Center's Monthly Enquirer article "Why Cincinnati Lags the Nation in Job Growth"

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Why Cincinnati Lags the Nation in Job Growth

While the national economy is beginning to show some new life, most economists agree that a sustained recovery will require steady increases in employment. The same is true locally. So, how has the Cincinnati area fared on the employment front?

During the 19-year period from 1990 to 2008, national overall job growth was 24 percent. Cincinnati’s job growth was 4 percentage points behind the nation, at 20 percent. Part of this slower growth was due to the industrial mix of our local economy. When local employment is concentrated in industries that are growing at the national level, local employment is likely to grow. Likewise, employment concentration in industries that are losing jobs nationally will usually cause local employment losses. Cincinnati’s high concentration of jobs in manufacturing netted a loss of 52,000 jobs, or about 30% of total employment in this sector. Cincinnati also lost almost 4,000 jobs in the Information (i.e., publishing, broadcasting, and data processing) sector. Offsetting losses in these two sectors was rapid job growth in the Professional and Business Services sector where Cincinnati gained 85,000 total jobs, a 125% increase, about twice the national rate of growth.

An analysis by UC’s Economics Center shows that Cincinnati’s industrial mix, particularly heavy reliance on the manufacturing sector, accounts for about half, or 2 percentage points, of the 4 percentage point growth deficit. The remaining half is due to our area’s competitiveness, that is, how well Cincinnati performs as it competes with other areas to create, attract and maintain jobs. This competitive performance is affected by factors such as the size and quality of the labor force, transportation, tax policy, ease of doing business, and cost of living.

When Cincinnati’s growth rates are higher (or lower) than the national rate in a specific sector, it implies that we have a competitive advantage (or disadvantage) in that sector. For the 19-year period, in addition to the Professional/Business sector, we found that Cincinnati held a strong advantage in the Financial Activities sector. However, it had disadvantages in the Trade/Transportation/Utilities, Leisure/Hospitality, Education/Health Services, Information (i.e. publishing, broadcast, and data processing) and the Construction sectors.

While each of Ohio’s major metropolitan areas suffered because of their heavy reliance on manufacturing, each had a competitive advantages in some sectors that partially offset the disadvantages. The situation for Ohio as a whole was worse. It had a competitive disadvantage in every one of its industrial sectors. Between 1990 and 2008 Ohio would have been expected to lose a net of 166,000 jobs because of its industrial mix. Instead it lost 524,000 jobs.

This indicates that Ohio’s general competitiveness is ailing. While some of the metro areas, including Cincinnati, have reason to expect a sustainable recovery due to good job growth in certain sectors, Ohio as a whole has a less favorable outlook. An analysis of the causes and treatment of the problems are urgently needed.