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What is the President's message for Ohio?

Marc Lefkowitz  |  03/18/15 @ 3:00pm

“We do better when everyone grows together, middle, top and lower,” President Obama spoke about “middle class economics” at Cleveland City Club. “Reality has rendered its judgement. Trickle-down economics doesn’t work.”

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The President’s message is to tie future prosperity to helping out average Americans. He even touched on how it can be done sustainably by noting American growth in wind and solar power, which, he said, is adding jobs ten times faster than the rest of the economy.

How do we affirm this new contract with the middle class? At least one group thinks it has a good idea: Investment in affordable modes of transportation, in rebuilding a large stock of older homes, in the intellectual capital of its future workforce and in healthy places, responds Policy Matters in a new report.

The Ohio nonprofit recommends a suite of investments in not away from the economic powerhouses—metropolitan regions. The report marshals some good facts and figures that investing in the middle is the way to go.

Ohio’s Statewide Transit Needs Study, for example, found 47,945 people need a ride to work and home every day of the year, and would like to use public transportation, but can’t because there is no service, Policy Matters calculates.

Bottom line: Ohio needs to invest $75 million to meet market demand for transit, according to the study which put growth projections at 35 million rides in 2015.

In other words, the Statewide Transit Needs Study called on Ohio to support each new transit rider with a $1,626 subsidy. Meanwhile, AAA calculates that the average cost of car ownership is $9,122 per year.

Ohio’s response? A $1 million increase. Find your own ride to work.

The state budget for transit has fallen from $40 million a decade ago to $11 million, ranking it 38th, right between South Dakota and Mississippi. Ohio has a budget north of $1 billion for roads, many of them new, but can only find $1 million more for transit? Metro Cleveland and Columbus are stuck paying for 90 percent of transit, Cincinnati Business Courier reports.

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Support for energy efficiency also appears to be flagging. Ohio was the first state to freeze its energy efficiency and renewable energy policy last year. Policy Matters finds that Ohio is also underfunding a program that makes older homes more efficient. One in three homeowners in Ohio are “cost burdened” (30% of their income goes to housing and utilities). 460,000 homeowners applied for the state’s home weatherization program, but only 5,500 got in, says Policy Matters who recommends ramping up home weatherization with an infusion of $100 million. It would be a huge relief for the middle class in Ohio and a job creator on the order of 52 direct jobs and 23 indirect jobs for every $1 million invested. Home weatherization is generally considered one of the more efficient uses of public resources.

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What would it take to convince Ohio leaders that it is fiscally conservative to build up existing communities and make them economically competitive again?

Economist Joe Cortright’s new report seems to make a pretty strong case. For the first time in a generation, job growth in urban areas outpaces that in the sub-urban periphery.

“Aggregate job growth in urban cores, which has long trailed job growth in more peripheral areas, accounted for all of the net growth in employment in 41 metropolitan areas over the period 2007-11,” wrote Cortright.

The inversion of the trend from the last 25 years is important because many economic studies indicate that the strength of a region depends on how well its central city is doing.

How did Ohio’s largest metros fare against the top 100? Columbus turned a -3.7% loss in its core from 2002-07 into a 0.8% gain in the next five years. That stunning turnabout is on trend for “core” growth industries—information technology and other service areas of the economy are thriving in cities.

In Cleveland, job loss in the “core” grew from -1.9% to -2.4% in the first decade of the Millennium. It’s likely due to job losses in manufacturing, a sector located in the “core” (which Cortright defines as 3-mile radius from the central business district). Job losses also mounted in Cleveland’s suburbs during the Recession which shrunk its commercial base from 0.6% to -1.4% growth in a decade.

The shift back to urban growth is a powerful story. It reinforces the notion that urban places, because of their density, are more efficient than suburbs at concentrating resources and more resilient in the face of economic shocks.

The common thread between the 41 out of 50 metros that saw growth in the center outperforming that at the periphery is a recognition of the demographic shift taking place in America by the private sector—even big companies who would “prefer” to locate on a highway interchange are locating in urban areas in order to stay competitive.

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