Anderson Economic Group Work

Benchmarking for Success: A Comparison of State Infrastructure

In 2006, Michigan’s economy was performing poorly, with one of the highest unemployment rates, a high rate of outmigration, and slow growth in personal and household incomes. This stagnancy in the state was occurring while the national economy was growing rapidly, with low inflation, low interest rates, and unemployment dipping under 5%. The Michigan House of Representatives hired Anderson Economic Group to produce three separate reports establishing benchmarks for three areas critical to our state’s economy: business taxation, education, and infrastructure. The purpose of these reports was to identify how Michigan’s performance compared to other states and what steps the state needed to take in order to become a top ten most competitive state.

To complete this analysis, we gathered information on measures that are generally used to compare states’ performance in each area. We used this information to identify or create performance measures. After identifying the metrics, we used the appropriate data to measure Michigan’s performance relative to benchmarks set by top performing states.

Our analysis concluded that Michigan is not among the top ten performing states for business taxes or education. Michigan’s business taxes are above average with certain key businesses taxes (such as those levied on business income and property) well above the national state average. In education, Michigan is one of the top ten states in funding per pupil, but the state’s students score in the lower half of the states on the National Assessment of Education Progress in math, reading, and writing tests.

In contrast to our findings about Michigan’s business taxes and educational system, the state’s infrastructure compares favorably to other states’ infrastructure. Utility prices are competitive and the state is dong well in telecommunications access and usage, and has abundant “green” infrastructure. The only exception is the state’s roads, which are in poor condition.

We presented our findings in three detailed reports to the Speaker of the House and at one press conference. The AEG benchmarking reports have been sited and used by professionals in the public and private sector.