DETROIT ? A new study warns that unless Michigan starts creating or attracting more knowledge-based workers ? and vibrant metropolitan areas for them to live ? the economic future of the state could be bleak indeed.

In its first report card on Michigan’s progress in developing a knowledge-based economy, Michigan Future Inc. said the state and its three largest metropolitan areas — Detroit, Grand Rapids and Lansing — are lagging other states and cities in creating high-wage jobs requiring at least a bachelor’s degree.

States with an abundance of jobs in information, finance and insurance, management, professional and technical services, health care and education have the highest per capita incomes, according to the report released Monday.

?Our basic conclusion: What most distinguishes successful areas from Michigan is their concentrations of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship,? the report contends.

?Quite simply, in a flattening world, the places with the greatest concentrations of talent win. States and regions without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, nor are they likely to be the place where new knowledge-based enterprises are created.?

This is Michigan Future?s first annual report on Michigan?s transition to a knowledge-based economy. The progress made in this transition will, in large part, determine whether once again Michigan enjoys high prosperity.

Obviously the Michigan economy has been dreadful this decade.

An unprecedented seven consecutive years of job losses. At the bottom of the national rankings in both employment and per capita income. This is largely because the engine that still drives the Michigan economy is the troubled domestic auto industry. So for the foreseeable future, until the Detroit Three automakers stabilize, Michigan?s economy will continue to lag the nation.

What Michigan Future is working on is what comes next. Its focus is on identifying a path to better position Michigan to succeed in the flattening world economy of the future. A path that will return Michigan to high prosperity, measured by per capita income consistently above the national average in both national economic expansions and contractions.

Michigan Future collected data for states and the 53 metropolitan areas with population of one million or more plus Lansing and Madison. It found that almost all states with the highest per capita income:

? Are over concentrated compared to the nation in the proportion of wages coming from knowledge-based industries (those where more than 30% of workers have a four-year degree or more)

? Have a high proportion of adults with a four-year degree or more

? Have a big metropolitan area with even higher per capita income than the state

? And, in that big metropolitan area, the largest city has a high proportion of its residents with a four-year degree or more.

More specifically we found:

1. Big metros are winning! The pattern is the larger the metropolitan area the higher the per capita income and the greater the concentration in both knowledge-based industries and college educated adults. Maybe most surprising is that the largest metropolitan areas not only have the highest proportion of households with incomes of $75,000 or more, but also the smallest proportion of households with incomes under $25,000.

2. The pattern that we found in our previous reports that high prosperity states have big metropolitan areas with even higher per capita income holds true. Except for Wyoming, each of the top ten states in per capita income includes at least one of the top ten metropolitan areas.

So metropolitan Detroit and metropolitan Grand Rapids and, to a far lesser degree, metropolitan Lansing are the main drivers of a prosperous Michigan. In fact, it is hard to imagine a high prosperity Michigan without an even higher prosperity metropolitan Detroit.

3. It is the broad based knowledge economy where most of the good-paying job growth is occurring in the American economy. High education attainment industries in 2005 were 41 percent of national employment and 54 percent of the wages earned by American workers. The average wage in these industries is nearly $53,000 as compared to nearly $32,000 in all other industries.

Most importantly, high education attainment industries accounted for 75 percent of the job growth in America from 2001-2005. All of the growth and then some came from the high education attainment industries in the education and health care sectors. The remaining high education attainment industries ? including all the new technology industries that are the focus of so much state and regional efforts ? lost employment.

4. Our basic conclusion: What most distinguishes successful areas from Michigan is their concentrations of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship. Quite simply, in a flattening world, the places with the greatest concentrations of talent win. States and regions without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, nor are they likely to be the place where new knowledge-based enterprises are created.

5. Michigan and its largest metropolitan are lagging in the transition to a knowledge-based economy. In 2006 Michigan ranked 26th in per capita income, an unprecedented drop of 10 places in a relatively short six year period. It ranked 37th in the share of wages from knowledge-based industries and 34th in proportion of adults with a bachelors degree or more.

In 2005 (latest available) metro Detroit still ranked 15th in per capita income. Of 53 metropolitan areas with populations of one million or more the Detroit region ranked 38th in knowledge-based industries concentration and 37th in college attainment. Metro Grand Rapids lagged even more. It ranked 49th in per capita income, 51st in knowledge-based industries concentration and 45th in college attainment. The story is basically the same for the Lansing region which trails substantially metropolitan Madison on most of our metrics.

Our best guess is that unless we substantially increase the proportion of college educated adults ? particularly in our biggest metropolitan areas ? Michigan will continue to trend downwards in the per capita income rankings towards the mid 30s.

6. There is good news! Behind the headlines of continuous job loss, Michigan had employment gains in the high education attainment industries. This despite large employment declines in the knowledge-based portion of the automotive industry. In the high education attainment industries in the education and health sectors ? where most of the national job growth occurred ? a gain of nearly 47,000 jobs. Almost 40,000 coming in metro Detroit and metro Grand Rapids.

Building on these gains across all the knowledge-based industries is the key to recreating a high prosperity Michigan. To us the message from the data is that the key to economic growth is talent. Quite simply, in a flattening world, economic development priority one is to prepare, retain and attract talent.

There are no quick fixes, the Michigan economy is going to continue to lag the nation for the foreseeable future. But there is a path back to high prosperity. As is laid out in our New Agenda report the framework for action is:

? Building a culture aligned with (rather than resisting) the realities of a flattening world. We need to far more highly value learning, an entrepreneurial spirit and being welcoming to all.

? Creating places where talent ? particularly mobile young talent ? wants to live. This means expanded public investments in quality of place with an emphasis