Decimated local governments can still create jobs
Hundreds of unemployed residents wait in long lines for help with their unemployment claims. (National Photo by John Sommers II/Getty Images)
Ohio is experiencing the most unique unemployment event in its recorded history. In April, the state approached 18% unemployment, meaning that over one in six Ohio workers were looking for a job that month.
Since then, however, jobs have returned. While the peak of the COVID recession’s unemployment in the state was 60% higher than the Great Recession, unemployment returned to single digits by July, meaning that double-digit unemployment only persisted for three months in 2020 compared to the 15 months of unemployment Ohio endured in 2009 and 2010.
Despite the snapback the economy has experienced, scars will persist from 2020. Businesses have had to scrap plans and adjust to a “new normal” of higher rates of telecommuting and less use of public space. People will continue to eschew public gatherings and retail even as restrictions are lifted.
Local communities’ ability to recover from a monumental event like this will depend on the decisions policymakers make in the next few months. As income and sales tax revenues dry up and as federal support seems to not be forthcoming, cities and counties in Ohio are going to be faced with tighter budgets and high unemployment. How can they deal with both?
Luckily, one of the leading economic development researchers in the country, Timothy Bartik, came forth with some guidance this summer for policymakers who want to create jobs at the local level that could be critical at this moment. Below are some of the options he lays out for policymakers, ordered from cheapest to most expensive.
According to a 2013 study, 85% of vacant or abandoned land in the United States has some sort of real or perceived environmental contamination from former use. Bartik estimates that cleaning these properties for job-creating projects can create a job for a mere $1,300 per job, a small investment for a new job and a more vibrant community.
Manufacturing technical assistance
One of the most effective ways to grow a local economy is to create export-oriented manufacturing jobs. Many small- and medium-sized manufacturers, though, don’t have the technical know-how to maximize their potential for sales and productivity. Bartik estimates that low-cost, high-quality manufacturing advice for these businesses can create local jobs at the cost of $3,300 per job.
Small and medium businesses are also often searching for the talent they need to grow their businesses. Customized job training run by local community colleges can be a final bridge for connecting people who need work and employers who need talent. Bartik estimates that a job can be created through a customized job training program for only $3,700.
Businesses locate where there are resources. Local governments can be a powerful tool for making the conditions for job creation better by building roads, providing public transportation, installing utility lines, and otherwise giving businesses the resources they need to grow, thrive, and hire. Bartik estimates that $4,100 in targeted infrastructure investment can create a job.
A tool often used by economic development professionals to keep or attract businesses are cash incentives in the form of tax exemptions. While these can create jobs, they do so at a much more costly rate than the other four options, coming in at a cost of $20,500 per job created.
While coffers are being trained, local government in Ohio still has options to fight unemployment. It may mean redirecting of dollars to more cost-effective options, but with smart decision making, policymakers can ease their local communities out of this historic event faster than they would otherwise.
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