A 2008 Update

Providing health insurance, food stamps, and cash assistance to poor families is an important function of government. Such programs provide all of us with reassurance that, in the planet’s wealthiest country, families are able to get some help with the basics. We might assume that assistance of this sort goes primarily to the unemployed. In fact, many working people at some of Ohio’s largest and most well-heeled employers do not earn enough to purchase health insurance or to meet their basic needs.

This paper examines state and federal costs for Medicaid, food stamps, and cash assistance for the 50 employers in Ohio that rely most heavily on the public sector to help compensate their workforce. High on the list are familiar employers like Wal-Mart, Target, the Cleveland Clinic, McDonald’s, and the owner of Kentucky Fried Chicken, Pizza Hut and Taco Bell.

Costs to Ohio and the federal government for providing this coverage at major employers grew to just over $400 million in 2007. This includes an increase of 29 percent since 2004 in costs that Ohio paid for Medicaid coverage at employers for whom a four-year comparison was possible. Six of Ohio’s ten largest employers – Wal-Mart, Kroger, the Cleveland Clinic Health System, University Hospitals Health System, Bob Evans, and Meijer – are included on the list of employers with the largest number of employees using Medicaid, food stamps and cash assistance. It is important that we know which workplaces leave employees reliant on public support.

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The Ohio unemployment compensation fund faces financial trouble. The Statehouse must step up soon to make the necessary repair.

Akron Beacon Journal

On Friday morning, word arrived that the state’s unemployment rate climbed to 6.6 percent in June, leading to more Ohio households feeling strained, looking to jobless benefits as part of their safety net. What Ohioans should know is that the state’s unemployment compensation fund is feeling its own strain, and the trouble is not due to the increasing numbers of people out of work. Rather, the fund is structurally flawed and now requires repair.

The trouble long has been known, triggering conversations among business leaders and state officials, attention focused particularly on the Unemployment Compensation Advisory Council. On Monday, Wayne Vroman of the Urban Institute unveiled a comprehensive assessment of the system. He is a leading researcher in the field. His analysis and recommendations point the way to Ohio ensuring solvency and bringing stability to its fund.

Vroman put it plainly: The state faces ”an imbalance between the revenue and the benefits sides of the program.” If state lawmakers do not act in the coming weeks and months, Ohio will have little choice but to borrow from the federal government, a turn of events that could prove more costly.

What should be done?

The problem isn’t that jobless benefits are too generous. If anything, Ohio could do more for the unemployed, Vroman recommending that the state broaden access to unemployment compensation, the current threshold of $4,000 in annual earnings higher than just three other states. The glaring flaw in the system is the inadequate financing, the state failing to raise enough revenue to support the level of compensation it has approved.

The fund is supported through a tax paid by Ohio employers on the first $9,000 of an employee’s earnings. That base has not changed since 1995. Vroman recommends the state expand the wage base by $1,000, $2,000 or $3,000. Worth noting is that if Ohio opted for an additional $2,000, it hardly would take an extraordinary or punishing leap. Policy Matters Ohio, a Cleveland-based think tank, recently calculated that the average taxable wage base for the country was $11,482 last year.

Such an expansion would do much to put the unemployment compensation fund on sound financial footing. So would another Vroman recommendation, freezing benefit levels for three years. The reasonable thinking is that both employer and employee contribute to addressing the problem. A three-year freeze would translate into a maximum weekly benefit of $365 as opposed to $400, no small sacrifice for someone out of work.

The hope is, the Vroman evaluation will spur action at the Statehouse. Practically everyone understands the wisdom of the compromise. The moment long ago past for Ohio to expand the taxable wage base for unemployment compensation. To be sure, many employers are hurting. So are many workers. Here is a vehicle for each to do its part, ensuring that Ohio has the resources to help those who have encountered a chapter of hard times.

Despite a weak labor market, many Ohio employers say they have trouble finding qualified workers in key occupations. This report evaluates the evidence for occupational shortages in health care and manufacturing in Ohio and analyzes their likely causes. We found the strongest evidence for occupational shortages in the health care sector, where we identified ten health care occupations that increased their real median wage and added more than 400 positions statewide between 2004 and 2007. In lower-skilled or entry-level positions, wages have fallen and recruitment problems could be eased by better compensation and working conditions.

In manufacturing, we analyzed shop floor production, installation, repair, engineering and technical occupations. We did not find clear evidence of shortages except in a few machinery repair and engineering occupations. Twenty production occupations grew by at least 500 positions statewide, but only two small occupations — bindery workers and metal-refining furnace operators — experienced real wage gains (although wage analysis in this sector is complicated by layoffs and retirements among the highest-paid). We also found drops in participation in apprenticeships and public sector training programs, even in jobs that are growing.

We conclude that resolving workforce development challenges is rarely just a straightforward matter of increasing training program capacity. While employer concerns about skill deficits (particularly among entry-level workers) must be taken seriously, occupational shortages are inseparable from employer practices that influence recruitment, retention, and skill development. The state must focus on employers that are actively addressing job quality and help them develop a comprehensive, long-term human resource strategy that provides meaningful career opportunities for workers.

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