Ohio has the 36th-ranked economy in the nation when compared to all other states and Washington, D.C., according to a new study released by financial website WalletHub.
“The state lacks in startup and entrepreneurial activity, has a high unemployment rate, and almost no growth in the number of non-farm employees,” WalletHub analyst Jill Gonzalez told The Center Square via email.
“Its civilian labor force is shrinking, the growth in state personal income is at just 3.5 [percent] (the tenth smallest), and the amount of unfunded public pension plans per capita is among the highest,” Gonzalez said. “There are also other signs of the state's poor economic health, such as a high foreclosure rate, a very small growth in the number of businesses at just 0.2 [percent], and a small number of issued building permits."
Out of a possible score of 100, Ohio received a 38.84. The highest ranking state was Washington with a 77.6 and the lowest state was Alaska with a 28.49.
The analysis provided rankings in three categories and scored each category on several different factors. Each category accounted for one-third of the total score.
Ohio ranked 25th in the economic activity category, which factors in the state’s GDP, its share in fast growing firms and other categories.. It ranked 32nd in the innovation potential ranking, which considers, among other things, its share in high-tech industry, share in stem employment and entrepreneurial activity.
Ohio’s worst category was the economic health category, where it ranked 43rd. This ranking considers unemployment rate, underemployment rate and the change in civilian labor force, among other things.
Rea Hederman, executive director of the Economic Research Center and Vice President of Policy at the Ohio-based Buckeye Institute, told the Center Square via email that Ohio’s lack of economic freedom contributes to its poor performance.
“While former Governor John Kasich improved Ohio's fiscal policy with tax reform, Ohio lags the nation in economic freedom,” Hederman said. “Ohio has a gross receipts tax, which adversely affects goods producing industries. Ohio's energy policy mandates the use of more expensive renewable energy options, which makes its more expensive for Ohio manufacturers. Unlike many of its neighbors, Ohio has not enacted any collective bargaining reform, which makes Ohio less attractive to new businesses. Ohio does currently have a budget surplus and the state should use this opportunity for more tax reform so the state can improve its competitive position.”
Most of Ohio’s neighbors also ranked in the lower half and two performed worse than Ohio. Kentucky and West Virginia ranked 45th and 47th respectively, and West Virginia ranked last among all states in innovation potential. Pennsylvania and Indiana ranked around the middle of the pack at 26 and 28, respectively. Michigan was the only neighboring state that performed well, ranking 13th in the country and fourth in innovation potential.