September 06, 2015
September 06, 2015
Post-recession Ohio still faces a host of economic woes: Tepid job growth, high income inequality, wage stagnation, racial wage disparities and an increasing number of working families in poverty.
Productivity isn’t enough: America’s economy is expanding, but almost all of us are being left out of that growth. Nationwide, productivity grew 238 percent between 1948 and 2014, while average worker compensation grew only 109 percent. This is in stark contrast to the middle of the twentieth century when productvity and compensation both roughly doubled. Ohio’s economy has grown less quickly than the nation’s, but has still grown much more than our compensation, which has gone backward since 1979 on average. Ohio productivity rose 66.9 percent between 1979 and 2014 while inflation-adjusted hourly compensation over that period actually fell, by 1.1 percent.
Ohio needs jobs: More than six years into the official recovery from the last recession, Ohio has not yet recovered the jobs we lost. The country as a whole and most states passed that threshold over a year ago. Ohio had 35,400 fewer jobs in June 2015 than it had when the recession officially started in December 2007, a 0.7 percent loss. The nation added 2.5 percent to its job base over that period. Ohio has underperformed the nation over various time periods — since June 2005 when Ohio passed tax cuts targeted to the wealthiest in the name of job creation; since January 2011 when John Kasich became governor; since December 2007, when the recession started; and over the last year, since July 2014. By June 2015, the most recent revised data available, we had 5,384,200 jobs in Ohio, still more than 240,000 jobs shy of 2000, the peak job year.
Leaving the labor market: Ohio labor force participation rose steadily through the ‘80s and ‘90s but has shrunk since 2003. In 2014, it was at a historically low 62.8 percent, lower than at any time since 1979. Since the recession began, Ohio’s labor force has shrunk by 236,000 people (through June).
Unemployment improves: Overall unemployment in Ohio and the nation are half what they were at the heights of the recent recession. Ohio’s black workers struggle with much higher unemployment: At 11.9 percent, Ohio’s African-American unemployment rate was well over twice that facing white workers (4.7 percent) for 2014 (state level demographic unemployment data available only at year end). Though both men and women experienced high unemployment in the recent recession, men’s job loss was worse. Both had much better rates of unemployment by July, and they are closer together, at 5.9 percent for men and 5.2 percent for women.
Out of control inequality: The top one percent of Ohioans had an average income of more than $852,000 in 2012, while the bottom 99 percent of Ohioans combined had an average income of just over $40,000. Inequality is even higher at a national level.
Wages in quicksand: Ohio’s median wage, once more than 8.7 percent above that of the nation, was over 5 percent less than the national in 2014. Ohio’s median wage dipped slightly last year to $16.05 an hour and remains lower than in all but eight of the last 36 years, adjusted for inflation. This is at the heart of what remains wrong with the Ohio labor market — regular Ohioans are left out of our productivity growth. The entire bottom 80 percent of the earnings spectrum is earning less than comparable workers did in 1979, adjusted for inflation.
Gender gap: Men still earn $3.30 more each hour than women do at the median in Ohio. The gender wage gap has gotten smaller but much of that is due to male wage decline. The median female worker has gone from earning about 61 percent of the median male to 82 percent since 1979. Women earned $14.64 per hour at the median in 2014, compared to $17.94 for men.
Race woes: Ohio’s racial wage gap has widened despite white wage decline over the past decade and a half. Black workers earned over 90 percent of what white workers earned per hour in 1979; by last year that ratio was just over 75 percent. White workers earned $16.87 an hour at the median in 2014, down from a peak of $17.81 in 2002. Black worker wages in Ohio have plunged, never recovering to their 1979 level of $15.90 in 2014 dollars. Last year, Ohio’s median black worker earned just $12.81 an hour, a more than $3.00 hourly pay cut since the peak a few decades ago. Data limitations prevent us from providing details about other demographic groups except to say Hispanics as a group earn less than black or white workers.
Unions help: Unionized workers earned about 32 percent more than non-union workers in 2014, $20.17 an hour compared to $15.27. Unions help workers of all demographic groups: Male workers in a union earn 8 percent more than non-union men, women earn nearly 22 percent more, white workers earn 12 percent more, and unionized black workers earn a whopping 35 percent more than non-unionized black workers.
Education issues: Ohio workers with at least a bachelor’s degree earned $24.90 in 2014, more than two and a half times as much as workers without a high school degree, who earned only $9.94 that year at the median. Wages of those with less education have plunged. While all workers benefit from getting a high school or college degree, at every educational level white workers earn more than black workers. Men earn more than women with the same education levels, with the exception of men and women who lack a high school degree, both of whom earn just $9.80 an hour at the median.
Many sectors struggle: Most sectors in Ohio have lost jobs since the beginning of the recession. As of June 2015, Ohio had lost more than 69,000 manufacturing jobs; more than 42,000 government jobs; more than 41,000 jobs in trade, transportation and utilities; and more than 34,000 construction jobs. Through June, Ohio gained more than 170,000 jobs combined in education and health services, leisure and hospitality, and professional and business services.
Poverty pay: Of all Ohio families earning less than 200 percent of the federal poverty level, nearly 70 percent are working. Between 2005 and 2013, the share of working families that earn less than 200 percent of poverty has expanded in Ohio, growing from 26 percent in 2005 to 32 percent in 2013.
We can do more: While many of the numbers are grim, we see a renewed commitment by many activists, advocates and regular Ohioans to create an Ohio economy that works. Some solutions that are generating excitement include raising Ohio’s minimum wage, building a stronger union economy, investing in childcare and early education, restoring public jobs and social services, and getting what we need from federal policy. We welcome you to join the conversation.
The American labor market is weaker than it should be at this stage in an economic recovery. But the Ohio labor market is far worse. National labor experts say that job growth is still slow. Yet, year after year, Ohio creates far fewer jobs as a share of our economy than the nation as a whole. While the country recovered the jobs lost in the official recession over a year ago and added 2.5 percent beyond that by June, Ohio still needed more than 35,000 new jobs just to get back to the level we had before the recent recession.
Nationally compensation is considered stagnant or slow-growing despite rising productivity because wages have risen by only five percent since 1979. Yet in Ohio, the median hourly wage in 2014 was only $16.05 an hour, more than $1.30 less than the 1979 Ohio median wage when adjusted for inflation.
Nationally, economists raise concerns that Americans have left the labor market. Yet in Ohio, labor market participation has fallen every year since 2007 and was lower than at any time in the 36 years that Policy Matters studies by the end of last year.
In both Ohio and the nation, disparities between black and white workers endure and even grow, gaps remain between men and women, inequality is staggering, and more working families have low incomes.
But we are also seeing the emergence of a rebellion against the policies that have led to lower wages, fewer jobs and higher inequality, and an embrace of a more middle-out or bottom-up economics. Turn to our conclusion and recommendations for our thoughts on how best to begin making Ohio’s economy work better for everyone here. But first, look carefully at the charts on the following pages and the very brief explanations that serve as a guide to what you’re seeing.
Before you get started, a few notes on this report. We use the best and most recent data available whenever possible. All dollars are inflation-adjusted to the final year measured in that chart — usually that’s 2014, though we had to use 2013 for two charts that examine low-income family earnings. Our jobs data, unless noted otherwise, goes through June 2015, the most recent revised monthly data available, which also happens to be the six year anniversary of June 2009, the official end point of the 2007 recession according to the National Bureau of Economic Research.
While a few of the charts below look at averages (primarily the first two), we usually focus on the median wage (the worker in the middle among all workers) because this illustrates how the typical Ohioan is doing. Averages are skewed upward in a highly unequal economy like ours — if you have 99 people in a bar and Donald Trump walks in, the average income in the room gets multiplied many times over even though nobody has gotten a raise. Finally, if you’ve read this report in previous years, prepare yourself for fewer words — we decided in time-crunched 2015 that a few bullets could convey the key nuggets of each of these charts. Open a discussion with us on Facebook or Twitter or by good old-fashioned e-mail if you’d like to learn more about how Ohio’s economy is treating Ohioans. And now, dig in.
Productivity isn’t enough
America’s economy is expanding, but almost all of us are being left out of that growth.
Ohio’s economy has grown less quickly than the nation’s, but has still grown much more than our compensation, which has gone backward since 1979 on average. We can access state data on productivity and compensation only since 1979. This data shows Ohio families being similarly left out. Ohio productivity rose 66.9 percent between 1979 and 2014 while hourly compensation over that period actually fell, by 1.1 percent.
Ohio needs jobs
A full six years after the official end of the last recession in June 2009, Ohio has still not recovered the jobs it lost during that recession. The country as a whole and the majority of the states passed that threshold over a year ago.
Figure 5 puts job levels in Ohio in a deeper historical perspective. During several years in the 1990s we regularly created nearly 100,000 jobs a year. By the year 2000, we had 5,624,700 jobs in the state. While we have been generating jobs since 2010 when the national recovery got underway, we have consistently produced a smaller share of jobs than the nation. By June 2015, the most recent revised data available and the six-year anniversary of the end of the recession, we had 5,384,200 jobs in Ohio, still more than 240,000 jobs shy of our peak.
Leaving the labor market
Because Ohio has created few jobs, Ohioans continue to leave the weak Ohio labor market.
Overall unemployment in Ohio and the nation are half what they were at the height of the recent recession. In July 2013, unemployment was 5.0 percent in Ohio and 5.3 percent in the nation, far below peaks exceeding 10 and 12 percent in 2009 and 1982. The difference between Ohio and the U.S. is not statistically significant.
Out of control inequality
It’s not just low-wage or middle-income families being left behind. It’s nearly everyone. The entire bottom 80 percent of the earnings spectrum is earning less than comparable workers did in 1979. The following figure divides the 2014 Ohio workforce into ten equal parts and shows how earnings changed compared to employees at the same relative percentage in 1979. Only the 80th and 90th percentile workers saw small gains and these are dwarfed by the earning of those in the top ten percent. These hourly earnings of even 90th percentile workers are, of course, far below the earnings of the top one percent, captured above in Figure 10 (on an annual income basis).
More Ohio families are poor or low-income, despite working.
It’s not surprising that many Ohio families are earning less than 200 percent of poverty because 11 of Ohio’s 12 largest occupations pay less than this amount for a three-person family with one full-time year-round working parent. Eight of these occupations leave that family under 130 percent of poverty, the eligibility threshold for food aid, which is also below the eligibility threshold for Medicaid.
Many sectors struggle
Knowing Ohio’s employment composition helps gauge the impact of job change on the overall economy. For example, mining and logging has high growth but it’s a small share of the economy (0.3 percent), so the growth creates just 2,800 jobs. Five key sectors — Trade, Transportation and Utilities, Education and Health Services, Government, Professional and Business Services or Manufacturing — provide three-fourths of Ohio jobs. Six years after the recession ended in June 2009, most Ohio sectors still have fewer jobs than at the start of the recession.
Ohio excels at some things
While the labor market indicators we explore in this report generally point to a weaker labor market in Ohio, some things are better in the Buckeye State for workers. As mentioned, inequality is bad here but even worse at the national level. Ohio has a much more reasonable cost of living than many places, so our lower wages go further here. We still have a manufacturing sector that is larger than that of the nation. Finally, health insurance coverage is strong in Ohio — just 8.7 percent of adults and just 2 percent of children were uninsured in a 2015 survey, both about half the rate of 2012. This is a clear affirmation of Governor Kasich’s decision to accept expansion of the federal Medicaid program under the Affordable Care Act.
A deep examination of economic data on Ohio leads to the inevitable conclusion that we’re badly lagging the nation on many labor market indicators. We have much lower job growth — still short of the jobs we had prior to the last recession (and the one before that). We have real wage decline where the nation has sluggish wage growth. And as in the rest of the country, a growing share of our jobs pay poverty wages. Ohio has also laid off more public sector workers, the one set of jobs over which we as citizens have the most control, leaving our communities deprived of many of the services that help families and businesses thrive. If we want to improve the lives of most Ohioans, reduce poverty, and invigorate the economy, better wage growth and more job creation are essential.
To be clear, not everything is worse in Ohio. Inequality, though staggering here, is even worse at the national level.
And we do many things better. We have a more reasonable cost of living than many places, so our lower wages go further here, buying more in the way of housing and services. Ohio manufacturing jobs have declined over the long term, but the auto industry rescue of 2008 and 2009 stabilized jobs in the auto supply chain where Ohio manufacturing is concentrated. And our health insurance coverage is phenomenal compared to the recent past and to other places — just 8.7 percent of adults and just 2 percent of children were uninsured in a 2015 survey, both about half the rate of 2012. This is a clear affirmation of Governor Kasich’s decision to accept expansion of the federal Medicaid program as permitted under the Affordable Care Act.
Still, if we’re looking mostly at the labor market - job creation and wage growth - Ohio is struggling badly.
The good news is we can influence our economy by making the right policy choices. We can restore and create jobs, raise job quality, invest for the future, and provide the basics. Doing so will make our businesses more competitive, our workers more skilled, and our communities better prepared to manage future challenges. Below is a brief list focused on strategic opportunities at the local, state or national level.
I. Create jobs: We need to create more jobs in Ohio to reinvigorate our economy and help families and communities thrive. Here are some current opportunities to do that:
II. Job quality and worker well-being: Over the past generation job quality has declined in Ohio — wages are lower, schedules more erratic and unpredictable, pensions and employer-provided health care more often missing from the social contract.
III. Invest for tomorrow:Ohio became a great state because in times far less prosperous than today we thought about what was needed for future success and invested in it: public schools, community colleges, universities, roads, bridges, and more. Our economy is changing and new investments are needed to enable a better future. Some exciting movements and policies are advancing these ideas. These include:
IV. Provide the basics:Our ideal Ohio would include a good job for everyone who wants one, a job that ensures the basics and a little extra. But too many people can’t find a job at all and too many of the jobs we can find don’t allow us to make ends meet. Until we have good jobs for everyone, it’s up to us as a society to make sure that kids grow up with what they need to become productive adults, and that the rest of us have the essentials, too. Ohio does a great job with some of this, but we rank near the bottom in other areas. Here are some ideas to bridge the gap.
Special thanks go to intern spectacular Spencer Murray and to David Cooper at the Economic Policy Institute for extensive help with charts. Huge thanks also to colleagues Hannah Halbert and Michael Shields for substantial help. We are grateful to the Working Poor Families Project for data used in some parts of the paper. Funding from the George Gund Foundation, the Saint Luke’s Foundation and many individual donors enables this project.
 Learn more here: http://www.policymattersohio.org/blogpost-localgovt-aug2015
 Learn more here: http://www.policymattersohio.org/testimony-medicaid-may2015
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