Economic Myths in the Age of Populism and Implications for Ohio
The Winter 2020 Swank Advisory Council meeting featured presentations from Dr. Mark Partridge, professor in the Department of Agricultural, Environmental, and Development Economics at The Ohio State University and chair of the C. William Swank Program in Rural-Urban Policy, and Dr. Bill LaFayette, owner of Regionomics. The presentations spurred discussions about the future of Ohio’s economy.
“Economic Myths in the Age of Populism”
The first myth addressed by Dr. Partridge in his presentation titled, “Economic Myths in the Age of Populism,” is that coastal states in the U.S. are the only states experiencing economic growth. Dr. Partridge explained that while Ohio lags the U.S. average with respect to employment growth, many non-coastal states, like Utah, Nevada, Colorado, Idaho, and Arizona outperformed the national average over the 2010 to 2019 period.
The second myth debunked by Dr. Partridge is that the rapid pace of technological change is leading to increases in productivity growth in the U.S. In fact, U.S. GDP in the 2000s was almost half of that in the 1960s, and, while it was slightly higher in the 2010s than in the 2000s, slowing productivity growth in recent years has become a source of frustration for many businesses and workers.
The third and final myth addressed is that workers are forced to move from job to job at much higher rates than in the past. Instead, Dr. Partridge explained how business dynamism, measured by rates of job creation and destruction, is declining across the United States and in Ohio in particular—i.e., workers are actually moving across jobs at a lower rate than 20-30 years ago. Additionally, new firms make up a smaller share of total employment in the Midwest than in other parts of the country. There is no one explanation for declining dynamism, but this trend is partially attributable to employer-tied healthcare, high student debts, greater costs associated with state-specific occupational licensing requirements, and increasing industrial concentration associated with fewer firm start-ups and higher price margins.
While the realities of lower employment growth, lower GDP growth, and declining business dynamism seem daunting, taking a closer look at Ohio’s economy and the economic performance of its core metropolitan areas can help us better understand the investments that need to be made locally to offset these broader, national-level trends and spur future growth for the state’s economy.
2020 Economic Outlook
Dr. Bill LaFayette presented his 2020 Economic Outlook for Columbus and the state of Ohio in the meeting after Dr. Partridge’s national-level overview. He showed that Columbus is the fastest growing metropolitan area in Ohio with respect to employment growth, but that employment growth has slowed over the last three years, largely due to dwindling workforce availability. Columbus was also an outlier with respect to population growth, far exceeding that of other metropolitan areas in Ohio and the state average. In fact, the state of Ohio’s population growth since 2000 would be negative without Columbus. Dr. LaFayette explained that this is due to both people moving to Columbus from other states and people moving to Columbus from other parts of Ohio.
Next, the conversation turned to a discussion about the long-term economic performance of the state and what will be required for Ohio to sustain and accelerate its growth. Dr. LaFayette discussed how the aging working-age population will become an issue for both Columbus and Ohio and will continue to exacerbate the decline in growth attributable to workforce availability, noting that the issue could become even more dire as immigration rates continue to decline.
Dr. LaFayette remarked how the Ohio economy has transformed from one based on industrial production to one based on knowledge production. To sustain and improve economic growth, investment in education is crucial. Dr. LaFayette argued that the burden of improving education in Ohio falls both on existing academic institutions and on business that have a clear vision for the skills required of workers to be successful employees. Dr. LaFayette also argued that the state needs both individuals with college degrees and individuals with trade-oriented credentials to continue to grow. In addition, statewide access to broadband, which, according to Dr. LaFayette, is to the knowledge economy as road and rail were to the industrial economy, is essential.
Finally, the advisory council members debated whether Ohio should reinvent itself as technology evolves, shifting the economy away from manufacturing, or whether it should double down on what it does best. Dr. LaFayette argued that Ohio should do both and that in either scenario improving educational attainment is critical. Advisory council members discussed the importance of revamping education at the local level, taking local business needs into consideration to equip residents with skills necessary to succeed in the local workforce. The council also expressed the need for better data and documentation of technical certificates.
Overall, the main theme that emerged from the meeting was that developing a skilled workforce is the most important issue facing Ohio’s economy currently and will remain so as the economy shifts from industrial-based to knowledge-based. Ohio must prioritize revamping its education system to improve the quality of education that residents receive while ensuring that the training obtained equips people them with the hard and soft skills necessary to be successful in the local workforce.
Written By
Sydney Schreiner, PhD Student, C. William Swank Program in Rural-Urban Policy Research Associate, 1-15-20
