Ohio is not as free as it used to be.
The Buckeye State fell in the latest edition of a report that explores states’ economic freedoms, ranking 35th out of all 50 states and Puerto Rico in the 2024 Economic Freedom of North America edition.
The Buckeye Institute, in partnership with Canada’s Fraser Institute, released the report, which marked the 20th iteration of the annual report.
The report measures the extent of economic freedom in all 10 Canadian provinces, all 32 Mexican states, the 50 U.S. states and the territory of Puerto Rico. It ranks the states and provinces based on economic freedom, using government spending, taxation and labor-market freedom as metrics for the measurement.
“While Ohio’s score in taxation is commendable and its score in labor-market freedom is decent, its score in government spending, particularly as that spending relates to the state’s stressed public pension system, continues to be a massive drag on its overall ranking,” Zachary D. Cady, associate economist at The Buckeye Institute, said in a release. “If Ohio is to improve its ranking, its leaders must get serious about reining in the state’s overspending and confronting its looming pension problems.”
In the report’s introductory remarks, Cady urged policymakers to continue improving Ohio’s state and local tax systems and “regulatory regime” to “create a more competitive, pro-growth environment.”
This year, Ohio ranks 35th out of the 50 American states and Puerto Rico, scoring 6.04. While Ohio ranked low on government spending, coming in at 45th, the state ranks much better regarding taxation and labor-market freedom at 18th and 29th, respectively.
Ohio’s neighbor to the north, Michigan, bested Ohio, ranking No. 30, as did Kentucky (33), Pennsylvania (18) and Indiana (7). West Virginia ranked 39th on the list.
Puerto Rico ranked last nationally, edging out New York and California. Conversely, New Hampshire topped the list, ahead of South Dakota and Florida.
The Buckeye State has hovered in the mid-30s to mid-40s since 1981, the first year available via the examination.
Ohio ranked 45th in 2014. The next year, it jumped into the 30s and has remained in the mid-30s since.
The report’s latest iteration uses an updated methodology to assess states based on their government spending, taxation and regulations. This year’s rankings are based on data from 2022.
“Incomes are not only higher in economically free places, but they tend to grow faster in these places as well,” according to the report. “From 2013 to 2022 total income in the freest 25% of North American jurisdictions grew 29% after adjusting for inflation. In the least-free jurisdictions, however, inflation-adjusted income fell 13%.
“Among the freest US states, population grew 10 times faster than it did in the least-free from 2013 to 2022,” the report added. “Total employment in these states also grew about three times faster than in the least-free states over this time.”
Ohio lawmakers could act to improve its regulatory environment. Lawmakers have been looking at streamlining licensing requirements for many jobs to make the state more competitive.
Senate Bill 255, enacted in 2019, requires Ohio lawmakers to evaluate and reaffirm the state’s occupational licensing boards every six years. The Buckeye Institute previously said that since lawmakers passed Senate Bill 255 more than half a decade ago, the state has scrapped or minimized requirements for 55 licenses based on its recommendations.
The Ohio House and the Ohio Senate have passed House Bill 238, eliminating several requirements and better aligning Ohio’s regulation mandates with nearby states. The measure would extend license durations and reduce renewal fees for some occupations, including real estate appraisers and private investigators.
