As national talk turns to predictions of a
potential downturn in the economy, Policy Matters Ohio's "The State of
Working Ohio 2006" shows that, for Ohio workers, the period since 2001 was
"the recovery that
wasn't."
"The state has fewer jobs and lower real
median wages than it had in 2000, before the most recent recession."
At the same time, "U.S. corporate profits,
Ohio gross state product, average worker productivity and incomes of the
very richest Ohio earners have all grown steeply ...."
Report author and Policy Matters Executive
Director Amy Hanauer said key findings include:
• American productivity rose sharply in recent years. After growing 1.4
percent a year from the mid-1970s to the mid-1990s, hourly output per
worker grew 2.5 percent a year from 1995 to 2000, then leapt to 3.3
percent a year from 2000 to 2005.
• Inflation-adjusted corporate profits rose by 50 percent in just the five
years between 2001 and 2005, to $931.4 billion. "Ohio's inflation-adjusted
gross state product (GSP) grew sharply in recent years to$394.9 trillion
(in the year 2000 dollars) in 2005, ranking Ohio seventh among states ...
Ohio's GSP grew 22.3 percent from 1990 to 1997, and an additional 12.7
percent between 1997 and 2005.
• Real GSP per U.S. worker grew 10.0 percent from 1990-97 and 6.4 percent
from 2001-04, to end at $62,685 in 2004 (in the year 2000 dollars). In
Ohio, GSP per worker grew 10.4 percent (1990-97) and 7.3 percent (2001-04)
to end at $58,053 in 2004. (This equals $65,840 in 2005.) Ohio ranked 26th
among states in 2004 GSP per worker.
• National job growth since the start of the 2001 recession has been
weaker than job growth in any postwar recovery period. Sixty-five months
after the start of the 1990s recession, the country had more than 7.6
percent more jobs than had existed at the recession's start but this time
the nation has added just 2.1 percent to its job base.
• In November 1995, 65 months after the start of the 1990s recession, Ohio
had added 7.2 percent to its job levels. As of July, 2006, the same point
in the cycle, Ohio remains more than 2.6 percent below the pre-recession
job levels. If the economy slows, Ohio might have fewer jobs at the height
of an expansion than it had before the previous recession.
• Ohio's median wage rose last year after several poor years, to $14.08
per hour in 2005. This was lower than in 2000 or 1979, but higher than in
many intervening years. The U.S. median wage was $14.28 in 2005, a decline
from the previous year.
• Ohio's unemployment rate declined slightly between 2004 and 2005 for an
annual rate of 6.0 percent in 2005. Many men have left the labor market;
if they were looking for work, the unemployment rate would be higher.
Women over age 16 have substantially increased their labor force
participation to more than 61 percent by 2005. Men's labor force
participation declined by 7.2 percentage points since 1979, from nearly 80
percent to 72.4 percent in 2005.
• The top one percent of income tax returns in Ohio in 2006 (for 2005
earnings) had an average value of more than $760,000. This was 75 times
what a household in the bottom 20 percent earned and 20 times what a filer
in the middle 20 percent earned on average in 2005. This inequality has
grown since 1988.
• Wage inequality seems modest compared to income inequality, but is still
extreme. Earners at the 90th percentile earned $29.03 per hour in 2005,
more than four times what earners at the 10th percentile earned ($7.17).
This disparity has increased since 1979.
• Median female and black workers saw modest wage gains in 2005, slightly
reducing the gender and racial wage gaps that have plagued Ohio. Median
men earned $15.68, compared to $12.52 for women, a 25 percent difference,
down from a 65 percent gap in 1979. Median black workers earned $12.45,
compared to $14.62 for white workers in 2005, a 17.4 percent wage gap,
which is smaller than in recent years but larger than in the 1980s and
early 1990s.
Hanauer closes the report with seven policy changes "that would make 2007
the year we begin creating an economy that works in Ohio." These
suggestions include:
1) Raise the minimum wage. "Research shows that the proposal to raise
Ohio's minimum wage to $6.85 would increase the wages of more than 700,000
workers, many of whom are the sole earner in their household."
2) Enact a state Earned Income Tax Credit. "The Earned Income Tax Credit (EITC)
provides refunds to working families earning less than about $38,000 a
year."
3) Solve the health care crisis. "Eighty percent of uninsured Americans
live in working families. Our economy is profitable enough to make sure
that families have health insurance. One creative idea is to provide a
'pay or play' option for employers, which requires businesses to provide
workers with health insurance coverage or pay into a government fund that
will do it for them. We could also expand the scope of coverage of
Medicaid and SCHIP (State Children's Health Insurance Program) so that
more working people could access them."
4) Educate or stagnate. "Studies of outcomes from investments in early
childhood education find that it more than pays for itself, particularly
for lower-income children."
5) Invest in infrastructure. "Reinvesting in our core areas, fixing
existing roads before building new ones, prioritizing core areas for water
and sewer maintenance and doing more to plan will result in a better Ohio
-- more efficient, more, equal, and more prepared for the future."
6) Energy. "Investing in renewable energy and retrofitting public
buildings to be more energy efficient would reduce oil and gas usage, keep
money in our local economy, create Ohio jobs and make us all
healthier."
7) Target development spending. "Economic development subsidies should be
reserved for companies that pay high wages, maintain high standards,
pledge not to oppose unions and are committed to their
workforce and their community. Local governments should join together to
create 'no-poaching' agreements, to reduce the likelihood that companies
can force municipalities to compete to lower their taxes."
The Hannah Report 9/1/2006
Vol. 126, No. 420
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