July 24, 2016

Partly cloudy

Job growth stunted in Cleveland metro area

Note: Job counts are from December of each year and not seasonally adjusted. Source: Ohio Department of Job and Family Services

Note: Job counts are from December of each year and not seasonally adjusted. Source: Ohio Department of Job and Family Services

The five-county Greater Cleveland area saw a dramatic decline in job growth last year, lagging all but one of the state’s 12 other metro areas. The new report, released by the Ohio Department of Job and Family Services, found the Cleveland Metropolitan Statistical Area — Cuyahoga, Medina, Lorain, Lake and Geauga counties — had 1,031,300 non-farm jobs in December.

That total was only 4,600 more than reported in December 2012 — an increase of less than a half percent.

Those job counts were adjusted for seasonal job swings such as the decline in construction jobs with the onset of winter and the layoff of retail clerks after the holiday shopping season.

The not-seasonally-adjusted numbers, also included in the report, showed the Cleveland MSA had lost 200 jobs — a number well within the margin of error, meaning zero job growth for the year.

Only one other Ohio metro area — the four counties surrounding Dayton — saw a drop in employment when compared to December 2012.

The annual update, released Friday, reports monthly job estimates using the more accurate counts almost all businesses are required to file quarterly with the state in connection with unemployment insurance.

While the revised statistics for both the state and Cleveland MSA show fewer jobs were created last year than in the previous three years, the updated numbers were much better than earlier estimates.

For example, the initial December report showed the Cleveland MSA was down 6,400 jobs from December 2012 instead of the statistically insignificant loss of 200 jobs.

The new report largely vindicates critics who challenged the earlier estimates, arguing that the initial releases of the monthly Current Employment Statistics survey is a misleading measure of employment at the metro level.

“The release and the way the Bureau of Labor Statistics portrays the release is irresponsible,” said Ned Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University.

Hill said the margin of error is so large in the CES survey that the reports are correct only 75 percent of the time in answering the most basic question: Whether the number of jobs in a metro area are increasing or decreasing.

Hill said the only reliable source of job statistics is the Quarterly Census of Employment and Wages. “It’s the only data that are even worth talking about.”

Unlike the CES, the QCEW is not a survey but an actual count of jobs based on information filed with the state by all businesses whose workers are covered by unemployment insurance. That is the benchmark used to revise the monthly estimates.

The downside of QCEW is that the data isn’t available until about seven month after the end of each quarter and final annual numbers aren’t available until the winter of the following year.

Hill acknowledged that the latest available census data — from the second quarter of 2013 — does indicate job creation slowed dramatically last year, both in the Cleveland metro area and across the state.

“We cannot duck the issue that there has been a slowdown in job growth,” he said.

Hill said he was not surprised fewer jobs were created in 2013 than in the years immediately following the official end of the recession in June 2009.

“We have a very rapid ramp-up coming out of the Great Recession because of the auto industry — that was essentially restarting plants,” he said. “Once we got past that big shot of growth, there hasn’t been a lot of growth coming out of the auto industry.”

Hill said other manufacturers aren’t producing that many jobs because they are “recapitalizing” by investing in high-tech equipment that increases productivity but requires fewer, better-trained workers.

“We are seeing a jobless recovery on the part of a number of existing companies because they are using capital instead of labor,” he said.

So, where will the new jobs come from?

“It’s going to be product innovation,” Hill said. “Even old-line, long-term industries have found the only way they get substantial growth is by innovating new sets of products.”

Bethany Dentler, executive director of the Medina County Economic Development Corp., said she wasn’t surprised by the drop in job growth.

Dentler said local businesses are surveyed every year about their employment plans.

“We counted 800 new jobs — that number is a little bit lower than previous years,” she said.

But Dentler echoed Hill’s explanation why a slowdown was to be expected.

“Coming out of the recession there was a lot of pent-up demand, so companies had to expand,” she said. “But now that we’ve met the initial pent-up demand, let’s take a deep breath and see where our industry is going.”

Mead Wilkins, director of Medina County Job and Family Services, said he was concerned companies will continue to hesitate to hire more workers because of the escalating demands of global competition.

“The lower their labor costs, the better they can compete globally,” Wilkins said. “So there will be a lot of temporary work and anything that can be automated will be automated.”

George Zeller, a Cleveland researcher who tracks economic data for Northeast Ohio policymakers, agreed that manufacturing “is driving the recovery” in Northeastern Ohio.

But Zeller argued that cuts in public-sector jobs — especially school teachers — were contributing to the slowdown.

“If manufacturing growth is going to be insufficient to drive local growth in the future, then the importance of government investments in education and training for workers to fill future growth industries increases in importance,” he said.

Zeller said the latest QCEW report from the second quarter of 2013 showed Ohio lost 4,188 local government jobs and 1,740 federal jobs in the previous 12 months.

“Manufacturing did show growth, but that growth is being counteracted by the public-sector cuts,” he said. “We are slowing down the recovery by failing to make those investments in the future skills of our workers.”

Contact David Knox at (330) 721-4065 or dknox@medina-gazette.com.

Note: Job counts are from December of each year and not seasonally adjusted. Source: Ohio Department of Job and Family Services

Note: Job counts are from December of each year and not seasonally adjusted. Source: Ohio Department of Job and Family Services