Table of Contents

Although Ohio, like many other industrial states, is going through a difficult transition, Ohioans stress that their state should not be defined by its past. Times have changed, and the economy has evolved considerably. Today, there are multiple economic realities that exist in Ohio, which once led the nation in providing broadly shared prosperity. A sizable number of middle-class households thrive in a modern, diversified economy, whereas others struggle to make ends meet. State officials and community leaders now grapple with complex and difficult domestic policy decisions to keep Ohio’s middle-class dream alive in a new context.

This new context is defined by the following features:

  • Ohio continues to enjoy strategic advantages that give reason for optimism about its economic future—the outdated Rust Belt label is misleading.
  • While Ohio continues to be one of the nation’s most important manufacturing states, the composition of its workforce has diversified and now resembles more closely the nation as a whole.
  • New job openings exist everywhere, but many of the fastest-growing occupations pay wages insufficient to sustain a middle-class standard of living.
Ohio continues to enjoy strategic advantages that give reason for optimism about its economic future—the outdated Rust Belt label is misleading.
  • Ohio still lags behind the national average in educational attainment beyond high school, although the gap is closing. This presents a major challenge for workforce development, especially outside the major metropolitan areas where higher-paying jobs are concentrated.
  • Assumptions that Ohio is ultimately split by an urban-rural divide do not reflect the complex nature of the state’s economic geography. For example, the economic outlook differs greatly across rural counties, notably between Northwest and Southeast Ohio.
  • As in many states, critical funding shortfalls persist for major infrastructure requirements that could boost productivity, aid businesses, and create jobs.
  • Current demographic trends show an increasing concentration of population and economic growth in certain counties and a slowing in many other counties, with some trailing the national average.

Governor John Kasich’s administration launched several initiatives designed to create more middle-class jobs and help Ohio businesses and workers address the challenges described in this chapter. His successor, who assumes office in January 2019, will need to determine whether to continue, modify, or abolish them. They include:

  • Privatization of some former Ohio Department of Development functions into a nonprofit corporation (JobsOhio)
  • Creation of the Office of Workforce Transformation
  • Identification of nine target industry clusters
  • Reduction in personal income tax rates
  • Establishment of a business income tax pass-through exemption to assist certain categories of small business
  • Expansion of Medicaid
  • Mandating of renewable energy standards

It is important to see this full picture to understand why changes to trade policy intended to help workers in specific manufacturing industries, while still highly relevant, can only address a fraction of the full range of challenges confronting Ohio’s middle class. Such challenges, falling more squarely within the purview of state- and national-level domestic policy, are first discussed in this chapter, before then turning to the state’s international exposure.

A Resurgent Economy With Strong Comparative Advantages

In recent surveys, Ohio’s businesses show record high levels of confidence in the economy, albeit with a slight tapering off in the last six months.1 The state’s unemployment rate, which peaked at 11 percent in 2009–2010 following the Great Recession, has dropped to 4.6 percent as of July 2018.2 Ohio added 540,100 private sector jobs between 2011 and mid-2018.3 Its economy grew 1.9 percent in 2017, just below the nation’s 2.3 percent growth.4

Ohio still enjoys formidable comparative advantages that first attracted manufacturers to the state. Businesses locating in Ohio find themselves within 600 miles of 59 percent of the population of the United States and Canada.5 Goods produced or transiting through Ohio can be distributed cost-effectively using the inland waterways, railway lines, and interstate highways. Energy-intensive industries, in particular, find Ohio attractive: the state ranks seventh in natural gas production, tenth in electricity generation, and twelfth in total energy production among the fifty states.6 Ohio’s abundant shale formulations will further attract private sector investors as the natural gas resource is developed. Renowned academic institutions in the state and region provide a steady supply of science, technology, engineering, and math (STEM) graduates, as well as other skills and talents businesses need. The state and private industries together contribute $10 billion annually to science and engineering research.7 State officials, businesses, and local communities take pride in partnerships they have built to advance economic development across Ohio.

Ohio has adopted a strategy for leveraging its competitive advantages to grow its more diversified economy. A combined workforce plan put forward by Kasich’s administration targeted nine industries as the best prospects for generating economic growth and good-paying jobs now and into the future. These industries include advanced manufacturing, aerospace and aviation, automotive, bio-health, energy and chemicals, financial services, food and agribusiness, information technology and services, and logistics and distribution.8 The industries are well-integrated into the global economy, account for most of Ohio’s international trade, are attracting domestic and foreign investment, and are anticipated to employ up to 30 percent of Ohio’s workforce.9 In addition to providing good-paying jobs, growth in these industries is expected to spur growth in small and medium-sized supporting enterprises.10

A Diversified Economy With a Changing Workforce

Manufacturing Remains Critical but Less Dominant

Ohio now has one of the country’s most diverse workforces.11 It remains an important manufacturing state, ranked third in the nation in 2016 by the value of its output, behind only California and Texas.12 However, the combined service sectors—including banking, insurance, utilities, trucking, warehousing and storage, hospitals, nursing, and residential care facilities—now account for over three-fourths of the state’s $649 billion gross domestic product (GDP) and will account for most job growth in the future13 While manufacturing constitutes a larger share of Ohio’s GDP than it does for the nation as a whole, other sectors are growing as or more quickly and occupying an increasing share of the state’s economy (see Table 1).

Table 1

The changing industry picture has thus changed Ohio’s employment needs. Manufacturing today still accounts for 12.4 percent of Ohio jobs (higher than the national share), but this pales in comparison to the 1950s, when the sector at its peak employed 44 percent of all Ohio workers.14 As discussed earlier, several factors explain this transition, including that robotics and other technological advances have made manufacturing industries far less labor-intensive. The previous conception of thousands of workers manning the assembly line no longer applies. For example, many parts required for aircraft engines can now be made with 3-D printers, reducing part counts and simplifying the supply chain. And parts can even be serviced remotely, using modern information systems.15

Ohio now has one of the country’s most diverse workforces.

Few factories in Ohio today employ more than 1,000 workers. Notable exceptions include Honda Motor Company Ltd. and General Electric—Ohio’s top two largest manufacturers in 2018— which employ over 14,000 workers each.16 Ohio’s eighty steel and iron industry establishments combined directly employ 25,821 Ohioans.17

Yet, in comparison, Walmart now employs over 50,000 workers—almost double the number directly employed by the steel and iron industry.18 More Ohioans today are employed in sectors other than manufacturing, such as trade, transportation and utilities, education and health, the government, and professional and business services. The healthcare industry in Ohio is expected to have the largest employment growth for the period of 2014–2024. The structure of employment in the state now more approximates the nation as a whole (see Table 2). Like the rest of the United States, many of Ohio’s top domestic employers are in the retail sector (see Table 3).19 In Ohio and twenty-one other states, Walmart is the largest employer and has been in Ohio since 2002.20 In contrast, in 1995, General Motors (63,200 workers), Ford (24,000), and General Electric (18,500) were three of the state’s top five employers.21

Table 2

Table 3

The 1950s picture of Ohioans working in good-paying, unionized manufacturing jobs across the state no longer reflects the current reality. Unionized jobs in the manufacturing sector still provide a livable wage and solid benefits, hence why they are coveted and so much attention is rightly given to protecting them. But employment has diversified, and with it, unionization has changed.

As of 2017, 12.6 percent of all employed Ohioans were union members, above the national average of 10.8 percent.22 Ohio remains one of the twenty-four states that do not have “right-to-work” laws designed to curb labor unions’ collective-bargaining power. This remains a contentious issue of debate. Proponents argue right-to-work legislation would encourage businesses to move to Ohio at a time of fierce competition between states to attract domestic and foreign investment. However, opponents contend that it would further exacerbate the disempowerment of workers and ultimately lead to lower pay and benefits for them.23

The Challenge of Low Wages and Rising Household Costs

One reason why so much attention is paid to the impact of trade policy on the manufacturing sector—notwithstanding the variable and limited nature of its relevance to much of Ohio—is that the sector still provides some of the best-paying job opportunities for semi-skilled workers without postsecondary education. The alternative for the vast majority of those without college or advanced degrees are service sector jobs that do not pay enough to sustain a middle-class lifestyle.

For example, although Walmart employs many well-paid managers, its average worker earns about $28,700 per year.24 A typical auto parts manufacturing worker, by comparison, earns about $58,300 per year, and workers employed in the state’s iron and steel industry earn about $65,700 per year.25 Table 4 lists the median wages associated with the ten most widely held occupations in Ohio.

Table 4

Registered nurses are an outlier in this list. Nursing jobs pay better but require higher levels of education and training, whereas most other occupations listed, which are accessible to those without a college degree, pay under $33,000 a year.

Wages are only one part of the equation, however. The other side of the balance sheet, namely household costs, is equally important to determining whether a middle-class lifestyle remains in reach. The cost of living in Ohio is considerably lower than in most U.S. states, partly due to more affordable housing and the slower-growing financial service costs resulting from Ohio’s competitive insurance markets.26

Within Ohio, the cost of living varies considerably. The EPI calculated that a family of four in Delaware County (one of the wealthy suburban counties in the Columbus metropolitan area) would need a household yearly income of approximately $83,718 to meet its basic budget. This figure would drop to $65,808 in rural Columbiana County.27 The EPI defines a basic budget as what is required to maintain a “modest yet adequate standard of living,” covering the costs of housing, food, transportation, childcare, healthcare, taxes, and other necessities such as household supplies. It does not include the costs associated with taking a vacation, saving for retirement, or paying tuition and paying off student loans for postsecondary education at a technical school, community college, or state university (leaving aside private education).28

Extrapolating from the EPI’s data, a family of four living in Ohio in 2017 required, on average, a combined income of $72,779 to meet a basic budget (assuming a four-year-old and eight-year-old). A typical family of three needed $61,066 (assuming a four-year-old). Clearly, these figures exceed the wages on offer in the leading occupations across the state, thereby often requiring both parents to work. That contributes to the premium on childcare expenses included in the budget, especially for single-parent households.

According to the U.S. Department of Health and Human Services, childcare is affordable if it comprises 10 percent or less of a family’s income. By this measure, slightly more expensive infant care is unaffordable for the majority of Ohio families.29 In Ohio today, extrapolating once again from the EPI’s data, almost 20 percent of the budget of a family of four, in which both parents work, goes toward childcare (over $13,500). On top of childcare, another 20 percent (over $14,000) of a family of four’s household budget goes toward transportation annually. The next highest expenditure is for healthcare (over $11,000). Per capita healthcare expenditure in Ohio has grown much faster than the national average (22 percent between 2011 and 2016 compared to 18 percent nationally).30

It stands to reason, therefore, why foreign policy may not be uppermost on the minds of Ohio working families struggling to reconcile the costs they incur with the wages they earn. Debates about healthcare, parental leave policies, flexible work, telecommuting arrangements, and public transportation are more directly and obviously relevant for them.

Chasing Wages: Skills Gap, Education, and Substance Abuse

In the prevailing circumstances, one solution is to lower household costs. But it should be coupled with an effort to help Ohioans become qualified for better-paying jobs. Those interviewed for this study repeatedly stressed that higher-paying jobs do exist, but many go unfilled due to a lack of qualified talent. Service sector jobs—doctors, nurses, lawyers, bankers, and insurance executives—pay enough, or considerably more, to sustain a modest, middle-class standard of living, but they generally require at least a bachelor’s degree. And Ohio’s educational attainment continues to lag behind the national average despite its growth (see Table 5).

Table 5

A central facet of the state’s workforce development plan therefore involves investing in post–high school education, apprenticeships, and certificate programs. There appears to be broad consensus for investing in the upskilling of Ohio’s workforce, in principle, but such a stated goal remains difficult to translate into practice.31 Projections on workforce requirements vary considerably, thus there remains a risk of training workers for jobs that may not exist in the future.

Further, these higher-paying service sector jobs are not accessible to all geographically. They are disproportionately concentrated in the state’s three largest metro areas: Cincinnati, Cleveland, and Columbus. The four counties where these three cities are located—Hamilton (Cincinnati), Cuyahoga (Cleveland), and Franklin and Delaware (Columbus)—are home to higher-paying jobs, including 56 percent of the 72,000 insurance and information technology jobs and 44 percent of the 540,000 bio-health service jobs in Ohio.32 It is worth noting that Cuyahoga and Hamilton counties suffered some of the state’s largest manufacturing job losses between 1990 and 2016, but urban counties were better able to offset lost manufacturing jobs than were many of Ohio’s smaller cities and towns because they had more diversified economies that benefited from universities, research and medical facilities, a better-educated labor pool, and airports with fairly robust connections.

Projections on workforce requirements vary considerably, thus there remains a risk of training workers for jobs that may not exist in the future.

Finally, in regions with fewer high-paying jobs, substance abuse is also a challenge. There is a clear connection between declining economic conditions—especially in those areas that suffered high numbers of job losses in the early 2000s—and the opioid crisis. For example, from 2011 to 2016, Marion, Montgomery, and Trumbull counties suffered some of the nation’s highest death rates from drug overdose at 31.7, 42.5, and 34.2 deaths per 100,000 people, respectively.33 With the epidemic of opioid abuse, as well as the growing misuse of marijuana, Ohio employers complain about the difficulty in finding employees that test free of drugs.34

Promise and Challenges for Rural Ohio, Farming, Agribusiness, and Energy

The preceding sections may give the impression that the challenges facing Ohio’s middle class principally reflect an urban-rural divide. But that would not be entirely accurate. Ohio is an agricultural heavyweight, and economic fortunes vary considerably across rural counties.

In Northwest Ohio, manufacturing and agriculture contribute significantly to economic growth and employment in rural areas. In 2017, Ohio ranked sixteenth in agricultural production.35 Ohio farming remains fundamental to the enterprise, with over 75,000 predominantly family-run farms with long ties in the state.36 But farm employment represents only a small percentage of the jobs associated with related food and agriculture activities. For example, almost 60,000 Ohioans are employed by the food and beverage manufacturing industries, which tend to be clustered nearer to metropolitan areas.37 But even this number does not capture the complete supply chain of food production, processing, and retailing and food services.

In contrast to the northwestern rural counties, Ohio’s rural Appalachian counties experience a very different reality than other regions. Technically, thirty-two of Ohio’s eighty-eight counties—extending from the state’s far northeastern corner to nearly its southwestern edge—currently fall within Appalachia’s geographic boundaries.38 Ohio’s Appalachian counties designated as distressed or at-risk are primarily clustered in the southern and southeastern portion of the state.39 These counties have the state’s highest concentrations of poverty and unemployment. Southeast Ohio has the state’s lowest level of educational attainment, with 17.1 percent of people ages twenty-five and older holding a bachelor’s degree, compared to 26.7 percent for the state, and a higher unemployment rate of 6.3 percent, compared to 5.0 percent for the state, in 2017 (note that the state’s unemployment rate dropped below 5 percent in 2018).40

Appalachia has had a negative economic outlook since the closing of many extractive industries in the 1940s and 1950s. Manufacturing closings have disproportionately hurt Appalachian counties because of the lack of alternative employment. Figure 7—which maps the large industrial sources of economic growth and employment—illustrates the disparity between the southeastern counties in Ohio’s Appalachian region and the rest of the state.

Figure 7

Much Hinges on the Energy Sector

Many people living in Ohio’s southern and southeastern counties once depended on the coal industry and coal-fired electric power plants for middle-class jobs. However, in recent decades, employment levels in these industries have fallen due to automation and the shifting away from coal as an energy source.41 Economic factors, as well as environmental concerns, provide a compelling reason to make the transition. New natural gas–powered plants are 40 percent to 50 percent more efficient than older coal-powered plants, resulting in substantially lower costs and cleaner energy.42 But communities that have long depended on employment in the coal industry may continue to be hit hard because natural gas plants require differently trained workers.

Meanwhile the shale boom contributes very positively to Ohio’s general economic outlook. But it remains unclear if it will yield long-term employment opportunities for Appalachia.

On a positive note, Appalachia may soon be home to a different source of energy employment—an ethane cracker plant that extracts natural gas and breaks ethane down into ethylene.43 Foreign investors have considered putting this type of petrochemical plant in Ohio counties and those bordering in West Virginia. As discussed in Chapter Four, this plant could substantially benefit those in and near Belmont County.

Infrastructure Needed to Help Businesses and Create Jobs

Local officials, economic developers, and middle-class families in both rural areas and big cities uniformly cite investments in infrastructure as vitally important to the economic well-being of Ohio’s middle class. Ohio’s strategy for growing the economy and creating good-paying jobs relies heavily on leveraging its locational and distributional benefits. That puts a particular premium on investing in the upkeep and modernization of its airports, roads, railways, and waterways to keep and attract manufacturers and logistics companies, in particular. Ohio also will need to sustain a cost-effective energy supply, reliable water supply, and wastewater management and treatment systems. It will need to make capital investments in education to compete in a marketplace increasingly driven by knowledge and talent.

In more remote areas, small business owners and middle-class families crave better internet access to take advantage of e-commerce—whether to sell products or purchase items that are cheaper or unavailable in their communities—as well as to telecommute and save on childcare. Those living in city outskirts seek a more extensive public transit network that might make it easier to switch to higher-paying jobs despite the extra commuting distance. Increased construction associated with infrastructure investment across all of these areas would create additional decent-paying jobs for mid- and unskilled workers.44

Demographics

The story of today’s Ohio is informed by the state’s demographic map. Businesses and foreign investors are attracted to where people have the skills for their jobs. At the same time, as the economic structure of Ohio changes, people move to where the jobs meet their talent, even if this means moving across counties or states. Generally, Ohio’s growth has slowed, and the population is aging. From 2010 to 2017, Ohio’s population grew 0.15 percent, compared to 0.74 percent nationally. Since 1960, Ohio’s population growth has been lower than the U.S. average. In that year, Ohio accounted for 5.4 percent of the national population, but by 2010, Ohioans made up only 3.7 percent. Ohio’s population share has stayed around that number since 2010.45 However, this leveling off is not true of all Ohio counties (see Figure 8). Some counties are growing quickly, while others are shrinking. As shown later in Figure 9, it appears that the counties that are growing are those that are doing well and are more globally connected.

Figure 8

Ohio’s immigrant population is growing at a faster rate than the population as a whole, though the numbers still remain small relative to many other states.46 Ohio maintains an overwhelming white majority (82 percent of the total population).47 Immigrants account for only 4 percent of Ohio’s population (with the largest numbers coming from India, Mexico, China, Germany, and Canada). Their education levels exceed those of the general population, with 42 percent of immigrants possessing a bachelor’s degree or higher, compared to 26.7 percent of Ohioans.48 Immigrants accounted for 7.2 percent of employees in all professional, scientific, and technical services; 14.1 percent of workers in computer and mathematic sciences; 16.5 percent of workers in life, physical, and social sciences; and 23.2 percent of business owners in the state’s capital.49

A Globally Connected Economy

The foregoing discussion may give the impression that Ohio is a closed economy. But, of course, it is not. The state continues to be well-integrated into the global economy through both FDI and trade. However, Ohio’s sources of FDI and trading partners vary across the state, and therefore, counties and industries experience different effects from trade policy.

Foreign Direct Investment Plays Prominent Role in Ohio’s Economic Strategy

As already noted, one major reason why Ohio manufacturers were forced to become more technologically advanced and shed labor costs was the resurgence of competition from Japan and Europe in the 1970s and 1980s. Ironically, today, many Ohioans see Japanese and European investors as saviors in parts of the state reeling from the departure of U.S.-owned manufacturing facilities.

Direct FDI-supported jobs (not including the many indirect jobs also spawned by FDI) account for 4.7 percent of Ohio’s workforce, in comparison to 4.2 percent nationally.50 The over 247,000 jobs directly supported by FDI rivals those created by exports.51

JobsOhio, a private nonprofit corporation established by the state in 2011, plays a large role in marketing Ohio’s regions globally. Those interviewed at JobsOhio and its regional economic development partners made clear that increased FDI was vital to creating more good-paying, middle-class jobs across the state. Each of Ohio’s areas has distinct advantages it can market. For example, they can entice foreign manufacturing firms to locate facilities near smaller towns and in rural counties, where there is ample land available for new sites at affordable prices and lower labor and energy costs.52 Table 6 illustrates the importance of FDI for Ohio’s modern-day workforce, especially in the manufacturing industry.

Table 6

Officials at JobsOhio and its partner organizations explain that this current FDI portfolio has resulted from several factors. The portfolio represents the natural evolution in the life cycle of foreign engagement. For example, Japanese companies first entered the market through exporting automobiles and electronics. Eventually, they opened up sales offices. They took up residence in Ohio. Their kids went to local schools. Deep human relations and ties were built. In time, Japanese companies also saw the business value of locating production in the United States. Japanese suppliers followed.53

The decisions of foreign and domestic investors alike are greatly influenced by issues such as prevailing tax rates, the regulatory environment, the human talent pool, and site availability. But Ohio’s economic developers stressed that foreign student enrollment, immigration, trade, and U.S. foreign relations were also relevant to their efforts to attract FDI. They spend a great deal of time nurturing relations with investors in G7 countries and pay close attention to how evolutions in U.S. foreign policies could affect investors’ business decisions.54

Beyond the G7 partners, economic developers spend an increasing amount of time traveling to Asian countries anticipated to be lucrative sources of growth in FDI. China, in particular, is getting increasing attention. Ohio’s economic developers scored a huge win by securing investment from the Chinese company, Fuyao Glass Industry Group, which now has its largest overseas investment in Dayton ($600 million). The rare size of the investment (not without serious challenges discussed in Chapter Four) could be seen as the first salvo of Chinese investments to come.55 One could argue that aspects of Ohio’s relationship with China today resemble relations with Japan several decades earlier. Like Japan in the 1970s and 1980s, China has become the source of many of Ohio’s imports and the resentment of manufacturing workers. Ohioans have begrudged the jobs lost due to Chinese mercantilist practices in the 2000s. Yet, at the same time, as had happened with Japan, Ohio is strengthening relations with China. The numbers of immigrants and foreign students from China continue to grow. Ohio boasts a total of 38,680 foreign students enrolled in its universities—the eighth-largest enrollment in the country—and 40 percent hail from China.56

Ironically, today, many Ohioans see Japanese and European investors as saviors in parts of the state reeling from the departure of U.S.- owned manufacturing facilities.

However, the trajectory of Chinese investment in Ohio will not be driven by economic considerations alone, as foreign policy and national security concerns loom large. Unlike in the case of Japan, China is not a treaty ally, dependent on the United States for its security, or aligned with American values and interests on the global stage. China is a near-peer competitor in the security realm, but it does not espouse democratic governance, human rights, or international financial institutions. Accordingly, the prospects for Chinese long-term FDI in Ohio remain uncertain. Opportunities for mutually beneficial investments and a foundation for human relations exist, but it may become increasingly difficult for states and Chinese investors to maintain a business-focused firewall if national security considerations and foreign policies continue to elevate tensions. According to the Rhodium Group, Chinese investment in the U.S. was down 92 percent in the first half of 2018 from the previous year, arguably due to escalated tensions over trade and U.S. scrutiny of Chinese deals on national security grounds.57

Chinese investment in the U.S. was down 92 percent in the first half of 2018 from the previous year, arguably due to escalated tensions over trade and U.S. scrutiny of Chinese deals on national security grounds.

Broad and Varying Types of Exposure to International Trade

Although Japan and Europe lead in FDI, Canada (38 percent) and Mexico (12 percent) accounted for half of the $50 billion worth of goods Ohio exported in 2017, making Ohio the ninth top exporting state in the country. And Asia is becoming an increasingly important trading partner for Ohio. China accounted for the largest share of Ohio’s $67 billion worth of imported goods (19 percent) in 2016, just edging out Canada. Over the last eight years, China’s share of Ohio’s imports has generally remained constant, but its share of exports has increased. Last year alone, Ohio exports to China grew by 4 percent and to Southeast Asia by 16 percent.58

The Trump administration’s decision to renegotiate NAFTA and withdraw from the TPP were therefore highly consequential for the businesses and workers in tradeable sectors. Approximately 250,000 Ohio jobs are directly supported by exported goods, and by one estimate, 1.2 million Ohio jobs are affected by all forms of two-way trade.59 Indirect job functions supported by trade include the receiving, warehousing, and trucking of exported and imported goods; the selling of imported goods at stores like Walmart; and the provision of a broad range of financial, legal, and other business services supporting the transactions. The 1.2 million figure includes those jobs associated with the export of services, with an estimated value of $14.2 billion and constituting almost one-fourth of Ohio’s total exports in 2016.60 Trade policy is especially consequential for those working in industries that account for the biggest share of Ohio’s exports and imports (see tables 7 and 8).

Table 7

Table 8

While Ohio clearly has a major stake in trade policy, perceptions of how changes would impact Ohio’s middle class vary considerably. Some of the state’s key manufacturers are principal importers. For example, Nestle’s Swiss-owned plant outside of Cleveland sources raw materials from a few regions overseas and produces goods at their plant largely for U.S. market distribution. Conversely, many of Ohio’s soybean farmers are primarily exporters, shipping grain to partners overseas. And still, others like General Electric, Honda, Fiat-Chrysler, and General Motors are both top exporters and importers, relying on global value chains to assemble their machinery, aircraft, and vehicles.

Ohio’s counties also experience the benefits of exporting activities very differently. Export production is particularly centralized in wealthier urban areas like Cincinnati, Cleveland, and Columbus (see Figure 9).

Figure 9

For these reasons, among others, there is no simple answer to the question of how changes to trade policy might impact Ohio’s middle class. The impacts vary considerably by industry and place.

Concluding Thoughts

When looking at the history of the impact of trade policy on manufacturing employment, as described in the last chapter, it is easy to get the impression that it is among the most important determinants of middle-class economic fortunes in Ohio. It does remain an important factor, but just one of many, including the impact of trade policy on FDI and the growing service sectors.

Meanwhile, the state’s executive and legislative branches must focus on the issues within their purview that are uppermost on the minds of working families. These include the state’s economic strategy; tax structure; approach to attracting and retaining business through tax abatements and other incentives; “right-to-work” legislation regarding unions; resource allocation and goals for education, workforce development and training, and infrastructure; priorities for investments in distressed communities; and substance abuse.

In tackling these policy issues, state officials face real dilemmas and trade-offs. The opportunities and challenges affecting the middle class are not spread out evenly across the state. Very different economic realities now exist in very different “Ohios.” To determine whether big changes to U.S. foreign policy are required to aid Ohio’s middle class, one must delve deeper into the varying perspectives found across different industries and places.

Notes

1 Bill Adams, “The PNC Economic Outlook: Survey of Small and Middle-Market Business Owners,” October 2018, pnc.mediaroom.com/download/2018_Fall_Ohio.pdf.

2 Ohio Department of Job and Family Services, “Unemployment Rate Map: December 2009, Seasonally Adjusted” and “Unemployment Rates, Ohio July 2018, Seasonally Adjusted,” 2009 and 2018, http://ohiolmi.com/laus/laus.htm.

3 “John R. Kasich: Governor of Ohio,” using data from the U.S. Bureau of Labor Statistics, accessed September 12, 2018, http://governor.ohio.gov/.

4 Mark Williams, “Ohio’s Economy Grew a Bit Faster in 2017 But 1.9% Lagged US Rate,” Columbus Dispatch, May 4, 2018, http://www.dispatch.com/business/20180504/ohios-economy-grew-bit-faster-in-2017-but-19-lagged-us-rate.

5 Ohio Development Services Agency, “Economic Overview,” August 2018, https://development.ohio.gov/files/research/E1000.pdf.

6 U.S. Energy Information Administration, “Rankings: Total Net Electricity Generation,” June 2018, https://www.eia.gov/state/rankings/?sid=OH#/series/51.

7JobsOhio, “2016 Annual Report, 2017 Strategic Plan,” 2017, https://www.jobsohio.com/site/assets/files/2335/jobsohio_2016_annual_report.pdf.

8 State of Ohio Workforce Innovation and Opportunity Act (WIOA), “Combined State Plan With 2018 Modifications,” 2018, http://www.workforce.ohio.gov/Initiatives/Combined-State-Plan.

9 Interview conducted by S. Ahmed and F. Stewart with state officials and economic developers, Columbus, July 9, 2018.

10 Ibid.

11 Using data from 2001 to 2014, IMPLAN calculated that Ohio was among the top three most economically diverse states in the nation in terms of the distribution of employment across industries; see IMPLAN, “The Shannon-Weaver Index of Economic Diversity: An Overview and Descriptive Analysis,” 2016, https://implanhelp.zendesk.com/hc/en-us/articles/115009505687-The-Shannon-Weaver-Index-of-Economic-Diversity-An-Overview-and-Descriptive-Analysis.

12 Ohio Development Services Agency, “Gross Domestic Product From Ohio,” September 2018, https://development.ohio.gov/files/research/E1001.pdf.

13 Ohio Development Services Agency, “Economic Overview.”

14 William Shkurti and Fran Stewart, “The Decline of Ohio,” Toward a New Ohio paper series, John Glenn College of Public Affairs, http://glenn.osu.edu/toward-a-new-ohio/; Bureau of Labor Statistics, “Ohio Economy at a Glance,” July 2018 data seasonally adjusted, https://www.bls.gov/eag/eag.oh.htm, extracted October 5, 2018.

15 Input from a Carnegie task force member who served for many years at General Electric.

16 Ohio Development Services Agency, “Ohio Major Employers—Section 1,” May 2018, https://development.ohio.gov/files/research/B2001.pdf.

17 Ohio Development Services Agency, “Advanced Manufacturing: Ohio Iron and Steel Industry,” December 2017, https://www.development.ohio.gov/files/research/B1001.pdf.

18 Ohio Development Services Agency, “Advanced Manufacturing: Ohio Iron and Steel Industry”; Walmart, “Location Facts,” August 15, 2018, https://corporate.walmart.com/our-story/locations/united-states#/united-states/ohio; accessed October 16, 2018.

19 Fortune 500, “Biggest Employers,” 2017, http://fortune.com/fortune500/list/filtered?sortBy=employees&first500.

20 Rachel Gillett, “The Largest Employers in Each US State,” Business Insider, June 11, 2017, https://www.businessinsider.com/largest-employers-each-us-state-2017-6; Ohio Department of Development, “Ohio Major Employers: Historic Data,” 2017, https://development.ohio.gov/files/research/B2021.pdf.

21 Ohio Department of Development, “Ohio Major Employers, Historic Data.”

22 Barry T. Hirsch, David A. Macpherson, and Wayne G. Vroman, “State: Union Membership, Coverage, Density, and Employment by State and Sector 2017,” Union Membership and Coverage Database From CPS, 2018, http://unionstats.gsu.edu/. For a description of the database, see Barry T. Hirsch and David A. Macpherson, “Union Membership and Coverage Database from the Current Population Survey: Note,” Industrial and Labor Relations Review 56, no. 2 (January 2003): 349–354.

23 William Shkurti and Fran Stewart, “Ohio Resurgent,” Toward a New Ohio paper series, John Glenn College of Public Affairs, 2018, http://glenn.osu.edu/toward-a-new-ohio/.

24 According to Walmart’s website, about 75 percent of its store management employees, who once started as hourly associates, earn between $50,000 and $170,000 a year. (It also indicates it is investing $2.7 billion over two years in higher wages, education, and training); see Walmart, “Company Facts,” accessed September 10, 2018, https://corporate.walmart.com/newsroom/company-facts. However, the majority of its employees are not store managers. According to Walmart, the average hourly full-time wage was $13.78 in Ohio as of August 2018; see Walmart, “Location Facts,” August 15, 2018, https://corporate.walmart.com/our-story/locations/united-states#/united-states/ohio, accessed October 16, 2018. Annual wage is then calculated using 2,080 hours (as is done by the Bureau of Labor Statistics to get annual wage); see Bureau of Labor Statistics, “May 2017 State Occupational Employment and Wage Estimates: Ohio,” accessed September 10, 2018, https://www.bls.gov/oes/current/oes_oh.htm#00-0000.

25 Ohio Development Services Agency, “Advanced Manufacturing: Ohio Iron and Steel Industry”; and Michael Shields, “Manufacturing a High-Wage Ohio,” The Century Foundation, March 12, 2018, https://tcf.org/content/report/manufacturing-high-wage-ohio/.

26 “Affordability Rankings: Determining the Most Affordable State,” U.S. News & World Report, https://www.usnews.com/news/best-states/rankings/opportunity/affordability; Bureau of Economic Analysis, “Per Capita Personal Consumption Expenditure Data,” U.S. and Ohio Data 1997–2016, computed in current dollars, https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1; Ohio Department of Insurance Communications Office, “Ohioans Pay Among Lowest in Nation for Insurance,” January 9, 2018, https://www.insurance.ohio.gov/Newsroom/Pages/01092018PremiumsRanking.aspx.

27 Economic Policy Institute, “The Economic Policy Institute’s Family Budget Calculator” and related Ohio data, March 2018, https://www.epi.org/resources/budget/.

28 Economic Policy Institute, “The Economic Policy Institute’s Family Budget Calculator: Technical Documentation,” March 5, 2018, https://www.epi.org/publication/family-budget-calculator-documentation/.

29 Economic Policy Institute, “The Cost of Child Care in Ohio,” April 2016, https://www.epi.org/child-care-costs-in-the-united-states/#/OH; Economic Policy Institute, “The Economic Policy Institute’s Family Budget Calculator” and related Ohio data.

30 Bureau of Economic Analysis, “Per Capita Personal Consumption Expenditure Data”; Economic Policy Institute, “The Economic Policy Institute’s Family Budget Calculator” and related Ohio data.

31 Shkurti and Stewart, “Stuck in Neutral,” Toward a New Ohio paper series, John Glenn College of Public Affairs, 2018, http://glenn.osu.edu/toward-a-new-ohio/.

32 Ohio Development Services Agency, “Ohio IT,” May 2018, https://development.ohio.gov/files/research/B1011.pdf; Ohio Development Services Agency, “Bio-Health in Ohio,” June 2018, https://development.ohio.gov/files/research/B1014.pdf.

33 Ohio Department of Health, “2016 Ohio Drug Overdose Data: General Findings,” 2016, https://www.odh.ohio.gov/-/media/ODH/ASSETS/Files/health/injury-prevention/2016-Ohio-Drug-Overdose-Report-FINAL.pdf.

34 Shkurti and Stewart, “Stuck in Neutral.”

35 United States Department of Agriculture, “Cash Receipts by Commodity, State Ranking, 2017,” all commodities in current dollars, data as of August 30, 2018, https://data.ers.usda.gov/reports.aspx?ID=17844.

36 Jon Husted Ohio Secretary of State, “Ohio Agriculture,” accessed October 15, 2018, https://www.sos.state.oh.us/profile-ohio/things/ohio-agriculture/.

37 Ohio Development Services Agency, “Ohio’s Food & Beverage Industry: Output,” March 2017, https://www.development.ohio.gov/files/research/B1004.pdf.

38 Appalachian Regional Commission, “Ohio,” no date, https://www.arc.gov/appalachian_region/Ohio.asp.

39 Appalachian Regional Commission, “County Economic Status in Appalachia, FY 2018,” no date, https://www.arc.gov/research/MapsofAppalachia.asp?MAP_ID=137.

40 Ohio Development Services Agency, “Ohio County Profiles: Ohio,” no date, https://development.ohio.gov/files/research/C1001.pdf; and Ohio Development Services Agency, “Ohio County Profiles: Appalachia,” no date, https://development.ohio.gov/files/research/C1090.pdf.

41 Bureau of Labor Statistics data only goes back to 1990, but it shows that the number of Ohioans in mining and logging declined from 17,800 in 1990 to 11,400 today; see Bureau of Labor Market Information, “Current Employment Statistics, Annual Employment by Industry, Ohio Mining and Logging, 1990–2017.”

42 JobsOhio, “2016 Annual Report, 2017 Strategic Plan.”

43 Jeff Jenkins, “Odebrecht Withdraws From Wood County Cracker Plant; Subsidiary Takes Lead,” MetroNews, June 8, 2016, http://wvmetronews.com/2016/06/08/odebrecht-withdraws-from-wood-county-cracker-plant-subsidiary-takes-lead/; Jared Stonesifer, “Plans for Ohio Cracker Plant Get Bigger, More Expensive,” Beaver County Times, March 14, 2018, http://www.timesonline.com/news/20180314/plans-for-ohio-cracker-plant-get-bigger-more-expensive.

44 Composite drawn from author interviews in Columbus, Coshocton, and Marion, May–July 2018.

45 Ohio Department of Development, “Charting the Changes: Ohio Demographic Profile,” June 2011, https://development.ohio.gov/files/research/P1096.pdf; U.S. Census data, 2017, www.census.gov, accessed October 9, 2018.

46 Rich Exner, “Non-minority Population in U.S. and Ohio Shrinks, New Census Estimates Show,” Cleveland.com, June 21, 2018, https://www.cleveland.com/datacentral/index.ssf/2018/06/share_of_non-minorities_in_us.html.

47 World Population Review, “Ohio Population 2018,” September 17, 2018, http://worldpopulationreview.com/states/ohio-population/.

48 American Immigration Council, “Immigrants in Ohio Fact Sheet,” October 4, 2017, https://www.americanimmigrationcouncil.org/research/immigrants-ohio; and Ohio Development Services Agency, “Ohio County Profiles: Ohio.”

49 Ibid.

50 SelectUSA, “Foreign Direct Investment: USA,” using Bureau of Economic Analysis data, https://www.selectusa.gov/servlet/servlet.FileDownload?file=015t0000000LKSn.

51 Ohio Development Services Agency, “International Corporate Investment in Ohio Operations,” August 2018, https://www.development.ohio.gov/files/research/B2003.pdf.

52 Interview conducted by S. Ahmed and F. Stewart, Columbus, July 9, 2018.

53 Interviews conducted by S. Ahmed and F. Stewart, Columbus and Marion, May–July 2018.

54 Ibid.

55 JobsOhio, “Fuyao Glass America Celebrates Grand Opening of Moraine Plant,” October 23, 2016, https://www.jobsohio.com/news/posts/fuyao-glass-america-celebrates-grand-opening-of-moraine-plant/; and Ylan Q. Mui, “A Chinese Billionaire Is Staking His Legacy—and Thousands of American Jobs—on This Factory in Ohio,” Washington Post, October 26, 2016, https://www.washingtonpost.com/news/wonk/wp/2016/10/26/a-chinese-billionaire-is-staking-his-legacy-and-thousands-of-american-jobs-on-this-factory-in-ohio/?noredirect=on&utm_term=.ddc3dee8654d.

56 Institute of International Education, “Top 25 Institutions Hosting International Students, 2016/17,” Open Doors Report on International Educational Exchange, 2017, http://www.iie.org/opendoors.

57 Bob Davis, “Trump Plans New Curbs on Chinese Investment, Tech Exports to China,” Wall Street Journal, June 24, 2018, https://www.wsj.com/articles/trump-plans-new-curbs-on-chinese-investment-tech-exports-to-china-1529883988.

58 Ohio Development Services Agency, “Ohio Exports Report: 2017,” February 2018, https://development.ohio.gov/files/research/B2004.pdf; and

Ohio Development Services Agency, “Ohio Imports Report: 2017,” March 2018, https://development.ohio.gov/files/research/B2005.pdf.

59 U.S. Department of Commerce, “Ohio Exports, Jobs, & Foreign Investment,” International Trade Administration, February 2018, https://www.trade.gov/mas/ian/statereports/states/oh.pdf; Trade Partnership Worldwide, “Trade and American Jobs: The Impact of Trade on U.S. and State-Level Employment, 2018 Update,” March 2018, http://tradepartnership.com/reports/trade-and-american-jobs-the-impact-of-trade-on-u-s-and-state-level-employment-update-2018/.

60 Business Round Table, “How Ohio’s Economy Benefits From International Trade & Investment,” 2018, data provided by the Trade Partnership Worldwide.