2912 Euclid Avenue, Cleveland, OH 44115     Phone: (216) 931-9922     Fax: (216) 931-9924


September 4, 2005
CONTACT:  Amy Hanauer, 216 931-9922

Ohio wages not keeping pace with productivity, education and hour increases

New State of Working Ohio finds median wage declines for fourth straight year

Output per U.S. worker has soared by 78 percent since 1973, Ohioans’ higher education levels leapt more than 65 percent since 1979, and median U.S. two-parent families have increased work hours by 18.4 percent since 1979. Yet median household income fell for the second straight year and median hourly wages for Ohio workers fell for the fourth straight year in 2004, according to the State of Working Ohio 2005 a new report from Policy Matters Ohio embargoed for the Sunday before Labor Day.

“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, report author and Policy Matters Executive Director. “Understanding what has gone wrong in our economy is the first step toward fixing it.” The report, which describes wages, job growth, unemployment, disparities and other trends facing Ohio workers also found:

¨ As of July 2005, Ohio employment levels remained 156,900 jobs or 2.8 percent below where it was when the recession began in March 2001. This put Ohio among the worst four states in terms of job growth, and well behind the nation. This growth is anemic by historic standards; At this point (52 months) after the early 1990s recession started, 237,800 jobs had been created in Ohio, an increase of 4.9 percent.

¨ Between 2000 and 2004, Ohio lost 19.2 percent of its manufacturing jobs. For much of 2005, Ohio’s manufacturing employment levels were at their lowest point in decades. Ohio and Michigan are distinguished, however, from the nation and other neighboring states in that they experienced net job losses between 2000 and 2004 in all non-manufacturing industries combined. Most states gained in these other sectors.

¨ The typical Ohio wage has been sinking since 2000 – inflation-adjusted wages dropped in each of the last four years. By 2004, Ohio’s median hourly wage was $13.37, lower than at any point since 1998 and lower than the 1979 level, though higher than in the 1980s and early 1990s.

¨ Men ($15.12) continue to earn significantly (30 percent) more than women ($11.66) at the median in Ohio and the median white Ohio worker earns 19 percent more than the median black worker each hour, nearly double the ten percent gap in 1979. While the gender gap has narrowed over the long term, women’s wages have declined for the last two years and are now lower than at any point since 1999.

¨ Ohio employers are more likely than national employers to provide health insurance, but rates of insurance provision have dropped over the past 20 years. Ohio rates fell from just over 75 percent in the early 1980s, to just 60 percent in the most recent period.

¨ Just half of Ohio workers (51.4 percent) have access to any type of employer-provided retirement plan, compared to just 46.2 percent of U.S. workers. These coverage rates are down from an Ohio rate of 58.7 percent and a U.S. rate of 49.8 percent in 1979. Because the statistics combine all types of pension plans, quality changes are not reflected here.

¨ Median household income, which has risen over the long term, has recently slumped in Ohio and nationally. In Ohio, 2004 median income was lower than in 2003 and lower than in any year since 1997, according to new CPS numbers released Tuesday August 30.

¨ The Ohio unemployment rate exceeded six percent in 2003 for the first time since 1993 and remained that high until the monthly rate for July 2005 (subject to future correction) dipped a bit below six percent. In 2004, the annual unemployment rate was 6.3 percent.

¨ Other measures of employment hardship are elevated. The share of the unemployed who have been jobless for over six months climbed again in 2004 to 21.4 percent, from a previous 20-year high. In each of the past four years, fewer Ohio jobless have qualified for unemployment benefits. By 2004, less than one in three (30.7 percent) of those without work were still getting benefits, compared to 36.2 percent of U.S. workers.

¨ More than 60 percent of Ohio workers earn less per hour than those at a similar point on the earnings spectrum earned in 1979. The 80th and 90th percentiles (the top 20 percent of earners) are the only categories to have seen solid wage growth over this period.

¨ Inequality grew in Ohio, but it grew at a faster pace and from a higher starting point nationally. The 90th percentile Ohio worker earned 3.38 times more hourly than the 10th percentile Ohio worker in 1979, but 4.18 times more by 2004, compared to 4.41 times as much nationally. While inequality skyrocketed over the long term, it also grew recently, including between 2003 and 2004.

¨ One in four Ohio workers earns less than $9.28 an hour, insufficient to bring a family of four above the official 2004 poverty level of $19,311 with full-time, year-round work.  The rate has climbed from its recent low of 21.9 percent in 2002.

¨ The percent of Ohioans living under the official poverty line rose from 9.8 percent to 11.6 percent between 1980 and 2004. Children were more likely to be poor than adults and that indicator rose to 17.1 percent in Ohio in 2004. A four-person family was under the official poverty line in 2004 if income was less than $19,157. Twice the poverty level is a more meaningful measure of need than the exceedingly low poverty line, and 28.5 percent of all Ohioans and 36.4 percent of Ohio children were under this threshold in 2004 (about $38,314 for a family of four), according to new data released on Aug. 30.

“If we want Ohio to be a national leader in wages and well-being, instead of in bankruptcies and job loss, we need visionary new solutions,” said Hanauer. “We must invest in education, make strategic energy investments that revitalize Ohio manufacturing, restore tax fairness and ensure an adequate public sector. The failed policies we’ve been pursuing are taking us in the wrong direction.”

Policy Matters Ohio is a non-profit, non-partisan policy research institute with offices in Cleveland and Columbus. This report, and other research from the institute, is available at http://www.policymattersohio.org