January 20, 2023
January 20, 2023
Rate hikes, government failure to restore jobs biggest challenges
The takeaway: Ohio continued to add jobs last month, but that was offset by a downward revision for November — pushing the state further from recovery than previously thought. Rapid interest rate hikes by the Federal Reserve have made jobs recovery more difficult in recent months. December inflation slowed to 6.5%, 0.6 points below November, which had marked the previous low for 2022 and raised the possibility that Fed officials may slow or pause rate hikes when they meet next month. In what could be a sign of a faltering recovery, Ohio’s household survey contradicted the business survey, which is the primary survey. The household survey showed job losses for the fifth straight month. State and local government officials’ failure to restore 41,200 jobs is a significant drag on recovery.
The numbers: Seasonally adjusted data released today by the Ohio Department of Job and Family Services (ODJFS) show that Ohio employers restored 1,900 jobs over the month, from a downwardly revised 5,506,700 in November to 5,508,600 in December. Ohio has restored 88.1% of jobs lost to COVID-19 and still needs 105,200 jobs to recover our pre-COVID number from February 2020.
“December’s numbers show that policymakers have a little more work to do than we thought in November to restore all the jobs lost in our state to COVID-19,” said Policy Matters Ohio researcher, Michael Shields. “Efforts by the Federal Reserve to stem inflation by slowing the economy have made it more difficult to restore these jobs. The good news is that inflation fell substantially to 6.5% by December, marking the second straight month in which inflation dropped 0.6 points and leaving the Fed plenty of room to ease off interest rate hikes. With inflation rapidly moving toward a healthy level, it is time for Fed officials to turn their attention toward the persistent jobs shortfall.”
The details: As Ohio employers slowly restore jobs, government officials’ failure to restore public sector jobs at the state and local level is becoming an increasingly heavy drag on our state’s recovery. State jobs remain at a 21,800 job deficit compared with February 2020 (-12.1%), while local government jobs remain 19,500 jobs short (-3.6%). Together state and local jobs account for a 41,200 job shortfall and comprise 39.2% of the jobs still missing from our state. Goods producers are the only sector to have fully recovered jobs lost to the COVID recession, and are 9,800 jobs above their pre-COVID level (+1.0%) after posting promising gains last month (+4,300). Service sector employers cut 1,200 jobs last month, leaving the large sector 73,800 short of its pre-COVID level (-1.9%).
The household survey: According to the separate household survey, 7,000 Ohioans left their jobs or were laid off last month, raising the number of unemployed Ohioans by 1,000 as 6,000 left the workforce. This marks the fifth straight month the household survey has reported job losses while the business survey reported gains. Ohio diverged from the nation last month, which reported gains in the household survey for the first time in five months (+717,000 jobs). Ohio’s unemployment rate remained at 4.2% while the nation’s fell 0.2 points to 3.5%.
“This is the fifth straight month that the household survey has posted overall job losses while the business survey posted gains,” said Shields. “When the surveys disagree, we put more stock in the business survey because it’s bigger, but the household survey tends to pick up new trends faster, so repeated losses here are something to watch. The fact that the nation posted gains here is an encouraging sign that continued progress could lift up Ohio, but Ohio policymakers need to do their part. It’s time to rehire the teachers and other public servants Ohio laid off in the COVID recession. That means restoring the jobs, and offering the pay and benefits to get qualified people to want to take them.”
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