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September 3, 2015 The Toledo Metropolitan Statistical Area Caitlin Treanor and Brendan Costello The Toledo metropolitan statistical area (MSA) is home to over 600,000 people, making up about 5 percent of the total population of Ohio. The MSA comprises Fulton, Lucas, Ottawa, and Wood Counties. In this Economic Trends, we track the relative performance of Toledo’s economy and compare it to those of Ohio and the country at large. 2014 Location Quotients Manufacturing Education and health services Leisure and hospitality Trade, transportation, and utilities Other services Professional and business services Overall, the Toledo MSA is heavily reliant on manufacturing; trade, transportation, and utilities; professional and business services; education and health; and leisure sectors for employment. In 2014, these industries accounted for 72 percent of total nonfarm employment. Using location quotients (LQs) allows us to compare Toledo’s employment makeup to that of the country at large. An LQ greater than 1 indicates that a region has a higher fraction of its employment in that sector than the United States’ aggregate, while an LQ less than 1 indicates that the region has a relatively lower share. Mining and construction Financial activities Ohio Toledo Information 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 Note: For both Ohio and the Toledo MSA, the base area is the United States. Data is annual for 2014. Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. Payroll Employment Index: 2005=100 110 United States 105 Relative to the national average, Toledo and Ohio have a much greater employment share in manufacturing, which is 1.7 times more concentrated in Toledo compared to the average across the United States. Indeed, manufacturing accounted for 15 percent of Toledo’s total nonfarm employment in 2014, while in the United States it accounted for only 9 percent. By contrast, Toledo has much lower shares of financial Ohio 100 95 Toledo 90 85 2005 2007 2009 2011 2013 2015 Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. activities and information than does the nation, even though Ohio’s shares are closer to the national average. Employment in Ohio and Toledo followed a trend similar to that of the United States: growing prior to the Great Recession, falling during the recession, and increasing from 2010 onward. Ohio and Toledo, however, saw a decrease in employment during the recession that was far greater in magnitude than the national average, with Ohio falling below 95 percent of its 2005 level and Toledo below 90 percent of its 2005 level. While the United States has now grown over 5 percent above its 2005 employment level, Ohio has barely made it back to its 2005 employment level, while Toledo still has fewer jobs than it did in 2005. Part of this could be driven by Toledo’s negative population growth, which we will discuss below. When examining the manufacturing industry in particular, the contrast between Toledo and the United States becomes starker. The United States’ manufacturing industry bottomed out in early 2010 at 80 percent of its 2005 employment level. Toledo, however, found its manufacturing employment falling by nearly 40 percent, bottoming out at 61 percent of 2005 levels in mid-2009. Since then, Toledo’s manufacturing sector has recovered more quickly than the national average. While manufacturing employment for the United States has risen slowly since 2010, Toledo has seen more rapid employment gains in manufacturing and is now closer to its 2005 employment levels. Toledo’s employment growth can be disaggregated into its drivers to better analyze which sectors are bolstering Toledo’s growth and which are dragging it down. We do this by taking the employment change in each sector and weighting it by the sector’s fraction of Toledo’s total employment. We see that in 2009, manufacturing along with trade, transportation, and utilities were the largest drivers of employment decline and growth in Toledo, followed closely by professional and business services. Employment in manufacturing and trade, transport, and utilities also make up the vast majority of job growth in 2014. Leisure, hospitality, education, and health declined substantially in 2013, but the sector has made a substantial recovery in 2014. From 2013 to 2014, Toledo saw overall gains in total private employment of about 1 percent. The metro area posted job losses in five different industries, all of which fall under the services-providing sector. In the Toledo MSA in 2014, the services-providing sector Payroll Employment Index: 2005=100 115 Nonmanufacturing 105 95 85 75 Manufacturing Toledo United States 65 55 2005 2007 2009 2011 2013 2015 Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. Components of Employment Growth, Toledo MSA Percent change 8 Trade, transportation, and utilties 6 4 2 Professional and business services Mining, logging, and construction Manufacturing Leisure, hospitality, education, and health Financial services and information 0 -2 -4 -6 -8 2007 2008 2009 2010 2011 2012 2013 2014 Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. Payroll Employment Growth, December 2014 Total private Goods-producing Mining and construction Manufacturing Services-providing Trade, transportation, and utilities Financial activities Other services Education and health services Leisure and hospitality Professional and business services Information -15 Ohio Toledo -10 -5 0 5 10 Year-over-year percent change Source: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. 15 accounted for 77 percent of total private employment, while the goods-producing sector accounted for the remaining 23 percent. Within the services sector, those hit most heavily were information, and professional and business services. Other industries that contracted include education and health services, leisure and hospitality, and other services. In the goods-producing sectors, Toledo’s rate of employment growth has substantially outpaced that of the United States as a whole. For manufacturing in particular, Toledo’s rate of employment growth has outpaced that of the United States. Toledo saw the most growth in mining and construction, with a growth rate of about 12 percent. However, mining, logging, and construction accounts for only 5 percent of total private employment in the Toledo MSA. The MSA’s unemployment rate before the crisis hovered between 6 percent and 7 percent, above both the nation’s and Ohio’s averages. When the crisis hit, Toledo’s unemployment rate went as high as 13.6 percent, with the United States reaching 10 percent and Ohio topping out at 11 percent. Toledo’s post-crisis unemployment rate shows a complete recovery, with the most recent data putting it at 5.0 percent in June 2015, very close to the nation’s average. Unemployment Rate Percent 16.0 14.0 12.0 10.0 8.0 United States Ohio Toledo 6.0 4.0 2.0 0.0 2005 2007 2009 2011 2013 2015 Source: Bureau of Labor Statistics/Haver Analytics. Real Per Capita Personal Income Dollars, thousands 60000 United States Ohio Toledo 50000 40000 30000 Ohio’s and Toledo’s per capita income has remained noticeably below the nation’s average since the 1990s, with the gap increasing as time goes on. As of 2013, the nation’s average per capita income was $44,765, while the Toledo MSA’s per capita income was $38,604, a difference of over $6,000. Toledo has also been trailing behind Ohio, where per capita income was $41,049 in 2013. Toledo’s population remained unchanged from 1990 to just before 2005, and the residential population has been declining ever since. From 2004 to 2014, the average annual population growth in Toledo has been -0.17 percent. In contrast, the nation’s population has grown every year throughout this entire period, averaging growth at around 1 percent from 1980 to 2010, and Ohio has seen positive population growth since the mid-1980s. 20000 10000 0 1980 1985 1990 1995 2000 2005 2010 Source: Bureau of Economic Analysis/Haver Analytics. Population Growth Year-over-year percent change 2 1 United States Ohio Toledo MSA 0 -1 The percent of the population that is black is higher in Toledo than in Ohio or the United States. Other minorities, however, constitute a much smaller percentage of the population in both Ohio and Toledo than in the nation. The age distributions in Ohio and Toledo are very much in line with the distribution in the United States, though the median age in Ohio is marginally higher. The Toledo MSA has a higher percentage of -2 1980 1985 1990 1995 Source: Census Bureau/Haver Analytics. 2000 2005 2010 bachelor’s degree holders, with nearly 29 percent of the population holding a four-year degree, compared to 25 percent in Ohio and 24 percent in the United States. While the Toledo MSA is heavily reliant on several different industries, particularly in the services sector, manufacturing played an important role during the recession. In times when manufacturing was hit hard, such as 2009, this sector drove a substantial part of the decline in the Toledo economy. However, in the years post-recession, manufacturing has rebounded, and Toledo’s economy has grown with it. The trade, transportation, and utilities sector has played a similarly important role. Overall, Toledo’s economy has made some substantial strides in its recovery from the financial crisis. It is currently experiencing positive growth rates in employment, especially in manufacturing. However, the metropolitan statistical area has not completely returned to its pre-recession employment level and is also experiencing a persistent decline in total population. Demographics and Education Toledo Total population (millions) Ohio United States 0.6 11.5 311.5 Percent by race White 79.2 82.9 74.0 Black 14.3 12.1 12.6 Other 6.5 5.0 13.4 0-19 26.6 26.2 26.9 20-34 20.5 19.1 20.7 35-64 39.5 40.3 39.0 65 and older 13.4 14.4 13.4 Percent with bachelor’s degree or higher 24.1 25.2 28.8 Median age 37.1 39.0 37.3 Percent by age Source: US Census Bureau, 2009–2013 Five-Year American Community Survey. Caitlin Treanor is a research analyst in the Research Department of the Federal Reserve Bank of Cleveland. Her primary interests include development economics, macroeconomic policy, and applied econometrics. Brendan Costello is an intern in the Research Department of the Federal Reserve Bank of Cleveland. His primary interests include financial policy and regulation, innovation and patent policy, and law and economics. Economic Trends is published by the Research Department of the Federal Reserve Bank of Cleveland. Views stated in Economic Trends are those of individuals in the Research Department and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Materials may be reprinted provided that the source is credited. If you’d like to subscribe to a free e-mail service that tells you when Trends is updated, please send an empty email message to econpubs-on@mail-list.com. No commands in either the subject header or message body are required. ISSN 0748-2922
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