In July, Ohio added 5,300 jobs, an improvement over a dismal June, during which the state lost 8,400 jobs. Those two numbers point to the trend of the past year. The state has struggled to generate jobs, the pace slower than the previous 12 months. Ohio is “stuck,” to borrow from the title of the most recent assessment of the state’s job market by Policy Matters Ohio.
Each Labor Day, the Cleveland-based think tank looks at the annual employment figures. Its “State of Working Ohio 2013,” released over the weekend, starts with a reminder about the depth of the state’s jobs problem. Ohio not only has failed to recover the jobs lost in the Great Recession that began in late 2007. The state stands roughly 400,000 jobs short of the peak before the 2001 recession — 5.2 million jobs today compared to 5.6 million then.
For the past 13 straight months, job growth here has lagged behind the pace of the country as a whole. Policy Matters Ohio went back to the 2005 package of tax cuts, which eased the burden on individuals and businesses, Republicans in charge of the legislative promising a leap forward for the economy. Since then, the state has lost 3.8 percent of its jobs. To be sure, a recession intervened. Yet the country has experienced an increase of 1.8 percent. Other states faced the recession. Still, just three others lost a larger share of jobs.
Only Michigan has fared worse among the states in the Great Lakes region.
Worth adding, as Policy Matters does, is the impact of job losses in the public sector. The spending reductions, initially set in motion under Ted Strickland and then amplified in the first budget under Gov. John Kasich, schools and local governments hit hard, have deepened the problem. In past recessions, employment in the public sector has proved steady, serving to cushion the impact of an economy in trouble.
If Ohio has yet to make up the employment losses of the past decade, it follows that the portion of the population with a job has fallen sharply, many giving up the search for work. Policy Matters notes that in 2012, male participation in the labor force fell to an all-time low (going back 33 years), and the female rate has declined four straight years.
The median wage in Ohio rose two cents last year. Yet the wage remains essentially stuck, at $15.54 per hour, or at the same level in inflation-adjusted dollars as in 1983. A generation ago, the Ohio median wage exceeded the rate for the country by $1.50 per hour. Today, the state has fallen behind by nearly 75 cents.
Gov. Kasich and his Republican allies promise better days, arguing mainly that reductions in state income taxes will generate economic activity and job creation. Tax rates soon will be nearly one-third lower than a decade ago, and the governor talks about wanting to take the rates even lower. Unfortunately, there is little evidence to suggest such a course will make much of a difference.
If anything, such a depletion of revenue works against steps that do make a difference — for individuals and the entire state. From the Federal Reserve Bank of Cleveland to a recent report from the Economic Analysis and Research Network, the evidence shows that states with higher levels of education enjoy higher compensation and productivity. That is a path the state must follow if it truly is determined to get unstuck.