Ohio’s Local Labor Markets
Since the recession started in December 2007, the U.S. economy has shed 2.5 million jobs, or 1.9 percent of nonfarm payroll employment, and Ohio has reduced its payrolls by 1.6 percent. However, not all areas of Ohio have experienced similar employment losses.
Looking at nonfarm payroll data from the Bureau of Labor Statistics for the three largest metropolitan areas in Ohio, we see that Cleveland has experienced the steepest decline in employment since the recession began (−2.1 percent). This is worse than Ohio’s overall rate of decline (−1.6 percent) but is in line with the percentage change at the national level. Meanwhile, Cincinnati’s and Columbus’s labor markets have held up relatively well, with each metropolitan area losing less than 1 percent of its employment over the course of the current recession.
Examining the BLS data for the state’s smaller metropolitan areas, we see considerable dispersion in job losses. Akron, Canton, and Youngstown have experienced job losses of less than 1 percent, while Dayton and Toledo have experienced considerably higher losses of −1.9 percent and −3.3 percent, respectively.
The source of the differences in job losses across Ohio’s metropolitan areas lies in the manufacturing sector. Job losses in this sector also account for why the declines in nonfarm payroll employment are much steeper in Cleveland, Dayton, and Toledo than other Ohio metropolitan areas. In Cleveland, Dayton, and Toledo, for example, job losses in the manufacturing sector accounted for 40 to 55 percent of the decline in employment for sectors that were contracting.
There are two possible explanations for this pattern. A negative shock to the manufacturing sector could be affecting all metropolitan areas equally, but if Cleveland, Dayton, and Toledo have higher shares of their workforces employed in manufacturing than other areas have, the shock would subtract more from the overall growth of those cities with more manufacturing employment.
Alternatively, metropolitan areas like Cleveland, Dayton, and Toledo may have suffered much larger negative shocks to their manufacturing industries. This could be the case if manufacturing in these metropolitan areas is more tied to heavy industries that have experienced large negative shocks over the last several months, such as automobiles and steel.
The first possibility does not look likely. Areas hardest hit by employment losses in manufacturing do not have higher shares of manufacturing employment than areas not so hard hit. Cleveland’s, Dayton’s, and Toledo’s shares of manufacturing employment, for example, are similar to Ohio’s. Meanwhile, Canton and Youngtown—areas with the highest share of manufacturing employment—have held up relatively well. Columbus’s low share of manufacturing employment, however, has likely had a mitigating effect on the overall employment loss in that metropolitan area.
Employment Growth and Sector Shares
|Manufacturing as a percent of total employment (2007)||Manufacturing employment growth (percent)||Non-manufacturing employment growth (percent)|
Source: Bureau of Labor Statistics.
The large contribution of manufacturing to employment losses in Cleveland, Dayton and Toledo must instead mostly be due to the sharp decline in manufacturing in these areas. Cleveland, Dayton, and Toledo have all experienced relatively large declines in manufacturing employment compared to the other metropolitan areas. Toledo’s manufacturing sector has been the hardest hit, declining 13.6 percent over the period, while Cleveland and Dayton experienced losses of 7.8 percent and 6.4 percent, respectively.
There is considerably less dispersion across metropolitan areas in the growth rates of employment for the nonmanufacturing sector. Nonmanufacturing employment growth rates vary from a low of −1.6 in Toledo to a high of −0.1 percent in Youngstown. Moreover, those metropolitan areas that had the largest relative declines in manufacturing employment also experienced the largest relative declines in the nonmanufacturing sector, as well.