The Star Beacon; Ashtabula, Ohio

June 25, 2008

Why are we hurting so?

Despite abundant resources, county’s per capital personal income proves lowest in the region

By CARL E. FEATHER - Lifestyle Editor -

It’s time for a reality check.

For years Ashtabula County residents have been told things are going great in the local economy, bolstered by a plethora of win-win situations and abundant resources. Most working folks, however, scratch their heads and wonder if the county’s cheerleaders are talking about the same place where they live and work.

The truth is in the numbers. Ashtabula County has:

n The lowest per capita, per-family and per-household incomes of any Ohio county on the lakeshore. In 1969, the county ranked 46th in the state in median household income; by 1995, it had fallen to 66th;

A per capita that has consistently trailed that of the state and nation, and the gap is widening. In 1993, it was at 80 percent of the U.S.; by 2005, it had fallen to 74 percent;

The highest poverty rate of the same region;

The highest percentage of births paid for by Medicaid, 48.2 percent, of any lakeshore county;

The highest percentage of Medicaid payments to personal income, 6 percent, of any county north of Appalachian Ohio;

A rising unemployment rate – 8 percent in January, up from 7.5 in December 2007;

The region’s lowest percentage of residents with a bachelor’s degree or higher, a figure lower than the state of West Virginia, which ranks last in the nation.

Drive west to neighboring Lake County, and the per capita personal income is nearly $8,000 more, the median sale price of a house double that of one in Ashtabula County, 22.7 percent of the adults 25 and older have a bachelor’s degree, and the unemployment rate is nearly two points lower.

Why? Why must Ashtabula County trail the rest of the region, particularly in per capita income?

“That’s the $64,000 question,” says Patrick Arcaro, director of the Department of Job and Family Services for Ashtabula County. “The story I got is that when Route 11 was built, everybody from West Virginia took it north because they heard that the lake was a beautiful place to live. If you drive down Route 11, that’s where all the poverty is — all the way down to West Virginia.”

Blaming our county’s problems on in-migration from Appalachia may be a convenient, if not urban-legend explanation, but it’s also one sure to stir strong emotions among those who migrated here in the 1950s, not for a handout but the opportunity to work.

Sixty years later, however, this Ashtabula County/ Appalachia-connection mentality has resurfaced in the efforts of Rep. Steven LaTourette, R-Bainbridge Township. In 2003, LaTourette introduced a bill that would add Ashtabula, Mahoning and Trumbull counties to the Appalachian Regional Commission. H.B. 799 is before the U.S. Senate, and LaTourette hopes action will be taken this session.

Debbie Setliff, spokesperson for LaTourette’s Painesville office, says the designation is based upon contiguous counties being part of the ARC and the economic situation in the county.

“Ashtabula County would qualify because of the economic distress in the county,” Setliff says.

She says inclusion would give the county priority when dipping into pots of federal money for rural development, water/sewer projects and transportation.

It is interesting to note that among the three contiguous Ohio counties being considered for ARC inclusion, Ashtabula County has the lowest per capita income; the median family income here lags both counties by $5,000 or more, suggesting their poor neighbor to the north is ironically the most “Appalachian” of the trio. And both Trumbull and Mahoning counties had lower unemployment rates in January.

And yet Ashtabula County is rich with resources these other counties lack – land mass, Lake Erie ports, wineries, covered bridges and new state lodge. Many residents of Mahoning and Trumbull counties head north to enjoy these amenities, ironically in a county that lags behind theirs in basic indicators of economic health.

Why are we not doing better? And why does it matter if we don’t?

As for the latter question, the answer is quality of life. It’s not rocket science – if the residents of a county don’t make enough money to cover the basics, service industries and retailers whose businesses depend upon discretionary income aren’t going to locate in that community because there’s not enough extra money exchanging hands to support them. Property owners will be less likely to pass levies and school districts and municipal and county governments will constantly face budget struggles. Without discretionary income, individuals don’t have the money to support charities and the arts, invest in new businesses, send their kids to college, go back to school for their degree or additional training, buy that $25-bottle of wine, spend a night in the state-park lodge, shop in the upscale department store, eat at restaurants that don’t have a drive-through window or buffet line, own a boat and make improvements to their homes.

Further, if their income slides into the realm of the economically disadvantaged, those citizens become eligible for all manner of entitlements, which ultimately are borne by the taxpayer. Once that happens, resources that otherwise could be used to nurture and develop the full potential of the community must be diverted to maintaining the status quo of existence generation after generation.

Unfortunately, the statistics show Ashtabula County, and particularly Ashtabula City, has more poverty now than at any time in the past 18 years, despite millions of dollars spent on economic development. We are becoming a county of the working poor.

State trails nation

Why does this situation exist here, a corner of the state so pregnant with opportunity and resources that, in the 1950s, it was promoted as “The Best Location in the Nation”?

One explanation is that Ashtabula County is in Ohio, one of only four states to lose jobs since the 2001 Recession.

“Certainly, things are not doing as well (in Ohio) as they have elsewhere,” says Bill LaFayette, economist for the Columbus Chamber of Commerce.

LaFayette says Ohio lost 2.9 percent of its jobs from 2001 to 2007. Massachusetts, Illinois and Michigan were the only other states to lose jobs.

In Ashtabula County, employment fell from 35,128 jobs in 2000 to 32,607 jobs in 2006, according to analysis of the local economy prepared by LaFayette, who used U.S. Department of Labor, Bureau of Labor Statistics data.

What factors caused this bleeding? Alan Tonelson, an author and researcher with the U.S. Business and Industry Council in Washington, says the state is perceived as being “business unfriendly.”

“Taxes are high, and the state and county governments don’t do a good job promoting themselves,” he says.

Ron Clutter, owner of Nordic Air in Harpersfield Township, does business with vendors and customers all over the nation. He says there is definitely a perception about the state.

“’Be careful about moving to Ohio,’ I hear it time after time,” he says. “There is a perception out there that Ohio is difficult to work with.”

James Timonere, executive director of the Ashtabula Area Chamber of Commerce, says entrepreneurs who consider Ohio face challenges on both the state and local levels. He says local employers wishing to expand have encountered delays of two to three years as a result of red tape and roadblocks thrown up by state agencies. Even minor local regulations that control issues like the size and placement of signs can be roadblocks to development and expansion.

Roy Bean, who provides consulting at the Small Business Development centers in both Ashtabula and Lake counties, says the state does have particularly burdensome taxes, especially when it comes to Workers’ Compensation, a tax that kicks in as soon as a business owner hires his first employee.

Carin Rockind, vice president of marketing and communications with Team NEO, the 16-county marketing group for Northeast Ohio, says Ohio’s business-unfriendly atmosphere is a misperception that is stronger within the region than outside.

“Honestly, we don’t hear that a lot (from prospects looking to locate business in Ohio),” she says. “Not as much as we think it ourselves. Those outside the region are more positive about it than those inside.”

In addition, Ohio’s ongoing tax reform, which will be completed in 2010, will give the state the best tax environment for business in the Midwest, Rockind says. The state’s new administration is much more business friendly, she says.

“The lieutenant governor is doing everything possible and working on changing whatever negatives there are,” says Arnie Clebone, economic development director for Ohio Department of Development Region XII, which includes Ashtabula County. “We’re trying to improve the perception constantly as to how we relate to existing businesses and get new business to come to the area.”

But Tonelson says the trend in “new business” is actually fire sales of existing Ohio and Midwest businesses to foreign investors. Just last week, the acquisition by two Canadian firms of two Ashtabula County plastics companies – one in bankruptcy and one that was for sale – was announced by Growth Partnership for Ashtabula County.

“In a lot of Ohio and the Midwest, manufacturing executives are feeling that the U.S. Government has let them down to such a great extent, they are seriously thinking about getting out,” Tonelson says. “They don’t want to go through the aggravation of trying to succeed when their federal government is holding them back.”

Thanks to federal trade policies, many Ohio manufacturing jobs have gone overseas and south, resulting in a huge impact on per capita income. Tonelson says manufacturing has traditionally been “that sector that, in the history of America, allowed the person with average skills and education to enjoy the middle-class lifestyle.”

That’s an issue that hits close to home. Ashtabula County’s economy lost 134 jobs when Alphabet, formerly located in Orwell, moved its operations to Mexico and India. This year, Conneaut will have to deal with the closing of the General Electric plant and the loss of several dozen good-paying jobs there.

Tonelson feels both local and state economic development people have not come to grips with just how devastating these free-trade agreements have been to the American way of life and the economic condition of the nation.

“It’s clear to the regional leaders that something has gone wrong, but … that does not seem to have filtered down to the municipalities, county and local levels,” Tonelson says.

Working poor

According to a U.S. Census Bureau report, northeast Ohio lost 45,481 manufacturing jobs between 2000 and 2006. LaFayette says those numbers are deceiving, however, because manufacturing is actually a healthy industry in Ohio.

“While manufacturing employment has been declining, output has been rising very nicely,” LaFayette says. “Manufacturing is not nearly as sick as many people think it is.”

Statewide manufacturing employment fell 21.6 percent from 2001 to 2007 but output increased by a third, thanks to technology.

Ashtabula County lost more than 1,800 manufacturing jobs from 2000 to 2006, an 8.2 percent loss, much less than the rest of the state or nation. Although Growth Partnership for Ashtabula County has been successful in attracting new industries to the county and building industrial parks, that growth failed to keep pace with the loss of aging manufacturing plants. From 2005 to 2006, the county had a net loss of 180 manufacturing jobs, according to Labor Department statistics.

Team NEO, which charts economic growth in the 16-county northeast Ohio “Cleveland Plus” region, states in its September 2007 review that while manufacturing has grown the least of any sector in the region, it still represents 20 percent of the overall economic output. The economic sectors that constitute the other 80 percent have enjoyed steady growth. Overall, the region’s economy has grown 32 percent in the past 15 years, according to Team NEO.

Despite that growth, median household income in the eight-county northeast-Ohio region declined by $6,367, according to the Census Bureau. Jobs are shifting to the lower-paying service sector; more and more families are forced to depend upon two, or even three or four, incomes to make ends meet. Even at that, they aren’t making as much money as one wage earner could have made in one of the manufacturing jobs of the old economy.

“You’ve lost all these jobs that create spill-over and impact the community,” LaFayette says of the transition from manufacturing to service-sector jobs. Everything from retailing to social services is affected.

An analysis of Census Bureau data spanning the years 2000 to 2006 was prepared by Mark Salling, a demographic expert with Cleveland State University’s College of Urban Affairs and the Center for Community Solutions. Salling confirmed that Ashtabula County is part of the northeast Ohio eight-county region covered by his analysis, which was reported on by The Plain Dealer Sept. 12, 2007.

Salling’s analysis showed that, from 2000 to 2006, lower-income families increased while higher-income ones decreased. Those in the $75,000 to $99,999 range took the biggest hit, a loss of 25,043 families from upper middle class. During that same period, 21,866 additional families joined the $10,000 to $14,999 income class.

That’s a slide into poverty. For a single-family household, annual earnings of $10,212 or less is considered poverty level. For a family of four, it is $20,650 annually (2007 standards).

In 2000, “only” 12.1 percent of Ashtabula County individuals lived in poverty. The 2006 Census Bureau estimate is 16.7 percent. Nationally, the figure was 13.3 percent in 2006.

According the U.S. Census Bureau’s 2006 American Community Survey, 10.8 percent of the households in Ashtabula County had less than $10,000 in income, and another 8.6 percent had between $10,000 to $14,999. Only 9.8 percent of Ashtabula County households had incomes of $100,000 or more.

“Ashtabula County has a lot of $8 to $10-an-hour jobs, and a lot of people making those incomes are living in Ashtabula County,” Bean says. “That pulls the numbers down in terms of per capita incomes.”

Clebone, the regional economic development director, feels the county’s numbers are pulled down by the higher-than-average number of senior citizens (over 65). According to the Ohio Department of Development, that figure is 14.6 percent of the population; nationally, it is 12.4 percent. Overall, 75.9 percent of the county’s population is between 18 and 65; nationwide it is 75.4 percent.

“One of the issues you have in Ashtabula County is there are a lot of retirees,” Clebone says. “Retirees tend to have a lower income, even if they have more assets.”

However, Lake County, whose median family income is nearly $20,000 more than Ashtabula County’s, also has 14.6 percent of its population at age 65 or older. And 13.8 percent of Geauga County’s population is 65 and older. That county, which also has a large Amish population, has a median household income nearly $25,000 higher than Ashtabula County’s.

Another factor that has the potential of skewing the number is Conneaut’s Lake Erie Correctional Institution, whose 1,500 inmates are counted as part of the county’s population but would not have incomes. Those inmates have been in the numbers since 2000, during which time the spread between the state’s and county’s per capita figure has steadily increased, suggesting the impact has more to do with wages and increased dependence upon government payments than non-productive citizens.

Salling, who has not studied Ashtabula County specifically, says another explanation for the county’s poor economic showing is geography. Although the Census Bureau considers the county a part of northeast Ohio and the Cleveland metropolitan area, there’s no consensus about its best fit. The Ohio Department of Development lumps it into District XII, which includes Mahoning and Trumbull counties. Team NEO, the 16-county Northeast Ohio marketing alliance, has embraced placing the county in the Youngstown-Warren region, as does the Census Bureau when releasing regional data for northeast Ohio.

“It has a rural population with very little suburban connection,” Salling observes. “It’s not Lake or Geauga counties or Medina, which are rural but benefit from an urban county adjacent, or near, to them.”

Tuesday: Struggling to care for the county’s poor.