Michigan Workers Used To Make A Lot More Than National Average. Now We Don't

(Source: MIRS.news, Published 01/16/2026) Shortly before Michigan’s top fiscal hawks markedly downgraded revenue projections Friday in response to recently enacted tax policy tweaks, a group of economists turned their attention to a more systemic issue that's hampering the state’s fiscal potential.

“Over the past three decades, Michigan’s real wages have deteriorated sharply compared with the United States,” University of Michigan Economist Gabriel Ehrlich said during a presentation at the Consensus Revenue Estimating Conference.

Michigan’s average cost-of-living-adjusted real wage in 1990 was the sixth highest in the country, standing 9.5 percent higher than the national average. It now sits 4.2 percent below, Ehrlich said.

That reality surely won’t sit too well with the state’s workers. But it might be similarly lamented by those faced with the zero-sum task of creating a state budget: As Ehrlich noted, “wages are a key driver of tax revenue.”

Ehrlich — who was presenting Friday along with his fellow representatives of UM’s Research Seminar in Quantitative Economics — pointed to two main drivers of the erosion of Michigan’s one-time wage advantage.

In 1990, the average wage for blue-collar workers in Michigan was $11,500 higher than that of blue-collar workers nationwide. Since then, that differential has been reduced by over two-thirds to $3,000 as of 2024.

The other issue is in a sector the economists define as “higher education-attainable” — mostly private sector, white collar jobs for which a college degree is a prerequisite.

In 1990, Michigan workers in that sector enjoyed a small wage advantage over the national average. Now, they’re at a stark disadvantage, with Michigan’s average trailing the nation by $11,000 as of 2024.

The state’s historic advantage in the blue collar sector — despite its steady erosion over the decades — is something to be “very proud” of, Ehrlich said, adding, “We basically invented the middle class here in Michigan.”

But its disadvantage in the white collar sector necessitates some reflection, he thinks: “We have faced a tough transition to the knowledge-based economy.”

To get its competitive edge back, Michigan needs to “increase employment, and especially wages, in these higher education, higher wage industries,” Ehrlich said.

That’ll mean helping more young people get bachelor’s degrees, he concluded, and doing a better job of keeping them in the state post-graduation.