A review of the state’s economy involves understanding the state’s industry size and make up, its income performance, unemployment rate, demographic strengths and weaknesses. As an example, Ohio has the seventh largest economy among the fifty states with a $608.1 B GDP as measured in 2015. Pennsylvania ranked 6th in GDP of states and New Jersey as 8th.[i] If it were a country, Ohio’s economy would be the 21st largest in the world—just below Saudi Arabia.[ii] On a per capita basis, Ohio’s GDP of $52,363 ranked 26th largest in the nation in 2015.[iii] Among its neighboring states, only Pennsylvania ranked higher than Ohio, with per capita GDP of $53,831 (23rd).[iv] Over the last decade, average annual economic growth in most of Ohio’s neighboring states was faster than in Ohio, including West Virginia where GDP growth averaged 3.3% per year, Pennsylvania (3.2%), Indiana (3.1%), and Kentucky (3.0%).[v][vi] Michigan was the only neighboring state with slower GDP growth than that of Ohio, at an average of 1.6% per year.[vii]Ohio’s economy when reviewed by industry illustrates an economy not nearly as dominated by the manufacturing industry as had existed in the past.
Source: US Bureau of Labor Statistics
As measured by the Bureau of Labor Statistics, trade, transportation and utilities, education and health care, government and professional service jobs all have more jobs in Ohio than the manufacturing sector. State and Regional economies grow through the retention, expansion, and attraction of like, growing industries already located in a region. This is measured by a review of the industry cluster and location quotient for the success of these clusters. An industry cluster comprises of a geographic concentration of firms within a particular industry.[viii] It includes core firms and other organizations who can contribute to the industry’s competitive success.
Location quotient is an indicator of the economic concentration of a certain industry in a state, region, county or city compared to a base economy, such as a state or nation. A location quotient greater than 1 indicates a concentration of that industry in the area. A location quotient greater than 1 typically indicates an industry that is export oriented. An industry with a location quotient of 1 with a high number of jobs present is likely a big exporter and is bringing economic value to the community feeding the retail trade and food services sectors. The location quotient is an indicator of past success but is also a harbinger of future success.
Source: US Bureau of Labor Statistics
As illustrated in the chart above, Ohio leads states in trade, transportation and utilities, manufacturing and goods producing industries but does not keep pace with neighboring Indiana or Michigan and is far behind Florida in professional and business services and financial activities. North Carolina is a clear leader in technology with the highest location quotient in information technology, and Florida leads in technology and leisure activities.
How Ohio compares to other states from an economic standpoint is a highly relevant topic for any economic development strategic plan. Reviewing demographic data is a strong starting point for measuring economic. Regions with an increasing population base and a group of younger workers illustrate growing communities. Homeownership rates and home value illustrate stability in a community but also whether it is affordable to buy a home in a community. The percentage of citizens over 25 with a college degree illustrates the likelihood the region can attract high-wage financial services, insurance, health care, high-tech, professional service and other advanced services white collar jobs. Finally, measures of income and poverty rates illustrate the overall economic strength of the community. Utilizing a demographic benchmark comparison, Ohio illustrates weak population growth and has a slightly higher than average senior population illustrating the challenge the state has in retaining a younger generation of worker compared to the national average and regional competitors. Ohio’s homeownership rates are above the national average but trail competitors such as West Virginia and Florida. Ohio’s median home value is far below the national average illustrating the affordability of housing in the state.
State Demographic Benchmark State Comparison
|Population Gains 2010-16||2.3%||0.4%||6.4%||2.2%||0.7%||4.7%|
|Persons over 65||14.6||15.8||15.6||15.5||15.9||14.9|
|Median Home Value||$124,200||$122,400||$157,100||$126,100||$129,900||$178,600|
|Median Household Income||$49,255||$49,576||$48,256||$44,811||$49,429||$53,889|
Source: U.S. Census Bureau
[viii] See http://www.eda.gov/Research/ClusterBased.xml.