CLEVELAND (TDB) -- Ohio's economy is losing jobs at the rate of 300,000 every quarter and somehow manages to replace them all. So says Cleveland Fed Chief Susan Pianalto, who contends the state's difficulty is "not unusually high job destruction," but slow overall growth. Pianalto says the state must create a business climate that embraces education and innovation to solve long-term structural issues that have caused accelerating economic decline.
Pianalto blames neither globalization nor foreign trade agreements like NAFTA for Ohio's lackluster economic performance. The state once had the nation's 5th largest economy among the 50 states; today it is 7th. The Cleveland fed chief says there simply has not been enough new business formation to pick up the slack.
"The dynamics of creative destruction play out across almost all sectors of our economy. The churning of firms also creates a churning in labor markets. Here in Ohio, we have roughly 5.5 milion workers. In each quarter of the year, roughly 300,000 jobs are destroyed, but in each quarter, roughly 300,000 new jobs are created.
"But even with all of this churning, Ohio's labor market it less dynamic than the nation as a whole. That is, at the national level, roughly 7 percent more jobs are created each quarter than are lost. Many Ohioans tend to blame our weaker employment growth on the job losses in our traditional manufacturing industries. However, Ohio is not losing jobs at a faster rate than the rest of the country. Our problem is not unsually high job destruction. Instead, it is our weak job creation, especially in the number of jobs created through new business formation."