By Jon Cassidy | Watchdog.org
COLUMBUS — Is Ohio’s steady job growth over the past four years something real and sustainable, the product of solid economic fundamentals?
Or is it ephemeral, a temporary rebound from hitting bottom after three years of freefall?
A new study published this week by the free-market Manhattan Institute offers hope, but it’s conditional.
Author Joel Kotkin, a Democrat, has sifted through a decade’s worth of county-by-county economic and demographic data and reached a startling conclusion: flyover country is the future.
Kotkin puts his findings in terms of four growth corridors: the Great Plains Region, the Third Coast Region (aka the Gulf Coast), the Intermountain West Region and the Southeast Manufacturing Belt Region.
These four corridors outpace the rest of the country in measure after measure: employment growth, weekly wage growth, GDP growth, general population growth as well as populations of children and the college-educated, business climate, export growth, energy production, cost of living and more.
Over the same time, the East and West coasts and much of the industrial Midwest have gone stagnant.
“Perhaps the biggest advantage that the corridors have today is their business climate,” Kotkin writes. “Often historically poor, many of these areas have stayed hungry: they continue to seek out ways to expand incomes and opportunities for their residents.In many ways, they resemble the hungry barbarians who, as the great fourteenth-century Arab historian Ibn Khaldun noted, usurp the more established regimes that develop in the comfort of luxurious cities. Over time, these regimes suffer ‘the chronic diseases of senility’ — lack of ambition, vigor, discipline, and willingness to sacrifice for the next generation— that the poorer peoples often avoid.”
So how is the stagnation of the industrial Midwest and competition from a new manufacturing base in the Southeast good news for Ohio? The answer isn’t a simple question of geography. In fact, many of the forces driving growth in the corridors can drive growth in Ohio, too. Kotkin credits energy, manufacturing, aerospace and high-tech and a low cost of living for much of the growth. Ohio is strong in all those areas, which is why it’s been something of a geographic exception.
Despite all the hype in the press about information and service industries replacing old-fashioned industry, making things is still a good way to grow an economy. “In reality, much of the world’s sustained economic growth since 2000 has occurred not in financial or information capitals but in regions that produce basic commodities such as energy and food,” Kotkin writes.
Ohio, for example, was second in the nation in 2010 in opening new plants, Kotkin said. That struck me as curious, considering the state is highly unionized and over-regulated.
“The natural gas revolution is a big part of the picture,” he said. “A lot of the growth is in Licking County, and that wasn’t union labor.”
Although they aren’t union jobs, they are blue-collar jobs that pay an average of $75,000 a year, he said. As well, “the Great Lakes have a very affordable quality of life that’s very attractive,” he said.
Kotkin looks at the country through the eyes of your average worker who’s just looking for a good job and a decent place to live. When you record the results of all those individual decisions, you get Kotkin’s county-by-county maps. Whatever label one or the other has, they’re ultimately the same thing – a map to the land of opportunity.
“For better or worse, America will never be orderly and dense like Japan or Korea, nor will it be a capital-city-dominated economy such as the United Kingdom or France,” Kotkin writes. “Instead, the United States is a constantly changing mosaic of boom regions, mature regions, and declining regions. Opportunities for migrants, companies, and investors arise from accepting this pattern and recognizing where it is playing out. This was true in the previous two centuries of American history, and it remains true today.”
Except for the Southeast, the biggest factor creating boom regions is energy. The U.S. has surpassed Russia in natural gas production, and both countries produce three times as much as the next biggest producers. We hear a lot about the Utica shale here in Ohio, but the same story is playing out across the country.
“The energy boom has created an enormous surge in high-wage jobs across the three affected corridors, which has helped them stave off the worst effects of the recession,” Kotkin writes. “Unless it is stopped by regulatory constraints, this energy boom could be just in its infancy. New finds in the Wattenberg Field north of Denver alone could contain more than a billion barrels of recoverable oil and natural gas, placing it on the same level as the huge Eagle Ford find in south Texas and the Bakken Field in western North Dakota. Another find, the Green River formation in Wyoming, could contain an astounding 1.4 trillion barrels of oil shale.”
But it’s not just energy. “The real lure of the Great Lakes lies in its own fundamental advantages: lower housing prices, business climate and perhaps, more importantly, a nascent industrial rebound,” Kotkin wrote in a 2012 regional study. “We are witnessing the early stages of what could be a profound increase in both the economic heft and job creation tied to the industrial sector.”
“Despite the attempts to write it off as a spent force, manufacturing will remain a key driver of Midwestern and national growth. Despite the many job losses that impacted this sector over the past generation, American manufacturing remains remarkably resilient, with a global market share similar to that of the 1970s … .
“Yet in everything from migration to industrial growth, the region can expect to face strong competition from other areas, most notably Texas, the Southeast, the Great Plains and the Intermountain West for new jobs and production.”
Contact Jon Cassidy at email@example.com