Editorial Board

Unglamorous but Effective Ways to Create More Jobs

We keep hearing that the U.S. presidential election is all about jobs. So why aren’t we getting more concrete ideas from the candidates about how to create more of them?

That’s a trick question; we know there are no easy answers. Declaring that you will produce 12 million jobs in your first term by lowering taxes, boosting domestic energy production and cutting government spending, as Republican nominee Mitt Romney does, isn’t convincing. Nor is President Barack Obama’s promise to lower unemployment by taxing the rich and spending more on education, public works and manufacturing.

The U.S.’s 8.3 percent unemployment rate requires more short-term, down-to-earth ideas than either candidate’s long-term agenda is serving up. So on the day we celebrate the American worker, it’s worth noting some success stories from the annals of job creation. The best examples come from the persistent efforts of local, state and regional groups -- economic development agencies, community colleges, Chambers of Commerce, nonprofit groups, local business leaders, elected officials in both parties -- managing their local and regional economies as a team.

Successful Ideas

The to-do list of the most successful collaborations includes fostering a pro-business environment in which licenses, permits and red tape are kept to a minimum, and basic services such as broadband communication and efficient transportation are readily available. The best coalitions make sure training programs offer workers the right skills for the local job market. And these groups work hard to diversify their local economies to avoid overdependence on a single employer or industry.

One of the best examples of the collaborative approach comes from the campaign battleground of Ohio. The state lost 282,000 jobs in the 2007-2009 recession. Today, Ohio’s unemployment rate is 7.2 percent, 1.1 percentage points below the national figure. It’s all the more impressive considering that Ohio was devastated by the housing bust, the near-collapse of the U.S. auto industry and the offshoring of manufacturing to cheaper locales in Asia.

As the presidential campaign intensifies, Obama will try to claim credit for Ohio’s comeback, as will the state’s Republican governor, John Kasich. In truth, they both deserve some credit -- but not all or even most of it. Obama’s contribution was bailing out the auto industry, which employed 35,000 Ohioans in 2002. Today, that’s down to about 20,000, after hitting a low of 14,000 in January 2009, before Obama took office.

But more has gone right in Ohio than the auto industry’s revival. Kasich’s two predecessors, one a Democrat and one a Republican, got the ball rolling with a program called Third Frontier, a 10-year-old economic development plan that encourages advanced technology companies, suppliers, service providers and academic institutions to work together to attract more employers to the area. The state now has 20 clusters devoted to industries such as flexible electronics and energy: hybrid cars, fuel cells, smart office buildings, and wind, solar and nuclear power.

Third Frontier provides research and development support; lobbies governments to cut red tape; jawbones local colleges to produce more engineering, math and science graduates; connects entrepreneurs with business leaders who can provide mentoring; and helps link companies to overseas markets. Ohio voters have twice approved bond issues to fund the program.

Big Payoffs

Supplemental regional efforts offer smaller programs that can have big payoffs. For example, Cleveland-based Nortech offers one called Speed to Market Accelerator, which helps small companies commercialize their products faster. Nortech also does old-fashioned networking, having recently connected a major plastics manufacturer with an entrepreneur looking to produce synthetic oil from polymer waste.

All of this collaboration seems to be having an effect. Ohio says Third Frontier has directly created 14,500 jobs, at an average salary of about $62,000. Manufacturing has rebounded. There are waiting lists for vacant apartments in downtown Cleveland. Office space is scarce in Youngstown. Unemployment is 6.9 percent in Akron.

A recent Brookings Institution study of the U.S.’s 100 largest labor markets says Cleveland was fourth-best in the country for attracting new industries and lowering unemployment. Youngstown came in sixth, and Akron and Columbus tied for eighth place.

None of these coalitions are ideological or partisan. Government money is needed to pay for salaries and other necessities, but the work doesn’t require gobs of federal funds. It doesn’t provide easy sound bites the way tax cuts, deficit reduction or entitlement reform do, and it isn’t as intellectually stimulating as debating the virtues of free markets versus the power of Keynesian economics. The evidence, however, shows that it’s much more effective.

    To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net .

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