Michigan ranks No. 6 among America’s best states for business, yet it ranks only No. 24 for its economy. A new University of Michigan forecast shows why turning Michigan’s business advantages into jobs, workers and population growth remains a major challenge. Part 2 of a series. Read Part 1. 

LANSING — Michigan is officially one of the best states in America in which to do business.

CNBC ranks Michigan No. 6 nationally in its 2026 America’s Top States for Business rankings, behind only Ohio, North Carolina, Virginia, Texas and Minnesota.

But here’s another number that should get the attention of Michigan business leaders:

Michigan ranks only No. 24 for its economy.

That raises the question at the heart of this two-part MITechNews analysis:

If Michigan is such a good place to do business, why isn’t its economy growing faster — and why aren’t more people coming here?

The answer may be that Michigan doesn’t have an asset problem.

It has a conversion problem.

Michigan has many of the things companies want: relatively low business costs, industrial infrastructure, major research universities, engineering talent and one of America’s largest advanced-manufacturing ecosystems.

The challenge is converting those advantages into sustained job, income, workforce and population growth.

What CNBC Is Actually Measuring

The Michigan Economic Development Corp. provided MITechNews with additional perspective on how CNBC constructs its rankings.

CNBC evaluates all 50 states using 138 metrics across 10 categories, emphasizing factors companies consider when deciding where to invest, expand and locate operations.

That’s an important distinction.

Being a great state for doing business isn’t necessarily the same thing as having one of America’s fastest-growing economies.

Michigan’s individual rankings illustrate the difference:

  • Cost of Doing Business — No. 4

  • Infrastructure — No. 9

  • Cost of Living — No. 11

  • Access to Capital — No. 13

  • Quality of Life — No. 15

  • Technology & Innovation — No. 17

  • Workforce — No. 21

  • Economy — No. 24

  • Business Friendliness — No. 27

  • Education — No. 29

Michigan performs extremely well on the cost and physical assets of doing business.

It performs much less impressively on several of the ingredients needed to transform those advantages into sustained economic growth.

Infrastructure Carries A Lot Of Weight

MEDC pointed MITechNews toward another important feature of CNBC’s methodology.

Infrastructure is the most heavily weighted category, accounting for 17.6% of a state’s total score.

That helps Michigan considerably because the state ranks No. 9.

And infrastructure no longer means simply highways, bridges, airports and railroads.

For an economy increasingly driven by artificial intelligence, advanced manufacturing and enormous data centers, infrastructure also includes broadband, available industrial sites and, critically, electric power.

CNBC’s 2026 methodology includes new measurements reflecting emerging business concerns such as artificial intelligence, insurance and power-grid capacity and reliability.

Those issues could become particularly important in Michigan as billions of dollars in proposed data-center developments create enormous new electricity demands.

Michigan’s Biggest Competitive Advantage

Michigan’s No. 4 Cost of Doing Business ranking may be its strongest competitive advantage.

The category considers business taxes, wages, utility costs, office and industrial property, insurance and economic-development incentives.

Michigan also possesses economic assets that can’t easily be recreated elsewhere.

It remains the center of the North American automobile industry, has an enormous advanced-manufacturing supply chain, major research universities and generations of engineering and manufacturing expertise.

Those are genuine advantages.

But businesses also need workers.

Increasingly, they need AI developers, cybersecurity specialists, engineers, robotics technicians, skilled-trades workers and advanced-manufacturing specialists.

Michigan ranks only No. 21 for Workforce and No. 29 for Education.

Those numbers may ultimately matter just as much as tax incentives.

U-M Forecast: Don’t Expect A Michigan Boom Yet

A new University of Michigan economic forecast suggests the gap between Michigan’s business competitiveness and actual economic growth isn’t likely to disappear quickly.

The University of Michigan’s Research Seminar in Quantitative Economics released its latest Michigan forecast Sept. 4.

Its economists expect modest but positive growth through 2028.

But the numbers put “modest” into perspective.

U-M economists forecast Michigan will add only about 3,200 payroll jobs in 2026, followed by 15,400 jobs in 2027 and just 4,200 in 2028.

Even after those gains, Michigan payroll employment at the end of 2028 is projected to remain about 3.9% below the state’s all-time employment peak reached in 2000.

That’s a remarkable contrast for a state CNBC currently ranks as America’s sixth-best state for business.

TWO VERY DIFFERENT MICHIGAN JOB NUMBERS

Michigan establishments added approximately 8,200 payroll jobs from July 2025 to July 2026.

But over roughly the same period, the household employment survey estimated that the number of employed Michigan residents plunged by about 135,600.

University of Michigan economists themselves call the divergence puzzling.

There is an important caveat: The payroll and household surveys measure employment differently, and U-M economists warn that Michigan’s household employment estimates could eventually be revised.

Even with that warning, the enormous gap underscores how difficult it is to determine just how healthy Michigan’s labor market really is.

Michigan’s Workforce May Be The Bigger Problem

The U-M forecast identifies another problem that could ultimately matter more than business taxes or incentives:

Michigan is running short of workers.

Michigan’s labor-force participation rate fell from roughly 62% in late 2024 to 59.1% in July 2026.

Excluding the pandemic, U-M economists say that rate is approaching its lowest level since comparable records began in 1976.

And they don’t expect demographics to make the problem disappear.

Michigan’s labor force is projected to rebound somewhat during the first half of 2027 before declining again as baby boomers retire and immigration policies constrain workforce growth.

U-M economists describe Michigan as facing “demographic speed limits to growth.”

That phrase may explain the contradiction at the heart of Michigan’s No. 6 ranking better than almost anything else.

Michigan can build roads.

It can offer incentives.

It can prepare industrial sites.

It can build data centers, battery plants and advanced-manufacturing facilities.

But it can’t build a successful economy without enough people to work in it.

Michigan Has Made Real Progress

None of this means Michigan’s No. 6 ranking should be dismissed.

Michigan ranked No. 24 overall when Gov. Gretchen Whitmer took office in 2019. The state first reached No. 6 in 2025 and retained that position in 2026.

That’s substantial progress.

Michigan also maintained its No. 4 Cost of Doing Business ranking while climbing to No. 9 in infrastructure.

Those improvements strengthen Michigan’s hand when competing for investment.

But rankings aren’t the ultimate goal.

Jobs, wages, businesses and people are.

From Winning Projects To Building An Economy

For decades, Michigan economic development has often been measured by announcements: another factory, battery plant, research center, corporate expansion or billion-dollar investment.

Those projects matter.

But perhaps Michigan needs another measurement.

Instead of asking only:

How many companies can Michigan attract?

Ask:

How much Michigan economic activity does each investment create?

A billion-dollar factory or data center becomes far more valuable if Michigan companies supply it, Michigan workers build and operate it, Michigan startups develop technology for it and the people earning those salaries remain here and spend their money in Michigan communities.

That’s how an investment becomes an economic ecosystem.

And it may explain the gap between Michigan’s No. 6 business ranking and No. 24 economy ranking.

The No. 6 Ranking Is The Beginning, Not The Finish Line

Michigan has demonstrated that it possesses many of the assets businesses want.

CNBC’s No. 6 ranking is evidence of that.

But the University of Michigan forecast demonstrates how difficult the next step will be.

Michigan is expected to produce only modest job growth through 2028 while confronting an aging and potentially shrinking workforce.

That’s the real economic-development challenge.

Michigan doesn’t simply need to attract investment.

It needs to attract people.

It needs young workers, engineers, skilled tradespeople, entrepreneurs, AI developers and families willing to build their careers and lives here.

Because ultimately Michigan won’t be judged by whether CNBC ranks it No. 6, No. 3 or even No. 1.

It will be judged by whether those rankings translate into more jobs, more workers, higher incomes and growing communities.

Right now, Michigan has many of the ingredients.

The question is whether it can finally turn them into growth.