The Self-Inflicted Economic Death of Ohio

By Chester E. Finn Jr.
Saturday, June 28, 2008

Once known as the Mother of Presidents, Ohio is now getting poorer, older and dumber – and making all the wrong moves to reverse the situation.

And that may actually be a plus for Barack Obama. His party is finding that lofty, vague promises of change combined with high-spending, high-tax, welfare state-ish policies are a political winner in the state. How else to explain why Gov. Ted Strickland's approval ratings are in the mid-50s or why Democrats may even win control of the state House for the first time in 14 years?

But as a formula for economic revival, it is madness. Ohio already has the fifth-heaviest state and local tax burden in the country (up from 30th in 1990) and finds itself stagnating. Its unemployment rate, 6.3%, is above the national rate of 5.5%, even as the state's work force shrinks as people emigrate. Ohio's median household income is also falling – in 2006 it was $44,500, down 0.5% from the previous year – while the national figure ($48,500) was up 1.6%. During the closing decades of the 20th century, incomes rose twice as fast across the country as in Ohio.

The state has been deindustrializing for ages – the sprawling General Motors and NCR plants of my Dayton childhood are long gone. Every metropolitan area has seen manufacturing employment plunge. The state lost more than 200,000 nonfarm jobs over the past seven years alone. Of Ohio's 10 largest corporations (including Procter & Gamble and other well known companies), just two have posted positive returns so far this year. A surefire way to have one's portfolio underperform the market these days is to invest in Ohio.

Any sane strategy for turning this around would start by strengthening the state's human capital for a globalized, knowledge-based economy while making Ohio more hospitable to high-tech and brain-powered firms. To his credit, higher education chancellor Eric Fingerhut is moving to make the state's colleges more accountable for their performance, and more transparent to students and taxpayers. Primary-secondary schooling has seen a few decent efforts, too, such as a new initiative to beef up science and technology education. The state's first "KIPP" academy will soon open in Columbus.

But the distance to be covered is vast. Ohio ranks 41st in the percentage of adults with bachelor's degrees. Though it has many fine colleges, their young graduates don't stick around. They head for the coasts or for "happening places" in between, none of which (with the partial exception of Columbus) happens to be in the Buckeye State.

Bright Ohio kids aren't even enrolling in nearby colleges. The Cincinnati Enquirer recently reported that almost half the top seniors in local high schools were headed for out-of-state campuses. As jobs and young people exit, the remaining population ages. The Census Bureau projects that Ohioans over 65 will rise to 20% by 2030, up from 13% in 2000.

Even some well-established cultural institutions are faltering. The 57-year-old Columbus Symphony is broke and canceled its summer season. There is not a single downtown in Ohio that could be described as "lively" in the evening.

The government sector is still growing, of course, abetted by rising taxes on what's left of the private economy. Some big nonprofits are doing well, too, especially major medical institutions such as the acclaimed Cleveland Clinic. But urban public school systems – beset by shrinking enrollments, obdurate teacher unions and an aging workforce – are stumbling, ever more dependent for revenue on local bond issues that strapped voters are ever likelier to reject.

In both the public and private sectors, what one witnesses in Ohio are the most senior employees clinging to what's left of the economy, fending off change, demanding ever more burdensome contracts and costlier benefits. The ship is slowly sinking, but as the more agile passengers and crew take to the lifeboats and sail off, those who remain on board climb to the upper decks, determined to grab whatever plunder they can, confident that the rising waters won't reach them.

Few are paying attention to tomorrow and even those who do often come up with harebrained schemes. Gov. Strickland, for one, has yet to unveil an education-reform strategy a full two years into his term, but has been inviting education interest groups to briefings and workshops filled with vague, psychobabbling talk of creativity and innovation. While demanding greater control over the K-12 system than his predecessors enjoyed, he has also signaled his intention to back away from academic standards, testing and accountability, and to abandon Ohio's pioneering school-voucher and charter-school programs.

Mr. Strickland's approval ratings remain strong, perhaps because he's giving the teacher unions and other adult interests what they want.

Yet Ohio needs wrenching change on almost every front, not feel-good policies designed to placate and cosset survivors of the current economic meltdown.