Tuesday, June 16, 2009

The Ohio Brain Drain and Supply and Demand

There's been a lot of coverage in Ohio the past couple days about the brain drain that the state is suffering.

Yesterday, the 'Spatch gave us some details:
About 88 percent of native Ohioans attending seven top colleges in the state say they are proud of Ohio, but more than half indicate that they plan to leave after graduation, according to the survey. Among out-of-state undergraduates, 79 percent believe their future lies outside Ohio.

Ohio leaders have long been concerned about its brain-drain problem, and if the state and schools don't do more now to keep graduates from leaving Ohio's economy will continue to falter, Fordham Institute officials said.
Today, in a separate article detailing the difficulties Strickland and the General Assembly will have in finding $3.2 billion for the budget to be balanced, we find this gem:
State leaders in recent years have acknowledged that Ohio's long-term economic success hinges largely on its educated work force. They hoped to make 2010 the third straight year of tuition freezes.
Now, I'm not fond of the ambiguity found in "state leaders", but I do know of one politician that has supported this line of thinking. From Ted Strickland's fundraising letter last month:
I'm convinced that the key to growing our economy is making sure we have the best educated workforce in the nation. In a global economy, good-paying jobs and capital investment go to where the workforce is most prepared. And this is an area in which Ohio can excel.
As was described in this article in the Cleveland Plain Dealer, it's increasingly difficult for college graduates to get jobs in Ohio.

So now we know a couple important points:
  1. Businesses aren't offering jobs to Ohio college graduates.
  2. Without jobs, young people are leaving the state.
And Strickland's solution?

Make more college graduates.

Now I only took a few econ classes in college, but I know the basics of supply and demand. If demand for college graduates is static, increasing the supply of graduates will not help the situation.

Now don't get me wrong. For the most obvious of reasons the higher education of Ohio's youth is vital to the state's growth.

But, Strickland is missing a vital piece of the puzzle.

The business environment.

Rather than focusing solely on education, the state needs to make increasing the private sector's demand for college graduates a priority.

How do you do that? Well, that's easy, as we've been repeating on 3BP, Ohio absolutely must improve its business tax climate.

From the non-partisan Tax Foundation:
Ohio ranks 47th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Indiana (14th), Pennsylvania (28th), West Virginia (36th), Kentucky (34th) and Michigan (20th).
47th.

Improve this ranking and more businesses will come to Ohio. More businesses yields more jobs. More jobs provides opportunity for these college graduates. More employed graduates brings more tax revenue. More tax revenue balances this mess of a budget.

And there's your answer, fishbulb.

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