Study: Wages Declining for Ohio Workers

Chillicothe Gazette - September 5, 2005

Earnings fall despite rise in production

Chillicothe Gazette

CLEVELAND (AP) – Median wages for Ohio workers have declined over the past four years and continue to trail the nation despite increases in worker productivity, education and work hours, according to
a report released Sunday.

Researchers with Policy Matters Ohio analyzed employment and demographic information to understand the trends facing Ohio workers. The group’s report looks at Ohio wages, household income, education and employee productivity numbers and examines whether low- and moderatewage workers are falling behind economically.

“The fact that we’ve actually seen declining median wages for the last four years is really alarming,” said Amy Hanauer, the organization’s executive director and an author of the report. “It used to be that compensation rose with productivity gains. That is no longer the case. Productivity is rising much faster and going to executives and profits rather than to workers.”

Mark Schweitzer, an economist and vice president at the Federal Reserve Bank of Cleveland, said that long-run comparisons among wages, productivity, education and other factors are tricky. He suggests consumers should look at their everyday experiences as consumers to determine whether they are better off today that they were in previous years.

A typical household in 1973 was located in a smaller building, more households were renters and they didn’t have two cars and a whole collection of TV sets, he said.

“That suggests that living standards and what we’ve been receiving in real terms in compensation has made quite a lot of progress in that span of time,” Schweitzer said.

He said that it is more difficult to determine whether the poorest Ohioans are better off now than they were in the 1970s because their income growth has been much less and involves much smaller changes.

The Policy Matters report notes that one cause of Ohio’s weak growth was the state’s loss of 19.2 percent of its manufacturing jobs from 2000 to 2004. Ohio also experienced net job losses from 2000 to 2004 in all other industries outside of manufacturing, Hanauer said.

Ohio lost 218,000 jobs in that span, ranking it with Illinois, Massachusetts and Michigan as the states with the worst job growth.

The state’s 2004 median hourly wage was $13.37, lower than at any point since 1998 and lower than in 1979, but higher than in the 1980s and early 1990s, said Hanauer. One in four Ohio workers earns less than $9.28 an hour. Wage earners in the top 20 percent of the earnings scale are the only ones experiencing solid pay growth in the past quarter-century.

Schweitzer said he worried that the study gives the impression that education does not boost earnings. He said that increased educational levels have been very important to rising income in Ohio.

Twenty-five percent of Ohioans have a bachelor’s degree or higher today, versus 15 percent who did in 1979, said Schweitzer. He said that education has played a key role in increasing paycheck amounts in households with college-educated workers.

Hanauer agreed that increased education is one of the best ways to increase income, but she also said that increased educational and productivity levels and longer working hours should result in more steeply rising standards of living.

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