Work in progress

Federal cash support to families, and federally funded investments in COVID recovery and infrastructure worked: The nation avoided a potentially devastating period of unemployment. Inflation, while painful, has been stymied, all while jobs and wages grew. Given these indicators, Ohioans should be living better than they have in a couple of decades. The fact that so many continue to report uncertainty and struggle in this economy underscores how deep insecurity is in the Ohio economy.

Corporate interests and the very wealthy have captured an outsized share of the state’s wealth at the expense of working people who helped create it. Many are using that wealth to further entrench policy that bends the rules ever more in their favor. State lawmakers continue to advance an agenda of tax cuts for corporations and the wealthy that deprive worker supportive programs like childcare and education of needed funding. Continued hostility to collective bargaining and even basic improvements in basic employment protections like increasing the minimum wage or ensuring all Ohioans receive a paystub from their employer allow wages to be artificially suppressed by employer interests. All of this adds up to create a rigged economy, where working people produce more wealth for Ohio than ever before, but their share of that wealth remains largely stagnant. Put simply, it takes more than just any job to build a life, it takes a good job and accountable government.

This year’s State of Working Ohio: Work in progress looks at a variety of economic indicators to explore how Ohioans are being treated in the labor market, to better understand where gains have been made and what policies could level the playfield for workers. This year’s recommendations include policies to rein in corporate influence and support a middle-out approach to growth.

In May 2023, 38 months after the steepest job losses in generations, Ohio fully restored the jobs lost to the COVID recession. Job growth continued into 2024, and in March for the first time, Ohio restored all the jobs lost to the early 2000’s recession, posting the largest number of jobs in the state’s history.

As more jobs became available, Ohio’s unemployment rate fell. In July 2023, it hit an historic low: 3.3%. This was followed by incremental increases, signaling confidence in the job market: Ohioans began returning to the labor force, or joined for the first time. In July 2024, unemployment stood at 4.5%.

This jobs recovery took a fraction of the time it took to restore jobs after the Great Recession,[2] in large part because of the scale of the federal response, when federal policymakers sent dollars to state and local governments, businesses, families, and individuals to get through the crisis.

Low unemployment gave working Ohioans leverage

Coming on the heels of massive job losses — especially among low-paid workers — this rapid recovery created a labor market whiplash, reducing barriers that usually prevent workers from seeking better opportunities. Many low-paid workers left their jobs for better ones, increasing job market churn and boosting their bargaining power, which contributed to faster wage growth as employers had to intensify their efforts to secure and keep desired employees.

Sustained job growth also meant that, for the first time in years, the average jobless Ohioan had their pick of more than one available job, rather than vying for too few jobs to go around. As shown in Figure 1, the number of unemployed Ohio job seekers stood at 0.9 for every open job in May 2024. A 1:1 ratio represents an equal match between job seekers and job openings, so could represent a stable job market over the long term. A relative abundance of job openings helped workers reclaim leverage in the labor market. In Ohio, there has been less than one job seeker per opening since June 2021.

Gray bars in the figure below indicate recessions. The timing of spikes in this ratio correlates with historical economic recessions in 2001 and 2008, and the COVID-19 pandemic. The number of job seekers per available job surged in the Great Recession from 1.8 in December 2007 to a peak of 8.8 in August 2009, then took years to approach a stable level near 1:1 in mid-2015. Aside from a short dip under the 1:1 mark in 2019, Ohioans have not experienced this level of labor demand in decades.

Figure 1

Sustained low unemployment especially helps low-paid workers and historically marginalized workers, giving them leverage to overcome long-standing labor market discrimination: Black Ohioans face an unemployment rate that runs about double that of their white counterparts, in good economic times and bad. At the end of 2023, Black worker unemployment was 5.8%, nearly 3 percentage points higher than that of white workers.[3]

Trends are now emerging in the Ohio labor market that suggest the economy has cooled too much. Unemployment for Black people has surpassed the pre-COVID rate. In the second quarter of 2024, Black worker unemployment reached 9.1%, nearly 1 percentage point over where the rate stood right before the pandemic began in 2020.[4]

This is likely another example of how Black workers are typically hit earliest and hardest by policy choices that sacrifice jobs to slow inflation. (See sidebar.) Policymakers need a more nuanced set of tools to ensure that those who cause inflation cover the costs of slowing it. Though inflation has created a hardship for many Ohioans in recent years, it is still vital to recognize the harm of unemployment and prioritize keeping it low.

Wages grew in 2023, reaching significant milestones and beating overall inflation. However, effective inflation, decades of wage stagnation, and persistent discrimination in the labor market mean wage improvements are not translating into broader economic security.

The median wage is the mid-point of Ohio wages: Half of the data set is higher than the median, and half lower. The median wage better reflects a “typical” worker wage than the average wage, as it is less affected by outliers. Growth at the median is evidence that economic gains are being broadly distributed.

Ohio’s median wage in 2023 was $23.95, an increase of $1.55 (7%) over 2022. This represents the largest annual increase in the median wage since the data set began in 1979. Growth in 2023 reversed two years of inflation-driven declines. The typical wage in 2023 was $1.16 more than it was in 2019 and just over $2.06 more than when the data set began in 1979.

Ohio’s median wage caught up with the nation’s

For the first time since 2001, Ohio's annual median wage nearly reached the national median wage of $23.98. Though the single year datapoint does not make a trend, and the state caught up with the nation in part because the national median saw a small decline, Ohio wages have been on an encouraging growth trajectory since falling after the Great Recession. Ohio’s median wage has grown from to $20.14 in 2012, despite small declines in 2022 and 2021. Figure 2 shows this trend.

Figure 2

Ohio’s median wage has trailed that of the nation for decades, but from 1979 to 1992, the opposite was true. Historically, the promise of better wages and a better life was so potent and possible, Ohio was a destination for Black sharecroppers descended from enslaved people who came during the Great Migration, and migrants from Appalachia escaping coal booms and busts to work in rubber and steel where they could earn better wages.

By the close of the 20th century, Ohio’s promise of a better deal was harder to attain. The late 1990s brought global trade deals far more favorable to multinational corporations than to the people of the participating nations. Plants closed and union density dropped. The 2001 recession accelerated Ohio’s hollowing out. Ohio had become a state that didn't fully recover from recessions.[5] For these reasons, Ohio’s return to parity with the national median wage is encouraging, particularly because the state needs to keep and attract working aged people.

Across the income spectrum, wages outpaced inflation

Wage increases in 2023 were real wage growth. Real wages describe actual buying power, adjusting for inflation; wage growth is only “real” if wages rise faster than prices. That happened last year across all income deciles,[6] breaking from the previous year: In 2022, average median wages fell from 2021 levels for all except the bottom 20%. Everyone else lost buying power. Wage growth and easing inflation have restored lost value for those working Ohioans across the board.

Figure 3 shows the average change in the median wage by combined income group from 2019 and 1979. Wage data show how everyday Ohioans saw gains coming out of COVID. The median wage has grown just 9% since 1979, with 5% of that growth since 2019, and much of that in the last year (7%, 2023). Workers in the bottom 20% who were paid at or just above the minimum wage, saw the largest percent increase in wages since 2019, but the top 20% eclipses all other categories of workers experiencing a 29% rise in average median wage since 1979.

Figure 3

Wages are (still) too damn low

Ohio workers were struggling before inflation took hold. This real wage growth happened in the context of an Ohio economy that has been short-changing working people for decades. Even with broad real wage gains, unacceptable economic realities remain, including:

• An Ohioan with a family of three who works full time, year-round for minimum wage earns $21,736 a year, which falls $4,084 short of the poverty level.[7]
• Half of Ohio’s lowest-paid workers make less than $14.71 an hour, meaning they have less spending power than people who were paid the minimum wage in 1968.
• Half of all working Ohioans are paid less than $23.95. A full-time worker would need to make more than $20.81 an hour to make a two-bedroom apartment and utilities affordable. Only two of the state's 10 most common jobs offer median pay that would make rent affordable for a working family.[8]

Ohio workers must spend a lot of money just to get to work and take care of their families.[9] State tax policy has weakened our budget so severely that lawmakers have too few resources to address these needs:

• A typical Ohio household spends $13,781 per year on transportation costs. On average about 27% of household income goes to transportation costs. That is 12 percentage points higher than the accepted threshold of affordability.[10]
• The U.S. Department of Health and Human Services describes childcare as “affordable” if it makes up no more than 7% of a family’s budget. But the cost of childcare in Ohio for a single infant runs $9,697 per year and would take 16.9% of the median family’s income.[11]
• It's estimated that 76% or about 4.4 million Ohio workers do not have paid family leave, and unpaid leave through the Family Medical Leave Act is unavailable for about 60% of Ohio’s workforce.[12]

Persistent inequity: Wage gaps, gender, and race

Wage growth did not reduce pay inequity. Many worker characteristics that show up as pay disparities have nothing at all to do with how those workers perform on the job. Some of these disparities are the result of outright discrimination in the labor market, while some are the remnants of harmful and unjust circumstances in other spheres of life, which have made their way into the labor market.

In 2023, Ohio women were paid just 81 cents[13] on the dollar compared with their male counterparts, a significant improvement over 1979, when data were first kept, and women were paid just 59 cents on the dollar. In 2023, median wages for women and men grew, but men’s hourly wage outpaced that of women, growing the gap at the median to just under $5.00. Overall, growth in women’s pay over the past four decades is one of the most positive long-term trends in Ohio’s labor market. Women’s pay rose 31.1% ($4.98/hour) over that timeframe. Of late, however, some of the improvement in the gender wage gap is due to declining wages for men. Men’s pay fell 4.0% (-$1.08/hour) over the same period. As of 2023, men’s pay had recovered from COVID losses, while women’s had not, though that recovery was attained in a single year in 2023, so it is too soon to know whether it represents a new trend or statistical noise.

Figure 4

In 1979, the median Black worker was paid 92 cents on the dollar compared with their white counterpart. By 2018, that figure fell to 73 cents before partially recovering to 77 cents by 2023. Last year, the median Black worker was paid $20.11 per hour, compared with $25.97 for their white counterpart. This widening wage gap reflects the fact that, while white Ohioans secured modest wage gains of $5.15 per hour (+19.8%) over 44 years ending in 2023, Black Ohioans’ wages were pushed down: They lost $2.71 per hour (-13.5%).

The growing racial wage gap and the suppression of Black Ohioans’ wages are among the most alarming trends in Ohio’s economy. Though outright job discrimination continues to play a role in this, other factors include legacies of systemic racism, and policies in force today that transfer racism from other facets of life into the job market. Such legacies include housing segregation resulting from redlining and other explicitly racist policies about who could live in each community. When combined with trends such as the disproportionate loss of manufacturing jobs from urban cores that once supported stable middle-class lives, discriminatory incarceration and collateral sanctions, it's no surprise to see wage gaps growing.

Wages for Hispanic[14] workers, most of whom are Latine,[15] have substantially trailed those of white workers every year and have also trailed wages of their Black counterparts in most years. In 2023 Hispanic workers made the same amount as Black workers compared to their white counterparts: 77 cents on the dollar. In some cases, language barriers can limit job opportunities, as well as handicapping Hispanic residents’ ability to advocate for themselves on the job.

Hispanic workers in Ohio also face 74% greater likelihood of experiencing wage theft in the form of nonpayment of the minimum wage compared with their Black and white counterparts.[16] Asian workers are similarly 51% more likely to face such wage theft. They were surveyed in too little numbers to report data on pay.[17]

Figure 5

Many Ohioans continue to struggle with prices elevated by rapid inflation that peaked in mid-2022 — and some are shouldering more of the burden than others. Annual growth in the Consumer Price Index hit 2.9% in July, dropping below 3% for the first time since prices took off in March 2021. This good news will keep the Federal Reserve moving toward a needed, overdue interest rate cut.[18]

Prices are now rising at a normal pace (2.9%), but prices remain high because current inflation compounds on top of the inflation surge that peaked at 9% in 2022. Figure 6 shows the rate of change in year-over-year inflation for the past five years, along with the cumulative change in the price level. Over the five years ending in May 2024, prices rose 22.7% overall.

Figure 6

Indexed minimum wage protected buying power for the lowest-paid

Critically, Ohio’s minimum wage is one of 14 state minimum wages that is indexed to inflation: Once a year, the minimum wage is adjusted to keep up with rising prices, so the wage doesn’t lose spending power over time.[19] In 2006, Ohio voters enshrined purchasing power protection in the state constitution when they voted to raise the wage and establish annual, automatic increases based on the Consumer Price Index. Today’s $10.45 is worth the same as the $6.85 voters passed that year. Ohio’s minimum wage in 2023 was $10.10 an hour, up from $9.30 the year prior. The Economic Policy Institute found that “low-end wages grew about 50% faster in states with minimum wage changes compared to states without any change in their minimum wage, 11.0% versus 7.3%.”[20]

Absence of indexing allows wages to be pushed down over time. Had policymakers protected the federal minimum wage from inflation at its peak in 1968, all workers would enjoy greater security, as it would be worth nearly $15 per hour in today’s dollars. Too many jobs at the bottom of the labor market, even with sustained, low unemployment increasing competition for workers, remain well under the $15 per hour needed to restore the value of the minimum wage.

Effective inflation rate hits working Ohioans even harder

Though far smaller than the 1970’s price surges, recent inflation is bad enough that most Ohioans are still feeling a pinch — some more than others. Ohioans with lower incomes likely face a higher effective rate of inflation, which better captures the actual impact of rising prices on individual households.

Whereas inflation is typically calculated using a weighted average of all the things the average family buys, the effective inflation rate accounts for the fact that not everybody has an average budget. Ohioans who have little or no discretionary income must spend a larger share or even all their money on necessities like food[21] — the prices of which rose faster than the general rate of inflation.

Grocery prices rose 21.1% from 2021 through 2023, at a time when overall inflation was 17.3%. This difference matters. An Ohioan whose grocery bill was $100 per week at the start of 2021 had to pay $121.10 by the end of 2023 to get the same groceries. If they couldn’t, they had to cut back or swap in less costly foods.

What drove inflation during the COVID recession recovery?

Evidence suggests that major shocks to the economy in the form of COVID and then the Russian war on Ukraine created quickly changing consumption patterns and major supply chain disruptions across sectors, like energy and cars rather than overheating in consumer demand generated by stimulus payments.[22] These shocks created conditions for some corporate interests to take advantage of their outsized pricing power.

The price of a product includes three parts: labor inputs such as employee wages and benefits; non-labor inputs such as materials, equipment, and energy; and the mark-up: any amount added on top of the first two components to generate a profit. We can understand the causes of inflation by examining how each of those three costs have changed. Figure 7 shows that profits have accounted for a larger and larger share of inflation.

Figure 7

From 1979 to 2019, profits contributed only about 11% to price growth and labor 62%. Through the end of 2021, the period of greatest price acceleration, profits contributed well over half of the entire increase in prices and grew to 83% by the 3rd quarter of 2023.

Josh Bivens, senior economist with the Economic Policy Institute, describes the relationship of shocks, labor, and pricing this way:

The pandemic drove demand through the roof in durable sectors, and employment has rebounded rapidly, but the bottleneck in meeting this demand on the supply side was largely not labor. Instead, it was shipping capacity and other nonlabor shortages. Firms that did happen to have supply on hand as the pandemic-driven demand surge hit had enormous pricing power vis-à-vis their customers.[23]

Had corporations simply raised prices enough to offset their costs, without taking advantage of the shocks to increase their mark-up, it’s estimated that inflation would have run at half the level it did. Corporate power to shape markets in their interest is not new, but the way it presented in this recovery period is different. During the great recession, corporations worked to hold down wages down, aided by long term unemployment. During this recovery, wage increases are necessary for hiring, so profits are secured through pricing. This pricing power was not lost on corporate executives. For example, The Hershey Company expanded its profit margin by 19% while its CFO and CEO were boasting about pricing architecture changes,[24] aka shrinkflation, paying the same for less. Though some economists question the influence of monopsony and profit, mega-corporation execs are very clear on the power they wield.

This suggests a broader set of policies that address corporate pricing power are needed to prevent and stall inflationary spikes. Broadly, however, both recessions and recoveries should lead policymakers to policies that increase corporate accountability and support labor protections, that enhance workers’ ability to bargain with employers on labor costs.

Unions counterbalance corporate control in the labor market

Corporations and other employers hold disproportionate control of the labor market because in some markets they operate monopsony power: a single buyer with enough power to dictate the price of a good or service — in this case, the price of labor. For example, if only one corporation owns a majority of the grocery stores in a region, that corporation doesn’t have to compete on price or for labor.[25] Monopsony power should be a growing concern for policymakers, as more and more segments of the economy are controlled by fewer corporate entities. This power enables employers to suppress wages and reduce job mobility, especially with extreme shocks of the pandemic and what has supported some firms’ ability to take advantage of pricing opportunities.

Strong labor unions can mitigate the disparities caused by monopsony power by ensuring that workers receive a fairer share of the value they generate. The presence of unions can improve overall labor standards and reduce wage inequality, especially in sectors where monopsony power is prevalent.

The erosion of manufacturing and the accompanying loss of union density in Ohio over the last four decades has limited the power of working people to negotiate for a better share of the wealth they helped to create.

Union premium and density in Ohio

The median wage of a worker covered by a collective bargaining agreement in 2023 was $26.80 per hour. The median wage for workers not covered by a union was $23.06 per hour, a $3.74 difference (16%). Based on full-time work for a year of 2,080 hours, this union wage premium is worth about $7,780-per-year.

Figure 8

A slow but steady narrowing has occurred between wages for union and non-union workers since 1983. This narrowing has many causes. The substantial decrease in the number and share of Ohioans represented by a union has diminished unions’ ability to bargain for higher wages. Unions also don’t get credit for some of the wages they win, because they ripple out as higher wages for non-union workers as well. This is because, seeing union wage victories in competitor companies, many firms raise wages themselves to try to head off an organizing effort in their own company. A recent example: When the United Auto Workers won historic contracts at the Big Three U.S. automakers, Toyota responded with a 9% wage hike,[26] and Honda followed up with an 11% raise.[27].

Some of the jobs currently growing the most include lucrative management jobs not part of a bargaining unit. And some of the most marginalized workers are now joining a rejuvenated labor movement. The median pay premium is smaller because employers like Starbucks pay even union workers less than they should. These workers’ successful organizing efforts are real progress for working people and the labor movement.

Today, just 13.5% of Ohio workers are represented by a union and 12.5% are members.[28] Union contracts covered 691,000 workers in 2023, down from 699,000 the prior year; and the number who belonged to a union was unchanged at 641,000. Ohio ranks sixteenth in the nation in the share of workers represented by a union. The shares run from 25.6% in Hawaii to just 3.0% in South Carolina.

These low union representation rates diverge substantially from the share of Americans who want to be represented by a union; they are the result of a sustained effort by corporations to block workers’ efforts to form a union, sometimes illegally. According to Gallup, 67% of Americans approve of unions.[29] Employers are estimated to spend $433 million a year on union-avoidance consultants.[30]

In A New Way Forward: 10 ways to support working people and resptore prosperity and democracy to Ohio, Policy Matters Ohio outlines a 10-point slate of policies to support working people in Ohio. Below, we elaborate on the ones most relevant to this report:

Support & strengthen unions

Because unions are one of the most effective ways to restore balance between employer and worker power, policymakers should make it easier to join or form a union. Ohio should require that all employers contracted with the state pay prevailing wages and respect workers’ right to organize. The state should negotiate in good faith with public-sector unions, require municipalities to do the same, and defend public-sector workers’ right to strike.

Make the budget and the tax code work for working people

For years, legislators have prioritized tax cuts for the wealthiest and corporations, choking off funding for public institutions and programs that could make life more affordable for Ohioans. Legislators know it, but lack the political will to act.[31]

The state budget process and the current election cycle are opportunities for lawmakers to demonstrate their commitment to working people. Legislators must ensure the state has sufficient revenue to support the services working people need to get and keep work — including childcare, transportation, paid leave, and post-secondary education.

Ohio’s upside-down tax code is among the most inequitable in the country. This prevents the state from funding Ohioans’ priorities. It also grows inequality, reduces accountability, and gives the wealthiest and corporate interests more disposable income to influence in policy setting; it’s a negative feedback loop that cuts out working people.

Progressive tax policy is critical to ensuring the state can address the crisis of affordability and to countering outsized influence of corporations and extreme wealth. The tax code can create disincentives for profiteering during times of crisis and economic distress and for engaging in pricing collusion, or deceptive strategies like shrinkflation. Increases in corporate taxes and a critical review of tax loopholes should be on the policy table. Creating additional accountability, consumer protection, and transparency for corporations would also increase revenues to fund a better future for all of us.

Raise the minimum wage, one way or another

Ohio needs a livable minimum wage of at least $15 per hour. Failure to act leaves around 1 million low-paid Ohioans with wages too low to meet their basic needs, even working full-time, year-round. The gains in 2023 have not been enough to recapture the purchasing power minimum wage workers had in the late 1960s.

Inaction also leaves Ohio behind. This year, Washington state is at $16.28 per hour, while California is at $16, and D.C. is at $17.50. Arizona voters will vote on $17 this November. California will vote on $18, while Hawaii has already passed it, on track to take full effect by 2028. A federal bill, the Raise the Wage Act of 2023, would raise the federal minimum wage to $17 per hour, bringing a raise to nearly 1.3 million Ohioans.

A signature gathering effort that would have put a $15-per-hour minimum wage on the November ballot fell short of the signature threshold it needed in some counties, and the petitioners have said they will continue to gather signatures to put the measure before voters in November of 2025.

Senate Bill 256, in Senate Committee at the time of this writing, would also give Ohio a $15 minimum wage, though it would cover fewer workers and phase in over a longer timeline, enabling inflation to cut down its value. The state legislature has blocked Ohio municipalities from passing their own higher minimum wage, but some cities have passed wage standards for companies that win municipal contracts and receive city dollars. Lakewood’s, for example, is $17.59 per hour as of 2024.[32]

By driving a robust recovery, policymakers have created a strong job market that has enabled workers in aggregate to win better wages on the job. Policymakers should learn from recent history: Broadly shared prosperity depends on substantial and targeted public investment in communities where it is needed most. But beyond creating the conditions where workers can successfully bargain for higher wages, policymakers must also take direct steps to sustain recent wage growth, restore losses to the lowest paid, and drive progress toward a more equitable economy, rather than one in which gains have been largely hoarded by those at the top. The nation and the state shouldn’t squander this momentum; we must use this period of growth to strengthen working people’s position in the market.

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