Job growth too slow as labor market sags, report says

Hamilton Journal News - September 3, 2012
   

Eric Schwartzberg

Ohio’s labor market has seen better days. The state’s median wage is dropping, job growth is too slow and labor force participation is falling for all demographics and to historic lows for some groups.

That’s according to a State of Working Ohio 2012 review by Policy Matters Ohio, a nonprofit, non-partisan policy research organization.

“Three years into the recovery we’re not making sufficient progress on wages or job growth, and we’re failing to tap the talents of many of our neighbors,” said Amy Hanauer, report author and executive director of Policy Matters. “Ohio workers and families are not getting what they need from the public or the private sector.”

Key findings of the report include modest job growth in the last 12 months with the state job total growing by 100,300 jobs or 2 percent.

“At that rate, it will take more than two years to generate the 233,3000 jobs needed to return Ohio to pre-2007 recession levels and even longer to get to year 2000 levels,” according to the report. Nonetheless, the number of jobs in Ohio has started to increase slightly.

The report also found evidence that Ohio’s recovery might start to strengthen. Ohio manufacturing climbed from a low of 609,900 jobs in November 2009 to 663,500 jobs in 2012, an 8.8 percent increase over 33 months. Durable good manufacturing, which produces appliances, cars and car parts, added 47,600 of those positions, an 11.9 percent increase. Ohio jobs overall grew by just 3.6 percent over this period.

However, Ohioans continue to leave the labor force. Last year, only 64.1 percent of Ohioans were in the labor force, the lowest since 1985, according to the report.

The share of unemployed Ohioans that have been jobless for more than half a year rose to an all-time high of 44.2 percent in 2011, up from 42.4 percent in 2010. The prior peak was 30.2 percent in 1984.

Ohio real wage loss last decade was among the highest in the United States, second only to Michigan. Ohio’s median wage plummeted by $1.33 between 2000 and 2011, a sharp contrast to Washington, D.C., North Dakota, Wyoming and Massachussetts, which saw wage gains of $3.54, $2, $1.93 and $1.41, respectively.

Many of the factors contained in the report represent long-term trends in the U.S. economy that are not unique to Ohio, according to Bill Even, an economist at Miami University.

That’s especially so when it comes to the rising inequality in wages and the growing difference between the earnings of the highly and less highly educated workers, Even said.

“It also points out that while education levels are improving in Ohio, we’re still far behind a good share of the country on the level of education and that’s hurting the average earnings here in Ohio,” he said.

Butler County so closely resembles Ohio when it comes to the report’s findings that “it’s incredible,” Even said.

“If you break it down, the employment rate, which is the percentage of the population that’s employed, we’re within two percent of the state average,” he said. “If you look at the unemployment rate, we’re about a tenth of percent above the state but we’re essentially the same.

Looking at the share of unemployment in various industries shows the county and the state are within a percent or two on virtually everything, including manufacturing, which is 16 percent for Ohio and 17 percent for Butler County and transportation, which is 4.7 percent for Ohio and 5 percent for Butler County.

“Across the board, it’s like we’re a little random sample of Ohio,” Even said. “We really represent the state of Ohio, on average.”

What sets Butler County apart from Ohio is its unemployment rates, he said.

“Butler County used to have unemployment rates that were typically below the Ohio average, and that’s no longer the case,” he said. “When we went into the recession, we were below the Ohio average and during the recession we didn’t get up to as high an unemployment rate as the rest of the state but now we’re matching them.

“It appears while Butler County wasn’t hit as hard but the recession as the rest of the state, we haven’t come out as quickly as the rest of the state, on average.”

To get a better picture of what’s driving unemployment in a county, one must look at its different cities, a challenging task in Butler County because each of its cities are “fairly different,” Even said.

“Obviously, Oxford is dominated by Miami University, Middletown has more of a manufacturing base … Fairfield on the other hand, is more retail,” Even said, while Hamilton is a mix of manufacturing. “Within Butler County we’ve got cities with diverse kinds of industry mixes and it’s hard to really get a feel for what is driving the higher unemployment rate. It’d be tempting to point to a particular big employer but no single employer is going to push these numbers all that much all by themselves.”

The 25-page report includes recommendations, including restoring public employment and services, did more to help manufacturing, restored smart regulation and encouraged education and unionization.

“As unions have eroded, so have worker wages and benefits and family well being,” according to the report. “States with the lowest levels of unionization have the worst wages, states that combine union friendliness and education investments do best.”

Neil Douglas, president and directing business representative of International Association of Machinists and Aerospace Local Lodge 1943, agreed.

“The laws in the United States are skewed not to let somebody organize,” Douglas said. “Some of these states that are passing these right to work laws, it’s just horrible. It’s going to bankrupt unions and prevent them from organizing.”

Union membership has shrunk dramatically from more than a third of all workers in the mid-1950s, both nationally and in Ohio, to just 11.8 percent nationally and 13.4 percent in Ohio in 2011, according to Unionstats.com, a website mantained by economists Barry Hirsch and David Macpherson.

In Ohio, 8.6 percent of private sector workers were in unions in 2011, up from 8.6 percent in 2010, while 42.6 percent of public employees were union members in 2011, down from 43.1 percent in 2010.

“The decline is … tied heavily to manufacturing,” Douglas said. “As those jobs get pushed overseas by some of these trade deals, it’s definitely going to affect and impact how many people are organizing.

“I think (when it comes to) labor today, you’ll find that we’re expanding our markets, expanding our organizational efforts into other fields like health care.”


Key findings about Ohio’s economy

Labor force participation lowest since 1985

Median wage falls to $15.20, among fastest falling in the nation

Manufacturing jobs growing more than twice as fast as other jobs

Durable goods manufacturing, a sector that includes appliances and cars, is growing more than three times faster than other jobs

Public job losses are dragging recovery

Share of unemployed that are at long-term at all-time high

African American employment-to-population ratio lowest since 1983

Male labor force participation at all-time low

Source: Policy Matters Ohio’s State of Working Ohio 2012

Job growth too slow as labor market sags, report says

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