Tuesday, January 30, 2001

Ohio's slowing economy reflected in budget

By John J. Byczkowski
The Cincinnati Enquirer

        By a few basic measures, Ohio's economy is fine: Unemployment, for instance, was just 3.9 percent in December, below the national rate of 4.0 percent. But state officials can read the handwriting on the wall:

        • The state's steel companies, which employ 83,700, are fighting a profitless war against imports.

        • Auto manufacturers employ another 115,000, and are taking the brunt of the nationwide economic slowdown.

        Gov. Bob Taft's budget, released Monday, takes into account the prospects of lower-than-expected tax revenues from a slowing economy. While some observers believe the situation will improve with time, others believe that health of the state economy will improve only with action.

        Steve Kelley, chief economist for the state Department of Development, said the state's economy is behaving as should be expected, when the rest of the nation is slowing.

        “Durable goods (such as autos) are generally the first hit. That's exactly what happened” in the last three months of 2000, he said. “The first six months will be slow, but most people are speaking about upward trends in the second half.”

        Others are more concerned about the long term. The state's rate of job growth has been below the national average for five years, according to a report released last week by the Council for Economic Opportunities in Greater Cleveland.

        Ohio ranks No.42 among all states for job growth. The study also found that while incomes have risen 9.1 percent from 1990 to 1999, those increases are concentrated in the suburbs, while the cities and rural areas remain stagnant.

        Given the low unemployment rate, the tepid rate of job growth shouldn't be alarming, said Paul Gottlieb, associate director of the Center for Regional Economic Issues at Case Western Reserve University in Cleveland.

        What he finds more troubling is lack of growth in incomes. He said the state is generating too many low-paying jobs, and not enough high-paying jobs that require more education.

        Mr. Gottlieb's study of the state's “brain drain” found Ohio is a net exporter of scientists and engineers, as the state's universities produce more than the Ohio's employers hire.

        Ohio ranked No.32 among the 50 states in the proportion of the work force that is scientists and engineers.


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