Central Ohio Attributes Help State See Significant Movement in Benchmarking Study

The Kauffman Foundation recently published its 2010 State New Economy Index, a report aimed at benchmarking the transformation of state economies to meet the demands of current market realities. Unlike some reports, which assess state economic performance or state economic policies, the State New Economy Index seeks to measure (by way of a number of variables) how state economies match up to those deemed ideal for the new economy. It also recognizes those states that are making most rapid progress in transforming their economies – the “Movers.” In that respect, Ohio shows encouraging progress – especially in comparison to some key indicators.

Although Ohio ranks 25th out of the nation’s 50 states, in comparison to how it ranked the first year this report was compiled (1999), Ohio has jumped a full eight points from 33rd. This is a strong indicator of the state’s continued momentum towards economic transformation.

So what are some of the key metrics that have contributed to this jump? By far, the state’s strongest showing is in the area of knowledge jobs. Knowledge-based jobs drive prosperity. Skilled and educated workers are the backbone of states’ most important industries, from high-value-added manufacturing to high-wage traded services. Ohio ranked 16th overall in the strength of its knowledge-based workforce.

One of the strongest indicators of a knowledge-based economy is the strength of IT occupations in non-IT industries as a share of total jobs. This indicator is a good way of determining to what extent traditional industries are making use of IT workers to transform into a digital economy. In this area, Ohio jumped 10 points from 25th in 2007 to 15th in 2010 and was tied for #1 Mover in this category.

Another area critical to bolstering the state’s position within the index of knowledge jobs is in high-wage traded services, those professional and business services that extend beyond local-serving markets. Insurance, financial services, publishing and other traded services pay wages well above the national average and increasingly are the only sector that is growing in employment. Ohio again ranked 15th in this area, jumping three spots since 2007 and ranks as one of the top Movers in this category as well.

“Although the report only takes into consideration statewide rankings, it’s obvious, because of the makeup of our knowledge-based, traded-services economy that Central Ohio is contributing heavily to the progress the state is making overall towards transforming to the new economy” says Ted Ford, president and CEO of TechColumbus.

Some of the other notable progress the state has made includes managerial, professional and technical jobs (ranked 9th), in-migration of knowledge workers from other states (23rd – up seven spots from three years ago and one of the fastest risers among all states), and immigration of knowledge workers (9th nationally). Ohio also ranks high on industry and non industry sponsored R&D (14th and 18th respectively). Even in value-added manufacturing, we are ranked 19th nationally. And as Ohio progressively moved up, competitor states like Texas, North Carolina, California, New York and Georgia remained stagnant or declined during the same period.

So should Ohio be proud of its overall 25th ranking?

“Ohio should be proud of the progress we are making in key indicators, but we should not be satisfied with being 25th,” Ford says. And he points out particular areas where the state needs to continue trying to do better.

“We fall short in several areas but are making progress. We are not starting new companies as fast as we need to be, but we are moving up on that list. Closely related to that is the presence of venture capital, where we rank 31st. Through programs like the Ohio Third Frontier, we are making major investments to stimulate both of these areas, and believe the results will be reflected in the next version of this report. The bottom line is that Ohio is making considerable progress, and where we fall short, we are making significant investments and effort to accelerate improvement. “

For complete details, see the report 2010 State New Economy Index.