Ohio Productivity Not Paying Off

Dayton Daily News - September 4, 2005

Report details job losses, wage declines, rising inequality in state
by William Hershey

Dayton Daily News

COLUMBUS | As workers across the country prepare to celebrate Labor Day on Monday, they can pat themselves on the back for being more productive and better educated than workers in the past.

They might want to worry, however, about why their improved productivity and education aren’t paying off in fatter paychecks.

They might despair, too, about Ohio’s continuing loss not only of manufacturing jobs but also jobs in other sectors of the economy.

Black workers in Ohio also might want to reflect on why the gap between their median wage and that of their white counterparts has nearly doubled since 1979.

Those findings come from the “State of Working Ohio 2005,” a report released today from Policy Matters Ohio. The Cleveland-based research institute is funded mainly by foundations but also receives financial support from labor unions.

“Despite becoming more educated and more productive and working much more than a generation ago, Ohio workers are facing job loss, median wage decline, income and benefit erosion, rising inequality and enduring poverty,” said Amy Hanauer, author of the report and executive director of Policy Matters Ohio.

Release of the report comes on the heels of new data released last week by the U.S. Census Bureau that showed Ohio was one of only seven states in which the poverty rate increased last year, climbing to 11.6 percent in 2004.

Like the data from the Census Bureau, the new report, which is based on statistics from the federal government, describes a state with economic problems that continue to defy recovery from the last recession.

Key findings include:
Nationally, inflation-adjusted output per worker has increased 78 percent since 1973, while average compensation has grown by about 40 percent. Corresponding data for Ohio was not available, Hanauer said.
In 2004 median household income in Ohio fell for the second straight year, while median hourly wages declined for the fourth straight year. (The study said median income, or the midpoint in a sample, is a more valuable measure than average income, which could be distorted by especially high incomes for some workers.)

Higher education levels in Ohio have jumped by 65 percent since 1979 when 14.7 percent of all adults and 7.3 percent of black adults had completed four years of college. By 2004 the rate for all adult Ohioans was 24.6 percent and for black adults, 16.4 percent. Ohio trails the 2004 national rates, 27.7 percent for all adults and 17.6 percent for black adults. In 1979 the national rates were 16.4 percent for all adults and 7.9 percent for black adults.

As of July, the number of jobs in Ohio remained 156,900 or 2.8 percent
below where it was when the last recession began in March 2001, making Ohio one of 15 states that has had a net job loss since then. Ohio ranked behind only Michigan, Massachusetts and Illinois in percentage of job losses during that time.

Ohio lost 19.2 percent of its manufacturing jobs between 2000 and 2004. The nation experienced a 2.3 percent increase in jobs outside the manufacturing sector. Ohio had a 0.4 percent loss in non-manufacturing jobs.

The median white worker in Ohio earns 19 percent more than the median black worker in the state, nearly double the 10 percent gap in 1979.
Gov. Bob Taft and legislative leaders have acknowledged the problems and have said the overhaul of the state tax code included in the current budget should help spur economic growth.

Also, the legislature, with Taft’s strong support, has voted to put a $2 billion Jobs for Ohio bond issue on the Nov. 8 ballot. It includes $1.35 billion to continue a public works program that helps local governments pay for roads, bridges and other projects; $500 million for Taft’s $1.1 billion Third Frontier program; and $150 million to prepare sites for business expansion. The Third Frontier is aimed at linking universities with businesses to create high-paying, high-tech jobs.

Ohio must continue to move away from the manufacture of commodities that can be built cheaply anywhere in the world and “towards highly engineered, highly innovative products,” said Bill Teets, spokesman for Lt. Gov. Bruce Johnson, who also is the state’s development director.

“It’s a long-term effort, one we had better take or else we are going to be competing with China for 50-cents-a-day jobs,” Teets said.

Hanauer believes it’s unlikely high-technology jobs would replace the manufacturing jobs being lost in Ohio.

The manufacturing job losses have had a ripple effect on the Ohio economy, she said. Jobs lost in other segments of the economy had been tied to manufacturing jobs, she said.

Also, the loss of manufacturing jobs has hit black workers particularly hard, providing a possible explanation for the widening wage gap between white and black workers, she said.

Black workers have had overall lower levels of educational achievement than white workers and the manufacturing jobs being lost provided high wages for workers with less education, she said.

Dayton City Commissioner Dean Lovelace, chairman of the local Poverty Reduction Task Force, said the jobs being created in nursing homes and fast food places for less-educated workers pay lower wages than the manufacturing jobs being lost. Jobs in fields such as information technology require more education than the manufacturing jobs that have been lost, he said.

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