The following editorial appeared in the June 2003 issue of Toledo Business Journal.
Permission to reproduce this editorial can be obtained by contacting the Editorial Department of Toledo Business Journal at (419) 865-0972.

 

 

 

In the 1990s, region shines while Toledo declines

 

Analysis contradicts Blade’s “Stuck in Gear” series

 

It has now been over five years since the Toledo Blade and its publisher and editor-in-chief John Robinson Block have been involved in a personal vendetta against the Toledo-Lucas County Port Authority.

During the past year, the Toledo Blade has published a series of articles titled: “Stuck in Gear.” The series puts forth the position that between 1990 and 2000, the economic health of all of northwest Ohio significantly declined relative to the rest of the nation. This series has been used, after its publication, repeatedly in support of Block’s personal vendetta in Toledo Blade editorials and out in the community.

We decided to examine the data and the analysis that support the conclusions put forward by the Toledo Blade in its “Stuck in Gear” series.

Our examination of economic performance in northwest Ohio begins by separating the region into two segments: 1) the City of Toledo, and 2) northwest Ohio outside of the City of Toledo. It is then important to select the correct income data for this analysis.

The Toledo Blade’s “Stuck in Gear” series focuses on mean average wage data from the Bureau of Economic Analysis (BEA) as the basis of its analysis. In his book, How to Lie with Statistics, author Darrell Huff devotes part of a chapter to illustrating analytical problems that can occur with mean average income data such as that used by the Toledo Blade. To avoid these problems, Huff shows the benefits of using median income figures to analyze trends in a sample population. This issue will be examined later in this editorial.

In order to avoid statistical problems, employ data below the county level, and utilize a more complete indicator of economic performance, median household income data from the US Census Bureau were used to analyze economic performance in northwest Ohio during the decade from 1990 to 2000.

Did income levels in northwest Ohio fall relative to the rest of the nation during the decade of the 1990s as the Toledo Blade has repeatedly implied in its “Stuck in Gear” series? Did economic development efforts during the 1990s fail and leave citizens in the region worse off at the end of the decade?

Our answers to these questions are based on a review of detailed data. An analysis of the U.S. Census Bureau data for northwest Ohio results in conclusions that are in sharp contradiction to the Toledo Blade’s “Stuck in Gear” series. In 8 of the 11 counties in northwest Ohio, median household income rose during the decade of the 1990s relative to the rest of the nation. Income levels were not “Stuck in Gear” in these northwest Ohio counties.

An in-depth examination shows that in most areas of northwest Ohio, key economic development gains were made during the 1990s. These gains resulted in new jobs being created, expanding employment levels, and higher median household income for area residents.

The analysis further reveals that during the 1990s, while most areas in northwest Ohio were advancing economically versus the rest of the country, the City of Toledo experienced a decline. During the 1990s, there were strategic mistakes and management issues by City of Toledo officials that negatively impacted economic development efforts under their guidance.

A 2002 survey in Forbes Magazine confirms the economic development issues that occured in the City of Toledo during the 1990s. Forbes ranked  metro Toledo 174th out of 296 best cities in the U.S. for Business or Careers.

There were important economic development successes for the City of Toledo during this period. The most significant success was the new Jeep plant project. This project utilized the capabilities of State of Ohio and Regional Growth Partnership economic development professionals to retain one of the area’s largest employers. However, successes during this period were not enough to overcome strategy mistakes and management issues made by City of Toledo officials in the area of economic development.

The economic vehicle of northwest Ohio was not “Stuck in Gear” during the decade of the 1990s as the Toledo Blade has repeatedly reported. However, the City of Toledo’s economic development vehicle not only got “Stuck in Gear,” but dropped its transmission toward the end of this 10-year period in 2000.

Since 2000, the region and nation have been hard hit by the economic recession. Northwest Ohio has fared better than technology areas like Silicon Valley. Santa Clara County in California lost close to 200,000 jobs during the last 2-1/2 years. High tech employment nationally for the two year period between January 2001 through December 2002 declined by 560,000 jobs. This means that one out of every ten high tech jobs in the U.S. was eliminated during this two year period.

In northwest Ohio, increased economic development efforts are needed to continue the upward trend achieved in the 1990s for those areas outside of the City of Toledo. And the City of Toledo’s economic development vehicle will have to be given a complete new transmission and overhaul. This will not be an easy job for the City of Toledo since focused job creation efforts and strategies have been parked in the garage for much of the 1990s.

The realization that important economic development progress was made during the 1990s in many areas of northwest Ohio outside of the City of Toledo may be displeasing to the Toledo Blade. This information will not be helpful to the Toledo Blade’s and John Robinson Block’s personal vendetta against the Toledo-Lucas County Port Authority or its efforts against the Regional Growth Partnership.

Population

Population trends between the 1990 and 2000 census provide insight into issues facing northwest Ohio. During the 1990s, total population in the eleven counties of northwest Ohio was virtually flat.

However, in-depth analysis reveals an important issue. In 1990, the population outside of the City of Toledo in the eleven counties of northwest Ohio was 645,593. During the decade between 1990 and 2000, the region of northwest Ohio outside of the City of Toledo grew by 28,193 residents or a 4.4 percent increase.

However, while the rest of the region was gaining population in the 1990s, the City of Toledo was losing residents. In 1990, the City of Toledo had 332,943 residents. Ten years later, Toledo’s population had declined by 19,324 or a 5.8 percent decrease. During the decade, modest gains in population experienced around the region were offset by an exodus from the City of Toledo.

Jobs

Figures for employment in northwest Ohio are important to this analysis. An effort to track new jobs being created was begun in 1994 by the Regional Growth Partnership. Data for new jobs being created is not available prior to this time period. In December 1993, employment outside of the City of Toledo in the eleven counties of northwest Ohio was 320,200. Nine years later, in December 2002, employment in this same area of northwest Ohio outside of the City of Toledo was 324,900. Even though December 2002 was in the middle of a recession, the region of northwest Ohio outside of Toledo added 4,700 jobs.

However, during this same time period, employment in the City of Toledo declined from 147,100 in December 1993 to 146,100 in December 2002, or a net loss of 1,000 jobs during this 9 year period. The region of northwest Ohio outside of the City of Toledo had added 4,700 jobs while the City of Toledo lost 1,000 jobs.

The loss of jobs in Toledo – while the rest of the region was adding jobs – is one reason residents were leaving the City of Toledo.

One out of every three residents of northwest Ohio lives in the City of Toledo. By lumping the City of Toledo together with the other counties in northwest Ohio, it appears that the entire region is “Stuck in Gear.” A more in-depth examination of population and employment data begins to show that problems facing the City of Toledo were masking the positive performance of the rest of the region during the 1990s. If the City of Toledo had accomplished a rate of job growth similar to the rest of the region, it would have had 3,206 more jobs in December 2002.

Household Income

An examination of income figures for northwest Ohio is key to this analysis. Median household income for the United States from the 2000 census was $41,994. Median household income for the State of Ohio from the 2000 census was $40,956 or 2.5 percent below the national average.

According to the 2000 census data for northwest Ohio, 6 of the 11 counties had median household income above the national median level and 9 of the 11 counties had median household income close to or above the median level for the State of Ohio. While jobs were being created in the region of northwest Ohio outside of the City of Toledo, median household income in these areas was being maintained at or above median levels for the rest of Ohio.

Two counties in northwest Ohio were below the State of Ohio level for median household income according to 2000 census figures. Both Seneca County and Lucas County had median household income levels more than 7 percent below the median level for the State of Ohio.

However, an examination of median household income figures for the City of Toledo reveals a significant issue. Median household income for the City of Toledo from the 2000 census was $32,546 or almost 21 percent below the median level for the State of Ohio. While the rest of the region was adding jobs and maintaining or advancing income levels, the City of Toledo was losing jobs and losing ground relative to the median household income levels of the state of Ohio and around the nation.

Immediately following the 2000 census, City of Toledo officials argued that U.S. Census Bureau employees failed to count some low income residents who were difficult to locate. If this is correct, population in the City of Toledo may not have declined as much during the 1990 to 2000 period. However, if there are additional low income residents who were not included in the census, it will reduce income levels for the City of Toledo even more. While the census data show median household income for the City of Toledo at 21 percent below the State of Ohio median level, it may actually be even lower if city officials are correct about the census.

New jobs created

In 1994, an effort was begun in northwest Ohio to collect data for new jobs created. During the 9 year period between 1994 and 2002, there were 868 projects assisted by area economic development professionals in northwest Ohio. These 868 economic development projects resulted in the creation of a projected 28,873 new jobs in northwest Ohio during this 9 year period. 22,352 of the projected new jobs were created in the area of northwest Ohio outside of the City of Toledo or 77 percent of the total.

However, according to projections made by City of Toledo officials, only 6,521 of the projected new jobs were created in the City of Toledo during this 9 year period, or 23 percent of the total in the region.

While one out of every three residents in northwest Ohio lives in the City of Toledo, less than one out of every four new jobs that was created during this 9 year period was created in the City of Toledo.

The failure to create enough new jobs in the City of Toledo during this period is a key factor in the reduced employment figures for the city and the lower income levels for its residents.

This analysis reveals that areas outside of the City of Toledo had a much higher rate of success at creating new jobs.

Median household income data versus average wage data

The Toledo Blade’s “Stuck in Gear” series focuses on mean average annual wage data for 1990 and 2000. This mean average annual wage data for 2000 is available from the Bureau of Economic Analysis (BEA) at www.bea.gov. A time series analysis of income data should use median figures instead of mean average data to avoid the possibility of biasing or skewing the results and conclusions.

Further, the BEA website does not provide data below the county level in order to isolate the City of Toledo’s performance.

Median household income data expose problems with using mean average wage data. Of the 11 northwest Ohio counties, Lucas County ranks second highest in mean average wages in 2000. However, for the same year, when median figures for household income are used instead of mean average figures for wages, Lucas County drops to last place out of the 11 northwest Ohio counties.

Type of jobs created

An analysis of the 868 development projects assisted by regional economic development professionals during this 9 year period in northwest Ohio offers greater insight. 73 percent of the projected jobs targeted and created by these economic development projects in northwest Ohio were manufacturing-related jobs. At the same time, 27 percent of the projected new jobs were service, distribution, retail, or agricultural-related. Many of these service and distribution jobs had lower wage levels than the positions in the manufacturing sector.

In the City of Toledo during this 9 year period, a much lower level (42 percent) of the projected new jobs created were in the manufacturing sector. At the same time, a much higher level (58 percent) were service, distribution, or retail related jobs.

While economic development professionals in northwest Ohio outside of Toledo targeted and focused on expanding higher-paying manufacturing jobs during this 9 year period, City of Toledo officials targeted fewer higher-paying manufacturing-related projects and jobs.

In the 1990s, the City of Toledo did not develop and implement an effective strategy plan for the creation of new higher-paying jobs.

During this period, City of Toledo officials were not successful at creating higher-paying jobs with economic development efforts concerning its Monclova property investments, development of MCO’s Research Park, attracting businesses with higher paying jobs to vacant downtown office space, developing the Capital Commons project in southwest Toledo, brownfield site development in east Toledo, etc.

Income growth

An examination of changes in median household income from the 1990 census to the 2000 census is revealing. In 8 of the 11 northwest Ohio counties, median household income rose during the decade relative to the rest of the nation. For example, in 1990, median household income in Defiance County was 105.1 percent of the national average. A decade later, according to the 2000 census, Defiance County improved its median household income position to 107.0 percent of the national average. In 1990, median household income in Ottawa County was 104.3 percent of the national average. A decade later, Ottawa County improved its median household income position to 105.3 percent of the national average.

However, while median household income was rising in almost all areas of northwest Ohio during the 1990s relative to the rest of the nation, it was falling in the City of Toledo. In 1990, median household income in Toledo was 82.6 percent of the national average. A decade later, according to 2000 census data, Toledo’s median household income position had fallen to only 77.5 percent of the national average.

A number of factors contributed to declining income levels in the City of Toledo during the 1990s. Toledo’s failure to create a higher level of new jobs resulted in lower employment. Reduced employment opportunities have been a depressing factor on wages in the Toledo area thus contributing to lower median household incomes.

During the 1990s, City of Toledo officials targeted and attracted a relatively low level of higher-paying manufacturing jobs. City officials also had limited success at creating higher-paying jobs with many of its prime economic development sites previously summarized. Reduced numbers of better paying jobs contributed to Toledo’s income decline relative to other areas of Ohio and the nation.

Conclusion

A surface level examination makes it appear that income levels for all of northwest Ohio were “Stuck in Gear” during the decade of the 1990s. Income levels for almost all areas in northwest Ohio outside of the City of Toledo did not get “Stuck in Gear” during this time period. However, an in-depth examination reveals that income levels for the City of Toledo not only got “Stuck in Gear,” but Toledo’s economic development vehicle virtually dropped its transmission toward the end of the decade.

It is important to examine the strategies and management issues that resulted in the economic development failure by City of Toledo officials during the 1990s. People certainly remember who was “driving” the City of Toledo’s economic development vehicle during most of the 1990s. It is also necessary to examine who was giving the “driver” directions and, in addition, telling him where he was permitted to go.

(For permission to reprint this editorial in other newspapers, newsletters, or direct mailings, or to use in radio and TV broadcasts, please contact the Toledo Business Journal at (419) 865-0972.)