‘Stuck’ in Ohio

Akron Beacon Journal - September 1, 2013

This editorial in The Akron Beacon Journal relies on our annual labor-market study to call for more investment in Ohio, rather than continued tax cuts.

Ohio is “stuck,” to borrow from the title of the most recent assessment of the state’s job market by Policy Matters Ohio.

Each Labor Day, the Cleveland-based think tank looks at the annual employment figures. Its “State of Working Ohio 2013,” released over the weekend, starts with a reminder about the depth of the state’s jobs problem. Ohio not only has failed to recover the jobs lost in the Great Recession that began in late 2007. The state stands roughly 400,000 jobs short of the peak before the 2001 recession — 5.2 million jobs today compared to 5.6 million then.

The editorial cites our findings on Ohio job loss since the state began phasing in tax cuts in 2005, and slow growth that’s been outpaced by the nation as a whole over the past year. 

Worth adding, as Policy Matters does, is the impact of job losses in the public sector. The spending reductions, initially set in motion under Ted Strickland and then amplified in the first budget under Gov. John Kasich, schools and local governments hit hard, have deepened the problem. In past recessions, employment in the public sector has proved steady, serving to cushion the impact of an economy in trouble.

The piece concludes:

Gov. Kasich and his Republican allies promise better days, arguing mainly that reductions in state income taxes will generate economic activity and job creation. Tax rates soon will be nearly one-third lower than a decade ago, and the governor talks about wanting to take the rates even lower. Unfortunately, there is little evidence to suggest such a course will make much of a difference.

If anything, such a depletion of revenue works against steps that do make a difference — for individuals and the entire state. From the Federal Reserve Bank of Cleveland to a recent report from the Economic Analysis and Research Network, the evidence shows that states with higher levels of education enjoy higher compensation and productivity. That is a path the state must follow if it truly is determined to get unstuck.

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