run for a sixth term in 2008. Even so, there was one discordant result. The ballot measure banning racial quotas and preference in state government and state universities, which was opposed and shunned by politicians of both parties, passed by a resounding 58%-42% margin, trailing only in the counties that include Detroit, the University of Michigan and Michigan State University. Michigan may still be a battleground state in the years ahead.