The gap between the highest-income families and poor and middle-income families grew significantly between the early 1980s and the early 2000s in Ohio, the U.S. and most other states, according to a new study by the Center on Budget and Policy Priorities and the Economic Policy Institute. The study is one of the few to examine income inequality at the state level. Incomes of the country’s richest families climbed substantially over the past two decades, while middle- and lower-income families saw more modest increases. This trend is in marked contrast to the broadly shared increases in prosperity between World War II and the 1970s.

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Executive Summary

Full Ohio Report

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Ohio Inequality Fact Sheet

Gongwer News Service

More than 1,700 employees at Ford Motor Company’s Batavia transmission plant will be affected under a restructuring plan the automaker announced on Monday.

As expected, the plan entails the elimination of 25,000-30,000 jobs – as much as a quarter of its North American work force – and several plant closings slated between 2006 and 2012. The company said it would idle a total of 14 manufacturing plants, with the Batavia operation among seven that will be shuttered by 2008.

Other operations slated for closing in the short term are assembly plants in St. Louis, Atlanta and Wixom, Mich., the company said. The Windsor, Ontario casting operation and two other plants to be named later will also close by 2008. Another seven plants will be idled by 2012.

“As hard and painful as it is to idle plants and reduce our work force, we know these sacrifices are critical to set the stage for a stronger future,” Anne Stevens, executive vice president and chief operating officer, The Americas, said in a statement. The company anticipates a total of $470 million in savings this year alone through the employee cuts and fixed asset write-offs.

Ford’s announcement follows restructuring plans unveiled last year by the Delphi Corporation, a large automotive parts supplier (See Gongwer Ohio Report, November 3, 2005), and General Motors Corp. (See Gongwer Ohio Report, November 21, 2005) that are also expected to impact thousands of Ohio jobs. Additionally, the Dana Corp. announced it was moving about 100 workers based in Lima to a plant in Mexico. (See Gongwer Ohio Report, October 20, 2005)

Governor Bob Taft’s administration and the GOP-led General Assembly recently proposed broadening tax credits and other incentives to save automotive industry jobs for the state, which continues to struggle economically in part due to its historically large manufacturing base. The budget bill ( HB 66) elimination of the business tangible personal property tax and the creation of a new commercial activity tax were also touted as being especially beneficial to the manufacturing sector, however the automotive industry in particular continues to shed jobs in Ohio and elsewhere.

Policy Matters Ohio, a non-profit research institute, said Friday that state employment data shows Ohio has lost 17.6% of its manufacturing jobs since 2001, when nearly a million workers were employed in the sector. Overall, the state added just 3,600 jobs of all types in 2005, a figure that equates to less that one-tenth of one percent of the entire job market of more than 5 million.

Gov. Taft said in a statement of Ford’s announcement, “I share the disappointment of those workers and their families that will be affected by the closing of the Batavia transmission plant. I am heartened, however, that Ford has decided that the more than 13,000 Ohio employees in the remaining nine Ohio facilities will be a part of their rebuilding efforts.

Area Reps. Joe Uecker (R-Loveland) and Danny Bubp (R-West Union) issued statements expressing frustration with the Batavia plant closure considering the economic incentives that have been provided to the company and the investments that have been made in the plant.

“I am very concerned for the future of those workers. Like others, I too have several relatives who are employed at this plant who I will worry about,” Mr. Uecker said. “In the coming months I will work with whatever teams that form to help ease the burden this has brought about and I will continue to work with the legislature to search for ways to help Ohio’s manufacturing future.”

Sen. Tom Niehaus (R-New Richmond) said he would continue to urge the company to invest in Clermont County beyond 2008.

Chairman and CEO Bill Ford said in announcing the plans that the company expects to return to profitability within two years.

“The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets,” he said in a news release. “To meet this challenge, we are acting with speed to strengthen the Ford, Lincoln and Mercury brands, deliver the innovation customers demand and create a business structure for us to compete – and win – in this era of global competition.

“We will be making painful sacrifices to protect Ford’s heritage and secure our future,” Mr. Ford added. “Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate.”

Columbus Dispatch

By Catherine Candisky

At 77, Donald A. Hyatt Sr. is still working because he likes to keep busy and needs the money to supplement his Social Security check.

Last year, when his company announced it would lay off workers, Hyatt was stunned to learn he was not eligible for unemployment benefits.

It turns out that thousands of older Ohioans do not qualify for benefits if they lose their job.

Ohio is the only state that reduces jobless benefits by 100 percent against Social Security.

As a result, unemployment compensation for Social Security recipients often is cut to nothing.

“I’ve been working here 25 years,” said Hyatt, a machinist at L.B. Heating and Cooling in Mount Vernon.

“Why can’t an elderly person collect unemployment if his company is paying into it? I think it’s a scam.”

With more older Ohioans in the work force out of necessity, the issue has become a top concern of advocates for seniors and the jobless, including AARP Ohio and Policy Matters Ohio, a Cleveland based nonprofit research organization.

Ohio’s Unemployment Compensation Advisory Council is reviewing the matter, and a Republican state lawmaker is pushing to end Ohio’s “offset” of Social Security.

Rep. William J. Seitz, Cincinnati, hopes “to help our senior citizens who are rudely awakened to find their Social Security benefits are offset against their unemployment comp benefits when they have to get a second job merely because Social Security isn’t enough.”

The way it works in Ohio:

- If you’re entitled to $100 a week in unemployment benefits and
$200 a week in Social Security, you get no unemployment benefits.

- If you re entitled to $200 a week in unemployment benefits
and $150 a week in Social Security, your unemployment benefits
are reduced to $50.

Zach Schiller of Policy Matters says the practice is unfair because
the workers paid into the Social Security system and their employers paid into the state s unemployment fund.

“A lot of retirees are working because they need to supplement their retirement income,” said AARP Ohio spokeswoman Kathy Keller.

Anita Wilhelm, a widow from Miamitown, had been working 30 years for a wholesale distributor when she was let go in 2003 at age 70.

“I was continuing to work because my husband passed away, and Social Security is fine, but it’s not enough,” said Wilhelm, now 72.

“I realize I didn’t pay, but the company paid and that’s what it’s for. The gentleman from unemployment told me they needed to take care of the younger workers.”

Keller said many others being denied benefits took early retirement usually at 62 and have started new careers as they receive lower retirement and Social Security benefits.

The Ohio Department of Job and Family Services estimates 2,360 unemployment claims are made each year by those collecting Social Security. To extend jobless benefits to them would cost about $12 million annually.

The money would come from Ohio’s unemployment trust fund.

The balance, currently at $446 million, is expected to dip to about $300 million in April before rebuilding.

Agency spokesman Jon Allen said the department does not oppose eliminating the offset.

But opinions differ among the co-chairmen of Ohio’s Unemployment Compensation Advisory Council, which makes recommendations to the General Assembly. The council is expected to discuss the issue at its next meeting, Feb. 8.

“We understand that it’s a problem, and what we’re trying to do is determine what amount of an offset we should have,” said council co-chairman William A. Burga, president of the Ohio AFLCIO.

But co-chairman Andrew E. Doehrel, president of the Ohio Chamber of Commerce, opposes extending unemployment benefits to Social Security recipients.

“If you’re going to start draining the system,” he said, “you will put benefits at risk for everyone.”

Unemployment benefits, Doehrel said, “were designed to be a bridge to help someone when they don’t have other resources. . . . It’s not meant to cure anything other than that.”

He also cautioned that reducing or eliminating the Social Security offset would make it impossible to implement other proposals, such as one to reduce the earnings requirement. In Ohio, workers must have earned at least $193 a week to be eligible for unemployment benefits. Some argue it should be lower so more workers can qualify.

Policy Matters says that Ohio is the only state that offsets 100 percent of Social Security benefits against unemployment benefits.

Eight states offset 50 percent.

Gongwer News Service

Elderly, jobless Ohioans could see an increase in their unemployment compensation if the legislature approves a measure that may soon be introduced in the General Assembly.

With the increasing trend of people continuing to work well beyond the traditional retirement age, more unemployed workers are eligible for both Social Security and unemployment insurance.

But Ohio is the only state to deduct 100% of an individual’s Social Security income from the benefits they would receive from unemployment insurance, according to Rep. Bill Seitz (R-Cincinnati).
Some states offset unemployment compensation by 50% of their Social Security payments, but most states have eliminated offset laws entirely.

“I believe the current offset law is age discrimination,” Rep. Seitz said in an interview. Recipients of food stamps, Medicaid, and other types public assistance don’t have their unemployment benefits offset by those programs, he noted. “But most people who get Social Security are elderly.”

Offsetting unemployment benefits saves an average of approximately
$12.5 million each year in payments, according to the Department of Job and Family Services.

It also causes undue hardship on older workers, some of whom find their unemployment payments fall to zero, according to Rep. Seitz and some advocacy groups.

The issue was originally brought to his attention by a widow in his district who lost her job “and was shocked when she got her first unemployment check and it was $13″ because of the Social Security offset.

Rep. Seitz said he has been working on a proposal with Reps. Thom Collier (R-Mt. Vernon) and Tim Schaffer (R-Lancaster), both of whom sit on the Unemployment Compensation Advisory Council. The panel has recently considered the issue and Rep. Seitz wants to ensure that its package of recommendations due soon will include a proposal to reduce the offset amount.

The proposal, which he said would affect about 3,000 Ohioans, reduces the current 100% Social Security offset to 50%. “What I’m proposing is the first step,” he said adding that it was a compromise between business interests and advocacy groups like Policy Matters Ohio, which would like to see the offset entirely eliminated.

A 50% reduction of the offset would cost the Unemployment Insurance Trust Fund about $6.2 million, according to figures supplied by ODJFS. Spokesman Jon Allen said the department has no position on the proposal. “But the question is always: what is going to be the impact on the taxes employers pay?”

Furthermore, it’s unknown how many more people would apply for the program, he said. Knowing that their Social Security benefit would eliminate their unemployment compensation, many people never bothered to apply for the program.

Policy Matters points out that the cost of eliminating the offset entirely would represent a fraction of the state’s reserves with the trust fund’s balance at about $450 million as of last week.

“It sounds like a lot of money, but it’s three times below the minimum safe level set by the legislature,” said Andrew Doehrel, president of the Ohio Chamber of Commerce and UCAC co-chair. Changing the Social Security offset would translate into added costs for employers, he said.

“Is this system the right place to address these issues?” he asked, noting that unemployment insurance was designed to help working people who’d lost their job and Social Security was meant to be a retirement benefit.

Mr. Doehrel acknowledged the evolving demographics of the labor market but argued that the entire retirement system should be realigned rather than making the unemployment system subsidize retirement. “The system was set up to do a certain thing. If you force it into other forms it’s going to cause problems.”

A Proposal to Protect Jobless Older Ohioans - Ohio now is the only one of the 50 states that reduces unemployment benefits by 100 percent of Social Security payments received by jobless workers. Thus, many older workers find when they lose their jobs that their unemployment insurance is reduced or cut to zero. However, the issue is getting new attention in Columbus. Policy Matters Ohio explains the Social Security “offset” issue in a Q&A adapted from the National Employment Law Project. Read the Q&A here.

STRAPPED - Why America’s 20- and 30-Somethings Can’t Get Ahead -
Join author Tammy Draut at two Policy Matters sponsored events exploring the economic challenges facing young adults. Her book examines the obstacle course facing young adults as they try to get education, build careers, buy homes and start families, often using Visa and MasterCard as the new safety net. See Draut:

At 4 p.m. Thursday February 9, at the Cleveland State University Levin College Atrium (1717 Euclid, Cleveland)

At 7 p.m. Friday February 10, at Mac’s Backs Paperbacks (1820 Coventry Road, Cleveland Heights)

Getting Credit (for free) - An innovative program, funded by Cuyahoga County, will ensure that more greater Clevelanders claim the tax credits they’ve earned, with free help (and without pricey fees). Workers without kids who earned less than $13,750, or workers with kids whose families earned less than $37,263 should check if they qualify for an earned income tax credit (EITC) – it could mean thousands of dollars. Click here to learn more and to find a free tax center near you.

Candidate briefings - How have tax changes affected who pays in Ohio? Do economic development incentives help poor communities? Who would benefit from a hike in the minimum wage? How could smarter energy policy boost job growth in Ohio? If you have filed to run for state office in Ohio and want to understand these issues better, join one of our candidate briefings. We’re still setting up dates for events in larger Ohio cities, contact Pam Rosado (prosado@policymattersohio.org) now to learn more.

Support Policy Matters - Since our founding in January of 2000, Policy Matters has released more than 100 reports, tracked more than 1000 press hits, given hundreds of public presentations, and changed the Ohio policy debate. If you care about work, wages, sprawl, taxes, inequality and the economy, please give generously to support this important work. Details here.

Don’t miss: “Pulling Apart” - Has the income growth for middle- and low-income Ohio families grown as much as that of wealthy families? Find out later this month when Policy Matters Ohio releases Pulling Apart, an analysis of income changes since the early 80s recession.

That’s all!
The Policy Matters Ohio Team

Dayton Daily News

A cartoon in a recent edition of The New Yorker magazine has a middle-aged man meeting with a financial planner, being asked whether he’s given much thought to what kind of job he wants once he retires.

If you didn’t laugh, you’d have to think about crying — or at least whimpering — at the prospect of spending your golden years under the golden arches, supersizing french fry orders.

But people are living longer, and many haven’t saved nearly enough to fully retire. Social Security provides just a modest benefit, and most employers are getting out of the pension business. So older citizens are a growing presence in the paid labor market.

Yet Ohio law has failed to keep up. Ohio has one of the most dismal unemployment security systems in the nation. Rick McHugh, a staff lawyer at the pro-labor National Employment Law Project, refers to the state as the “Mississippi of the Midwest.” Employees who work as many as 36 hours a week, for example, aren’t eligible for unemployment compensation if they lose their jobs, because they were only “part-time.”

Meanwhile, Ohio’s system stands alone in the nation in how it singles out senior citizens for discrimination.

Older workers who are otherwise entitled to full unemployment compensation after losing a job have their benefits reduced — dollar for dollar — for benefits received under Social Security. The rule is the result of an old, now irrelevant, federal labor rule that sought to ensure employers aren’t nicked twice when workers retire: once through the pension they funded and once through unemployment compensation taxes they paid.

Some states interpreted the rule to include Social Security retirement payments. But seniors have begun complaining loudly about the offset’s illogic. The complaint is justified. They’ve earned the right to unemployment compensation, and shouldn’t be denied that benefit simply because they’re old enough to be receiving Social Security payments.

Each year an average of about 2,500 Ohio seniors are being denied unemployment benefits because they are Social Security recipients. Some people are proposing a halfway reform, giving seniors 50 cents on the benefits dollar. This suffers from the same illogic as the current rule, and still relegates seniors to second-class citizenship.

Ohio lawmakers need to give older workers their full due without delay.

Negligible Job Growth in Ohio Last Year

The chart above and the following statistics, based on the latest seasonally adjusted payroll
numbers released Jan. 20 by the Ohio Department of Job & Family Services, highlight changes in the Ohio job market since 2001…

Full Report

Reflex in the Rust Belt
The Akron Beacon Journal

Who doesn’t understand the impulse of Ohio lawmakers seeking to aid a troubled auto industry in the state? The industry employs roughly 150,000 Ohioans. General Motors faces a painful restructuring. So does Ford. Both have seen their share of the American market diminish. Delphi, the country’s largest auto parts maker with 13,000 workers in the state, has entered bankruptcy.

Lawmakers want to do what they can to save jobs, often higher paying, certainly part of the fabric of this state and others in the Great Lakes region.

Jon Husted has in mind lowering the threshold for auto suppliers and manufacturers to qualify for the state’s Job Retention Tax Credit
program. The House speaker argues the change would encourage Delphi, GM and others to invest in their plants and keep jobs in Ohio.
The incentives, if fully exploited, could cost the state as much as $100 million a year.

Gov. Bob Taft intended to pitch the proposal during a visit to the North American International Auto Show in Detroit last week. The state
Senate has been exploring a more modest initiative, providing credits on the state’s electricity kilowatt-hour tax, amounting to a fraction
of the cost of the House proposal.

Would either approach make much of a difference? Industry analysts are doubtful. They note that General Motors lost nearly $4 billion in
the first three-quarters of 2005. Delphi has admitted that much as it appreciates the gesture, it remains uncertain about its structure, let
alone whether the Ohio incentives would apply.

An assessment by Ohio Policy Matters reinforced the point, noting the lack of precision in crafting the House proposal. The Cleveland think
tank cited the likelihood that even healthy automakers would be eligible for the incentives without requiring additional investments beyond
steps they already intend to take. Telling, too, is that the state’s tax system isn’t the problem for an industry coping with mammoth
problems on a global scale. Michigan has been similarly suffering. It has a very different tax code.

Worth highlighting is that Ohio lawmakers put aside the concerns of Ford about the state shifting to a commercial activity tax during the
next four years, the current tax on corporate profits giving way to a levy on gross receipts. The governor and others touted the broad base
and low rate of the commercial activity tax. Now they are eager to help? The worry is, the incentives would set in motion further erosion of
the new tax — even before it is fully implemented.

Perhaps a well-crafted set of incentives would make a small difference. As it is, the governor and lawmakers should resist acting more in
panic. Better to take a deep breath and think about the future. Ohio must lay the foundation for a new economy. Tax reform is part of the
effort. Even more important is investing in the skills of Ohioans. That $100 million? It could be put to better use.

Cleveland Free Times

Any way you slice it, the Ohio workers who need unemployment compensation the most — those living paycheck to paycheck — are a little less likely to get it in the new year. Because the federal minimum wage has not risen, and because the Ohio formula for determining eligibility is pegged to average weekly wages, the amount a person has to work to qualify for unemployment benefits keeps going up. That’s why in 2006, a minimum-wage worker who logs 37 hours a week every week will not qualify for unemployment compensation. To qualify for unemployment this year, a worker will have to average at least $193 a week for a minimum of 20 weeks. That’s up from $186 in 2005. Another way to look at it: You can make $10,000 this year and still not qualify. A decently paying part-time job might not cut it, either: you can earn $9 an hour for 20 hours a week and still not qualify. “Ohio’s eligibility requirements are among the highest in the country,” says Zack Schiller of Policy Matters Ohio. “Our requirement is set by law at 27.5 percent of the average weekly wage.” And it’s not just teens working at the ice cream store. For a 2004 study of unemployment benefits, Policy Matters looked at minimum-wage workers and found that only 27 percent were teens. And the period of time required to compute the average — 20 weeks — is much longer than summer vacation. As result, just 36 of 100 jobless workers in Ohio get benefits, compared to a national average of 41. And the situation won’t change until Ohio’s eligibility requirements go down, or the minimum wage goes up. “The amount a minimum-wage worker has to work to qualify for the benefit has been going up by about an hour every year for a number of years,” Schiller said. “We have a particularly high threshold.” — Michael Gill

League of Women Voters – LWV Cincinnati Voters Guide

LWV Cincinnati Area Voter

The General Assembly soon will take up legislation to implement Issue 1, the constitutional amendment passed by Ohio voters on Nov. 8. To ensure that government funds are spent in the most effective manner and provide the greatest benefit to Ohioans, the implementing legislation should ensure the accountability of all public funds used for Third Frontier projects by all levels of government, universities and other nonprofits, and the private sector.

The amendment says that the General Assembly shall provide for ensuring the accountability of all state funding provided for the purposes described in the amendment.

The bipartisan Agreement in Principle reached last summer by the legislative leadership on the implementing legislation for the amendment calls for accountability, integrity and transparency with respect to the disbursement of funds for the three components of this bond issuance.

The amendment itself also instructs the General Assembly to include
economically disadvantaged businesses and individuals in all areas of this state in its implementation.

The General Assembly should enact legislation consistent with these provisions and the Agreement in Principle, which contained six issues to be addressed in the implementing legislation.

In order to ensure accountability and maximize benefits, the legislature should also consider the following recommendations:

• Disclosure rules that provide a full accounting for the progress being made by beneficiaries of the program, as well as public access to records and meetings;

• Periodic outside review of the program by the Auditor of State;

• Availability to the State of Ohio and local governments at favorable terms of products and services commercialized using Third Frontier funds;

• A transparent and competitive selection process for loans, grants, and all other forms of assistance;

• Competitive bidding for all contracts let by the Ohio Department of Development (ODOD) and other state agencies for program administration and requirements for the review of potential conflicts-of-interest by contractors and their employees;

• Expansion of the Third Frontier Advisory Board in keeping with the amendment’s promise to include economically disadvantaged businesses and individuals and to better reflect the broad range of policy issues affected by the program; and

• A thorough, outside review of the issues raised by public funding of the creation, use, and disposition of intellectual property, which will serve as the basis for a legislative study committee on this topic.

Membership in Third Frontier Advisory Board – At present, the Third Frontier Advisory Board is comprised of sixteen members. Nine members represent business, five represent research organizations, and two are legislators.

The size of the board should be expanded for two reasons.

First, Issue 1 specifically requires that the state make an effort to include economically disadvantaged businesses and individuals in Third Frontier funding, and the Agreement in Principle calls for an outreach effort to minority businesses and individuals. Second, the present composition of the board does not adequately reflect the broad range of issues it faces.

In order to address these issues, the implementing legislation should add four board members. These members should be selected as follows:

• One owner or representative of an Ohio-based minority-owned business;

• One expert in community economic development from a non-profit organization that works with economically and socially disadvantaged individuals to provide training or support for entrepreneurship;

• One expert from a non-profit environmental advocacy organization with a background in regulatory affairs, and

• One representative from a labor organization.

Excerpted from a November 2005 Policy Matters report by Jon Honeck, PhD and Zach Schiller.