Three Thoughts: Spending Our Demographic Dividend

Woody Hayes said, “You win with people.”  His sports mantra might as well be a mantra for industrial development too.  Like in football, economic growth requires people to succeed.

Talent is as important as infrastructure.  Though the talk about financial incentives always makes headlines, it’s the availability of people that is the most important incentive to attract capital investment and jobs.

 

In his book predicting the global future for development, The Next Hundred Million: America in 2050, author Joel Kotkin wrote about the demographic dividend.  The premise?  The U.S. competes favorably for gross domestic product growth over countries which are experiencing demographic challenges.

 A shrinking population is a people problem indeed.  The lack of people to work in manufacturing is the biggest threat to growth.  Conversely, when the U.S. sustains a working age population, we enjoy a demographic advantage.  That advantage is Kotkin’s demographic dividend.

 What made me want to sing from the Joel Kotkin songbook is his predictions, fully 15 years ago, that the middle of the country would bring about a national resurgence by experiencing a reshoring of manufacturing.  He predicted places like Ohio could win the people side of the equation while also providing all the energy, logistics, and manufacturing capabilities needed to gain an edge.

Competitors for GDP growth.

Japan and Germany are two countries from where large investors have made their way to the U.S. and Ohio, in particular. It’s been for demographic reasons.  These two countries’ business leaders recognized 50 years ago that if they wanted to sell in the U.S., they had to come to the U.S.  And they did.

Arguably, of all the incentives dangled to get Honda to Ohio, it was people that won out as the biggest reason they came, and the reason they stayed. 

Those German and Japanese decisions being mirrored by other countries are the reason predictions of reshoring of manufacturing have gained momentum in recent years.

China Faces Demographic Cliff.

It didn’t make many headlines, but India surpassed China in 2025 as the most populous country in the world.  China’s yearly population dropped and, by some estimates, the drop was roughly equivalent to the entire population of Iowa.  Birth rates are to blame.  According to The Guardian, “. . . [China] births in 2025 were roughly the same level as in 1738 when China’s population was only about 150 million.”

That’s not a demographic problem.  That’s a demographic cliff. The workforce ramifications are already impacting China and, undoubtedly, influencing their economic decisions now and for decades to come.

U.S. Demographics Trends to Watch.

Spending, if you will, that U.S. demographic dividend requires achieving working age population growth, comparatively higher birth rates, and steady legal immigration in our country.

Lower birth rates and slowed immigration have caused Kotkin’s prediction of the U.S. achieving 400 million population by 2050 to be off.  Though we keep growing as a nation, demographers are adding years on to the Kotkin prediction.

Trends that show population growth, trends that continue to favor reshoring of manufacturing, and trends that see increased foreign investment are all trends to watch in our state. 

If we look to win at the game competing for GDP economic growth in the U.S. and spending our demographic dividend, we’ll win with people.

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This column is a regular column in The Dispatch. 

 

 

 

Three Thoughts: STEM is More Than an Acronym; It’s Key to Our Potential

 

Battelle’s Rich Rosen cited a national statistic twenty years ago:  80% of parents discourage their kids from science and technology careers.  

Even if that stat was only half true in Ohio, Rosen’s stat was scary for industry who depends on engineering- and technician-level talent with science, technology, engineering, and math skills.  

It was a wake-up call.  The message?  Get busy with connecting parents and kids with industry needing STEM skills. Inspire the next generation to engage in technology careers or lose opportunity. 

STEM skills can unlock a future in higher-paying jobs. 

One in every seven jobs in Ohio is a manufacturing job.  Manufacturing jobs bring Ohio’s largest payroll.  They average over $76,000 a year according to a U.S. Department of Labor stat.  Many of those jobs require STEM skill credentials, but they don’t require a college degree. 

STEM is more than an acronym; it’s key to realizing our state’s economic potential. 

Imagine workforce challenges without STEM learning attentiveness.

When the class of ’65 turned 65, the demographics of workforce got worse, fast.  Ohio saw the population reaching retirement age grow a whopping 500% in one two-year period.  Meanwhile, the population entering the workforce didn’t match that pace.   That was the onset of the workforce availability crunch that still is being felt today.

Imagine if, on top of that, STEM learning hadn’t gained priority in Central Ohio like it did after that Battelle wake up call.  The crunch would have been far worse.  Industry leaders would have feared a ceiling on their growth potential.  The cost could have been unfilled jobs resulting in opportunity lost.  

STEM talent is the biggest inducement to retaining jobs and attracting new job-creating investments.  STEM learning needs to remain a priority. 

Industry engagement is crucial.

Boeing technicians in Central Ohio can boast accuracy for its aerospace guidance systems to the equivalent of a pencil point on a football field.  DuPont’s thin film materials made in the region can withstand extreme temperature and demanding environments.  Ariel’s compressors require tolerance within multiple zeroes after the decimal point.  This kind of work demands strong science, technology, engineering, and math skills.

That’s why science museums like COSI in Columbus and The Works in Newark crave hands-on demonstrations from industry leaders.  Boeing, THK, and Covestro are among the stalwarts at community STEM learning events for a good reason-- STEM learning and manufacturing are intertwined.

Industry engagement in STEM learning needs to keep its momentum. 

Parents’ influence is also crucial.

Back to that Battelle statistic.  Many are optimistic that the number of parents discouraging science and technology careers is much lower today than it used to be.  Parents have heard the facts about higher paying jobs and recognize STEM learning is the key to those opportunities.

That doesn’t mean the task of reaching parents and kids ends.

Our call to action?  All of us have a job to do—make sure our youth get exposed to locally-relevant, real-World experiences where STEM skills translate to a future career in Central Ohio.

Our economy depends on it.

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This column is a regular column in The Dispatch.

Three Thoughts: Data Center Backlash

 

Nationally, data center bashing is a bipartisan issue.  The backlash is not going away either.

The first time I heard about a data center, it could fit in the space of a couple tractor trailer parking spaces.  They looked the part too—windowless boxes with a door for the occasional tender to visit and a vent for the excess heat.  There were some parked just outside the Brewery District twenty years ago.

Today, even though semiconductors allow more storage to fit in less spaces, data centers have evolved to become land-, water-, and electric-consuming massive concrete buildings.  Ohio, aided by strong electric infrastructure thanks to our long legacy of manufacturing and a lack of hurricanes, has been an attractive place to locate.  Today, there are reportedly 40 of them in New Albany alone. 

Far be it for me to pile on the backlash, but here I go.

ONE THOUGHT: Is the Juice Worth the Squeeze?

The biggest reason for the national backlash is a basic fact: The economic impact of data centers is truly weak.  

All the think tank studies claiming supply chain and spillover impact I’ve looked at never survive a couple questions deep.  Benefits to a few.  Pain to many others.  Not much juice for all the squeeze.

There’s no reason to incentivize them to come.  New Albany has one part of the data center equation right.  They impose a payment in lieu of payroll tax that brings in the equivalent from the machines that it would if there were people in those buildings paying wage taxes instead. 

 

SECOND THOUGHT: Electricity Demand Disrupted

The Ohio Manufacturers Association is right to point out that data centers, though certainly bringing a larger demand than manufacturers do, are not the ones to blame for the rising power rates.

OMA points the fingers at utilities.  The electric rate bidding system favors reporting higher electricity demand than can be proven.  The systems to hold monopoly utilities accountable are seemingly broken.

To be fair, there are risks.  Technology improvements could cut the electricity needs of AI and future data needs.  Thus, electric infrastructure investments based on data centers alone as a customer is a risky move to make.

The worst thing that could happen?  Put the risk of electric growth on stranded customers.  Ohio’s move to deregulate electricity 20 years ago was the right move.  Reversing that would be a huge mistake.  Mom and pop electricity rate payers shouldn’t bear the brunt of risky business decisions.

 

THIRD THOUGHT: Opportunity Cost is The Biggest Issue

To me, the biggest issue is one that isn’t at the center of the backlash but ought to be.  It’s opportunity cost.  It’s asking the question: What alternative opportunity could happen with a data center site, in the long run, that has more economic impact?

Without naming names, here’s one example that proves my point:  One large data center company sits on 350 acres with 70 jobs paying an average of $75,000 a year.  Just 15 miles away that same 350 acres hosts an industrial park with 20 diverse manufacturers employing 2,070 people.  The average pay is the same.

The difference is 2,000 families with jobs and a community with a more stable, growing tax base.  That’s the definition of opportunity cost.

It’s smart for communities to make informed decisions with future opportunity in mind.

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This column is a regular column in The Dispatch.