ITES: Profiling Ohio’s Economy

This is the fifth entry in “It’s the Economy, Stupid” a 15-part series analyzing the local economic news in five swing states.

Despite reports to the contrary, this state’s economy continued to exist following the departure of LeBron James. Other than jilted sports franchises, it’s known for nuts, nearly forgotten Presidents, and airplanes. This heart-shaped state in the Midwest is Ohio, and to its economy this series now turns.

Although Ohio’s Republicans will not cast their primary votes until Super Tuesday, the Santorum surge in its Midwestern peer, Michigan has been replicated in the Buckeye State. Even as swift political changes are common, decisive victories are rare. In the last five Presidential elections, both major parties have claimed a majority of votes only once each. Its bellwether status is celebrated by local politicos and national pundits, such that the phrase “as goes Ohio, so goes the nation” is common during election season.

True to form, Obama and Bill Clinton carried the state in their victories, while Bush claimed its 20 electoral votes as well. But it will have fewer votes to disburse this year, with reapportionment reducing its Congressional delegation by two. Despite the decline, Democrats will look to expand their U.S. House representation after losing five contests in 2010 – now five representatives to the GOP’s 13. That same year, Republicans defeated the incumbent Governor, retained a US Senate seat – in an open contest, and added to their outsized majorities in the state legislature with two new senators and 13 new representatives.

Its recent political history will have to suffice to justify its swinging status, as its Secretary of State does not release party voter registration. Still its voter rolls are likely large, as the state’s 11.5 million residents make it 7^th in the nation by population.[1] That rank is repeated with its Gross State Product, as its $478 billion GSP is the 7^th largest. While impressive, as with Pennsylvania and Florida, its per capita GSP of nearly $37,000 is below the national average and ranks 35^th in the country. A somewhat sunnier statistic is that a smaller proportion of its residents lack health insurance compared to the national average.

Another measure for which Ohio exceeds the mean is in high school education. More than 87% of its residents have earned their diploma. But that success falls with regard to college, with just above 24% having at least a Bachelor degree relative to the national average of near 28%. With regard to ethnicities, its population is 83% Caucasian, with African Americans and Hispanics a distant second and third, respectively.

Employment for Ohioans is concentrated in five industries that represent more than 70% of the labor force: Trade, Transportation, & Utilities (19%), Education & Health Services (17%), Government (15%), Manufacturing (13%), and Professional & Business Services (12%). Government remains in the top-five despite being only one of two industries with a negative growth rate during the last 12 months – Leisure and Hospitality is the other one.[2]

The number of residents with jobs continues to grow, with the unemployment rate last December at 8.1%. This comes after peaking at 10.6% in August 2009. Still, its labor force has 100 thousand persons fewer than at its peak in June 2008. The largest employers in the state are: Ohio State University, State of Ohio Department of Corrections, Procter & Gamble Company, Nationwide Mutual Insurance Company, and Ohio University Emergency Services.[3] Procter & Gamble is notable for making the list as it is the only industrial manufacturer in the top-five. But the advent of a new era of manufacturing may be forthcoming.

Policy Matters Ohio, a nonprofit, nonpartisan economic policy research organization estimates that the state boasts 630 thousand skilled manufacturing workers, with the sector contributing an outsized 20% of Ohio’s GSP. Many of those workers are shifting into “green jobs” with the organization Ohio Third Frontier, a nonpartisan business development coalition, having attracted close to $6 billion in investments for high technology research and development. One area of particular note is in groundbreaking fuel cell technology, with the state now claiming a “fuel cell corridor” that encompasses several post-industrial cities. Companies such as Roll-Royce Fuel Cell Systems are investing heavily into Ohio to further expand the industry. Look for additional coverage of this issue in future entries.

As with every selected swing state, three major, local newspapers were identified as sources of economic news stories. For Ohio, they are: The Plain Dealer (Cleveland), which serves more than 243 thousand readers on the typical weekday; The Cincinnati Enquirer, which has nearly 141 thousand readers; and The Columbus Dispatch, which has just more than 135 thousand readers. Before scouring those papers for hard-hitting stories, one swing state remains to be introduced.

Next up: New Mexico

STATE CLIPS

Pennsylvania: “Corbett defends cuts in Pa. higher-education budget” Philadelphia Inquirer February 14^th

Gov. Corbett’s $27.1 billion budget would cut $230 million from funding provided to state colleges and universities. The cut means that each of the 17 state-backed schools will see an average of 25-percent less in funding. That may not be as significant as it seems, as the cuts represent from 1.6 to 3.8-percent of the schools’ operating budgets. The Governor refused to include tax increases in his proposed budget, and argues that private businesses would be able to cut operating costs by the same amount when similarly situated.

Florida: “House Democrats try, fail to halt $108 million business tax-cut package” Tampa Bay Times February 14^th

Florida House Republicans advanced a $108 million collection of tax cuts over objections by their Democratic peers. The biggest change would double the corporate income tax exemption from $25,000 to $50,000. It would exempt 3,770 companies from paying the tax that contributed 8% of state revenues, last year. Despite calls in Washington to simplify the federal tax code, Florida’s bill would add breaks for several activities including oil drilling and private plane repair to the state’s code.

Colorado: “Expansion blocked for West Elk coal mine in Gunnison County” The Denver Post February 14^th

Following a decision by the US Forest Service, a St. Louis-based firm will not be able to expand its coal mining efforts in Gunnison County. The 1,700-acre expansion would have included 48 new well pads and 6.5 miles of road through previously undeveloped land. The decision came despite a review by the local forest service staff which found that the development would not have any adverse impacts on endangered species.

Ohio: “Deal funds blight fight” The Cincinnati Enquirer February 14^th

Ohio Attorney General Mike Dewine announced a $75 million plan to aid in the bulldozing of abandoned homes. The money would be used to match local efforts to revitalize neighborhoods and halt the decline of home values. Ohio’s vacancy rate of 10.2% is below the national average, but that still leaves an estimated 100 thousand homes are empty. Devine is optimistic that the $25 billion nationwide mortgage foreclosure settlement announced last week could mean millions of dollars more for state’s efforts.

New Mexico Preview: “New Mexico lawmakers send state budget to governor” Santa Fe New Mexican February 14^th

The Democratic-controlled State Legislature agreed to a $5.6 billion budget, but Republican Governor Susan Martinez indicated that she would veto the bill unless certain tax cuts are included. In a situation that is unusual for many states, the New Mexico budget is not projected to spend all the revenues anticipated in FY 2013. But the $37 million surplus is less than the Martinez’s requested tax cuts for veterans and businesses, which would cost $55 million. The remaining difference could come from the $67 million worth of earmarks included in the bill.