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Toward a New Ohio – Questions Every Candidate Should Answer

Toward a New Ohio – Questions Every Candidate Should Answer

In fall 2018, Ohioans will elect a new governor. For only the second time in the past 16 years, an incumbent governor will not be on the ballot. The new governor and the voters who elect her or him will need to grapple with challenges to Ohio’s future, many of which are rooted in the state’s past.
This three-article series aims to help inform the gubernatorial candidates and Ohio voters on important policy choices and decisions that lie ahead. The papers provide historical context for Ohio’s current economic performance, examine concerns regarding future growth and identify key questions facing the next governor.

The first paper traces the performance of Ohio’s economy over the past half-century — a time when Ohio’s economy declined compared to the nation overall, in large part due to the loss of high-paying manufacturing jobs. We look at the role foreign and domestic competition and automation have played in this decline, as well as the impact of manufacturing job loss on local economies.

The second paper focuses on changes in the nature of Ohio’s workforce over this period and workforce challenges the state faces in the future. We pay particular attention to the projected skill demands of Ohio employers and how they match up with the skills Ohio workers possess.

The third paper begins with the efforts of Ohio governors over the past 50 years to accelerate growth of the state’s economy. It discusses the politics of jobs as an issue and compares Ohio’s performance, relative to other states, in generating income for its citizens. The paper concludes with a discussion of policy questions we believe the next governor should be prepared to address.

LINK to the pdf of the report:

2018 Toward-a-new-Ohio-report Questions for Candidates

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PAPER ONE:
THE DECLINE OF OHIO
4 King of the Hill
4 Tracing Ohio’s Relative Decline
5 Ohio Manufacturing Goes Lean
6 Searching for Culprits
10 Local Communities Suffer
12 Conclusions
13 Appendices
14 Endnotes

CONCLUSIONS
The subject of this paper is Ohio’s economic trajectory since the late 1960s. The relatively high incomes that Ohioans enjoyed compared to the rest of the nation declined steadily after 1969. The loss of approximately 700,000 well-paying manufacturing jobs between 1970 and 2015 has negatively affected the lives of Ohioans and communities across the state. It is not that Ohio is no longer a manufacturing state; it very much is one. What is produced in the state has higher value, production is highly automated, and what we make is different today than it was in the late 1960s. Labor-intensive manufacturing is gone from Ohio and will never return. Factories that employ more than a thousand workers have nearly disappeared, with auto and truck assembly, aircraft engines and appliance factories being among the few exceptions.

These losses reflect multiple causes, including increased domestic and foreign competition. However, the most powerful force has been the automation of factory jobs, followed by a drop in demand for products of historic importance to the state — especially steel. Automation has allowed many of Ohio’s factories to remain competitive and has opened up opportunities for some Ohioans but at the expense of opportunities for other Ohioans, especially those lacking a college degree.

The state’s changing economy has varied greatly by community. Large metropolitan areas, such as Cleveland, Columbus and Cincinnati, have not been immune but have been able to offset some manufacturing job losses through diversification. Many less-populous counties have found it more difficult to grow other forms of business after major plant closings. Yet some other Ohio counties have managed to thrive for various reasons.

While these issues of economic decline have festered for years, the soaring rates of opioid addiction and the discontent voiced by white working-class voters in the 2016 presidential campaign have pushed these concerns more firmly onto the national agenda and have raised fears of the nation polarizing into haves and have-nots.

The next paper in this three-article series examines the impact of these changes on Ohio’s workforce.

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PAPER TWO:
STUCK IN NEUTRAL
16 The Changing Job Market
17 The Changing Worker
18 What Lies Ahead?
21 Additional Considerations
23 Conclusion
24 Endnotes

CONCLUSION
The fundamentals of Ohio’s economy have changed from one based on producing goods to a more diversified set of employers, with service-producing industries growing the fastest. This shift in jobs and industry presents a series of challenges and opportunities that will exist throughout the years ahead. To better prepare the state to address these changes, policymakers need to resolve the wide differences in projections of future skill needs for Ohio jobs. They must also go beyond understanding the level of academic achievement demanded by employers and instead understand the mix of skills — both hard and soft — employers reward. State policymakers must recognize that the public goal of economic development policy is not only growing jobs, but growing good-paying jobs and developing the skilled workers needed to fill them.
In our third paper, we look at what Ohio’s political leaders have done to try to reverse the long-term decline in relative per capita income, what the outcomes have been and what options may be available to the next governor.

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PAPER THREE:
OHIO RESURGENT?
25
27 An Opportunity Missed?
27 Jobs for Ohio
29 Jobs First
33 Workers for Ohio
37 Ohio Versus the World
38 Forgotten Ohio
39 Conclusions: Where Hope and Reality Meet
40 Endnotes

Our purpose in writing these three papers is to help focus public interest and the upcoming gubernatorial debate on what we believe is one of the most important issues of the campaign: the future of the state’s economy. This is a topic that has vexed Ohio’s political leaders over the past four decades, and the challenge remains. If the problems were easy to define and fix, we would have solved them by now. These papers are not intended to promote a specific set of policy recommendations, but instead to provide the framework for candidates to engage in a constructive debate about what Ohio’s course should be for the next four years.

In the first paper, we traced Ohio’s relative decline in economic well-being from its postwar high more than 60 years ago. This decline has been painfully felt in the pockets of Ohio’s citizens, as state per capita income has fallen from 9 percent above the national average in 1953 to more than 9 percent below in 2016. At the root of this reversal in Ohio’s economic clout has been the loss of 700,000 high-paying manufacturing jobs in the state. The loss of these jobs reflects long-term structural forces that, for the most part, are outside the control of Ohio’s policymakers. Increased domestic and foreign competition and changing consumer preferences have played a role, but the most significant influence has been automation on the factory floor. Ohio’s challenge is not one of moving on from manufacturing. It is in developing and attracting new products and industries with profit margins that can provide earnings sufficient to support families and economic mobility for Ohio’s population.

As Ohio’s economy has shifted from one based on making things to one based more on providing services, workers in the state have had to adapt. Our second paper explored Ohio’s evolving demand for and supply of skilled workers. By most measures, Ohio’s workforce is better educated than ever before. Although this upgrading of worker education and skill needs to continue, there is lack of alignment in the state as to what kind of training is needed, how it should be structured and who should pay. Additionally, significant issues remain regarding the well-being of Ohioans who work important jobs that pay low wages and provide limited benefits.

Responses to these issues are too often shaped by ideology rather than pragmatically informed by the realities of the marketplace. These are complex issues to talk about, no silver bullet exists, and we cannot simply copy public policies from other states and expect them to work in Ohio. Economic development is resource and context specific. Public policies that appear to be effective in California or Texas may also need California or Texas resources and tax bases to work.

In this third paper, we hope to enrich the debate over Ohio’s economic future by posing a series of questions to the hopefuls for governor in the 2018 election. These questions are also appropriate for legislative candidates:

1. What will be your priority for initiatives aimed at improving Ohio’s economy? Is it number of new jobs, number of well-paying jobs, median family income, or something else?

2. Governors of both parties have tried to stanch the relative decline of Ohio’s economy and return to the prosperous 1950s and ’60s. But to what extent can any state government, through either program initiatives or tax policy, exert a significant influence on the direction of a state’s economy?

3. Gov. Kasich has launched several initiatives designed to create more jobs and help Ohio businesses and workers. Which of these would you continue as is? Which ones would you continue but modify, and which ones might you abolish altogether?

a. Privatization of some Ohio Department of Development functions into a nonprofit corporation (JobsOhio)
b. Creation of Office of Workforce Transformation
c. Identification of nine industry clusters
d. Reduction in personal income tax rates
e. Establishment of a business income tax pass-through exemption to assist certain categories of small business
f. Medicaid expansion
g. Mandatory renewable energy standards

4. Do you think Ohio’s energy, transportation, and water and sewer infrastructure is capable of supporting the state’s goals for economic growth? If not, what would you do to keep Ohio competitive in this regard, whether or not the federal government acts, and how should such efforts be paid for?

5. Do you think the current state tax structure is conducive to economic growth? If not, what would you do to change it?

6. Do you think targeted tax breaks and other financial incentives are appropriate tools for recruiting or retaining businesses? If so, at what level does the cost exceed the benefits? What measures other than tax incentives do you think are necessary to attract and retain jobs for Ohio?

7. Do you support what is known as “right-to-work” legislation, which limits the ability of unions to collect dues or service fees from nonmembers?

8. What portion of Ohio workers do you think needs a bachelor’s degree or higher over the next five to10 years? What would you do to help achieve that goal, and who should pay for it?

9. What portion of Ohio workers do you think needs training beyond a high school diploma but less than a four-year degree (including apprenticeships)? What would you do to achieve that goal, and who should pay for it?

10. Should the state do more for “forgotten Ohio,” those communities outside of major metropolitan areas that are losing jobs, and should it do more for the many Ohioans who work in important but low-paying jobs?

11. What would you do to help Ohio employers deal with the challenge of finding workers who can pass a drug test, while still ensuring a safe workplace?

12. What are the most important policy issues regarding Ohio’s economy to be decided in Washington D.C.? How would you go about making sure Ohio’s economic interests are effectively represented at the federal level?

In the remainder of this paper, we will examine these questions in more detail. We will begin at the intersection of politics and public policy by taking a look at what actions previous governors have tried to address these issues. We will then take a closer look at the issues involved with creating jobs and the challenges of matching the skills of Ohio workers with the needs of our employers. In the fourth section, we explore the “forgotten Ohio” issue and close with a discussion of federal policies that affect Ohio’s future.

CONCLUSIONS: WHERE HOPE AND REALITY MEET
This paper has explored the intersection of politics and economic realities. We recount how Ohio governors of both political parties have consistently tried to improve the lives of Ohio workers and the state’s economic vitality. Some of these efforts have been more successful than others, but none has significantly altered the state’s trend of relative economic decline.

We argue that four areas deserve more attention from the gubernatorial candidates because they hold promise for improving the lives of Ohioans. These four issue areas center on how best to: 1) stimulate the creation of new jobs in industry clusters that have the potential both to diversify the state’s economy and exploit its competitive advantages; 2) align the needs of Ohio employers with the skills of Ohio workers, particularly in the mid-level skill range, and streamline education and training programs; 3) address the unique challenges of Ohio workers and Ohio communities that have been unable to adapt to and compete in the modern economy; and 4) engage allies and develop effective political coalitions to shape federal policies that impact Ohio.

Ohio’s next governor needs to be prepared to articulate, gain support for, adopt and implement a comprehensive strategy to move the state forward. Although understanding the past is important, the governor’s vision and actions must not be directed at recreating the Ohio that was, but on building the foundation for the Ohio that can be.

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