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Blogmail response on Hafner
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Stallworth's contract terminated
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KSU Notes – February 9
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Collector Car Hobby Loses One of the Best—Jim Roll
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Decisions Decisions: Credit Cards or Your Mortgage?
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Loucile is looking for a Lake Erie getaway in June for three kids, ages 1, 3, and 5.
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Do IT this week: Layering
As state incomes fail to keep pace with inflation, costs of owning home, higher education and health care have relentlessly climbed
By David Knox
Beacon Journal staff writer
Published on Sunday, Mar 16, 2008
Archrivals on the football field, Ohio and Michigan are competing in a different kind of contest.
It's a match neither wants to win: the race to the bottom of the nation's economic ladder.
For five years in a row, Ohio's median household income in inflation-adjusted dollars has dropped.
Only one state did worse: Michigan slid six straight years.
The dismal trend is putting many families in a double bind. At the same time income is going down, the costs of owning a home, higher education and health care — the hallmarks of membership in the middle class — continue to outstrip inflation.
Four decades ago, it was a different story.
In 1969, when manufacturing was king and Richard Nixon was president, Ohio ranked 12th among the 50 states in median household income (meaning half earned more and half, less). Michigan stood even better at sixth place.
Over the next two decades, both states, along with the rest of the Rust Belt, saw their rankings steadily decline as tens of thousands of good-paying manufacturing jobs in the auto, rubber, steel and other industries disappeared.
By 1989, Ohio's median household income had fallen below the national average and was 25th among the states.
The boom years of the latter 1990s boosted Ohio's standing a bit, but the recession in 2000 brought a return to the downward trend.
By 2006 — the latest year available — Ohio ranked 32nd in household income, with a median of $44,532. Adjusted for inflation, that's only $431 more — about the cost of a set of new auto tires — than reported in 1969, despite the dramatic increase in the number of working wives.
The reason those second incomes didn't help much is hourly wages dropped. In Ohio, median earnings for workers ages 20 to 64 have slid 7.5 percent since 1969, according to a Beacon Journal analysis of census records.
Again, Michigan — alone among the nation's nonrural states and 49th overall — saw a steeper decline: 8 percent.
That's not to say the rest of the country is doing fine.
The failure to recover is widespread. Two dozen states, in addition to Ohio and Michigan, posted lower median household incomes than in the recession year of 2000.
Jobs being replaced
''Ohio and Michigan are bringing up the bottom and that's no coincidence,'' said George Zeller, an economist who specializes in tracking the economy for Cuyahoga County and other local government policymakers in Northeast Ohio. ''Both states are seeing the same decline in manufacturing.''
Zeller said the latest employment figures show Summit County and Ohio have lost one in five manufacturing jobs since 2001. Cuyahoga County was hit even harder, with nearly a quarter of its manufacturing jobs disappearing.
Job gains in the service sector, such as retail sales, have failed to make up for the lost manufacturing jobs, both in number and pay.
The rest of Ohio isn't much better off, Zeller said. That includes Columbus, which has a reputation of ''being recession-proof.''
''Retail trade losses in stores, bars and restaurants have been larger there than anywhere else in the state,'' he said. ''When you lose jobs and earnings, people have less money to spend.''
Zeller said his analysis of the last decade of state income tax return records found household incomes going up in only 25 of Ohio's 612 school districts and none in the five-county Akron-Canton area.
Costs go up
But lagging incomes aren't the only threat to the middle class, according to Amy Hanauer, executive director of Policy Matters Ohio, a nonprofit think tank specializing in economic research.
''Being middle class means being able to own your home, access to health care for you and your family, and being able to send your kids to college,'' Hanauer said. Those three factors, plus a secure retirement, are the ''essential elements of the middle class.''
The problem is the cost of achieving those goals has gone up much faster than incomes and inflation.
That's especially true for higher education in Ohio, which last year had the fifth highest tuition and fees — averaging $8,445 — among states with four-year public universities, according to the College Board's Trends in College Pricing.
This year, thanks to a freeze in undergraduate costs, Ohio dropped to seventh highest. Michigan was one of the two states to move ahead.
But for many Ohioans, the damage was already done — the price tag of a degree already was out of reach.
At the University of Akron, for example, the annual cost for a full-time student living on campus more than tripled within a generation — from $5,622 in the 1989-90 school year to $17,254 today.
Costs for commuter students rose even faster, from $2,672 to $9,503 — a 256 percent increase.
During the same period, the overall cost of living, as measured by the consumer price index, went up only about 60 percent. That means that even after adjusting for inflation, the cost of attending the University of Akron more than doubled.
''There's no question that compared to the previous generation, it is much, much harder to afford to attend college or to send your children,'' Hanauer said. ''That's a crying shame, because this is a time when higher education is much more essential to economic success than it was in the past.''
For many students, going deep into debt is the only way to pay for college.
Hanauer said that makes it even more difficult to get into the middle class.
''Loans are not a fair way to ask young people to start out their adult lives,'' she said, '' particularly not huge loans that are going to take years to repay at the same time that you're trying to gather together the down payment for a house that is going to be difficult to afford, and at the same time you may be in a job that is less likely to be offering health benefits than in the past.''
No relief from housing
Although home prices haven't gone up as fast as college costs, they've beaten inflation by a wide mark — even in Ohio, where home prices are slightly below the national average and much lower than the East and West coasts, where the housing bubble sent values soaring.
Summit County's median home value, adjusted for inflation, rose by 50 percent from 1990 to $142,800 in 2006, according to census figures.
Thanks to lower interest rates, the monthly costs of owning a mortgaged home in Summit County grew less, but still increased by about a third to $1,264, after adjusting for inflation.
While the increases in medical costs have moderated in recent years, they also remain well above inflation.
Since 2001, the cost of health insurance has increased 78 percent, while the overall cost of living went up only 17 percent, according to the latest Employer Health Benefits Survey by the Kaiser Family Foundation.
The study found the average family premium in 2007 was $12,106, with workers paying $3,281 and their employers paying the rest.
Higher in Ohio
Ohio's overall health costs have gone up slightly higher than the national average, according to William Hayes, president of the Health Policy Institute of Ohio, a Columbus nonprofit research center.
Hayes cited U.S. Health and Human Services data that showed Ohio's per capita spending on health care more than doubled to $5,725 between 1991 and 2004, an average annual increase of 6 percent, compared to 5.5 percent for the nation.
But out-of-pocket costs are increasing even faster, Hayes said. That's because employers are shifting more of the cost to their employees.
''To keep the premiums more affordable, employers are changing the cost-sharing aspect so the co-payments are going up,'' Hayes said.
Hayes cited another study that found out-of-pocket spending for premiums and services for workers with employer coverage rose $553 to $3,211 between 2001 and 2004 — a 21 percent increase.
''You're having a trade-off — health care or wages,'' Hayes said.
David Knox can be reached at 330-996-3532 or dknox@thebeaconjournal.com
Middle class hanging by thread as rich get richer, poor get poorer
Meet the family: Census data form American portrait
Today's story about a middle-class family is unusual for us
The very things that define the middle class slipping out of reach for many Ohioans
Story behind the story: five decades of data
Speaking of... Voices from The American Dream series
Median annual pay in the U.S. over the decades (pdf)
Archrivals on the football field, Ohio and Michigan are competing in a different kind of contest.
It's a match neither wants to win: the race to the bottom of the nation's economic ladder.
For five years in a row, Ohio's median household income in inflation-adjusted dollars has dropped.
Only one state did worse: Michigan slid six straight years.
The dismal trend is putting many families in a double bind. At the same time income is going down, the costs of owning a home, higher education and health care — the hallmarks of membership in the middle class — continue to outstrip inflation.
Four decades ago, it was a different story.
In 1969, when manufacturing was king and Richard Nixon was president, Ohio ranked 12th among the 50 states in median household income (meaning half earned more and half, less). Michigan stood even better at sixth place.
Over the next two decades, both states, along with the rest of the Rust Belt, saw their rankings steadily decline as tens of thousands of good-paying manufacturing jobs in the auto, rubber, steel and other industries disappeared.
By 1989, Ohio's median household income had fallen below the national average and was 25th among the states.
The boom years of the latter 1990s boosted Ohio's standing a bit, but the recession in 2000 brought a return to the downward trend.
By 2006 — the latest year available — Ohio ranked 32nd in household income, with a median of $44,532. Adjusted for inflation, that's only $431 more — about the cost of a set of new auto tires — than reported in 1969, despite the dramatic increase in the number of working wives.
The reason those second incomes didn't help much is hourly wages dropped. In Ohio, median earnings for workers ages 20 to 64 have slid 7.5 percent since 1969, according to a Beacon Journal analysis of census records.
Again, Michigan — alone among the nation's nonrural states and 49th overall — saw a steeper decline: 8 percent.
That's not to say the rest of the country is doing fine.
The failure to recover is widespread. Two dozen states, in addition to Ohio and Michigan, posted lower median household incomes than in the recession year of 2000.
Jobs being replaced
''Ohio and Michigan are bringing up the bottom and that's no coincidence,'' said George Zeller, an economist who specializes in tracking the economy for Cuyahoga County and other local government policymakers in Northeast Ohio. ''Both states are seeing the same decline in manufacturing.''
Zeller said the latest employment figures show Summit County and Ohio have lost one in five manufacturing jobs since 2001. Cuyahoga County was hit even harder, with nearly a quarter of its manufacturing jobs disappearing.
Job gains in the service sector, such as retail sales, have failed to make up for the lost manufacturing jobs, both in number and pay.
The rest of Ohio isn't much better off, Zeller said. That includes Columbus, which has a reputation of ''being recession-proof.''
''Retail trade losses in stores, bars and restaurants have been larger there than anywhere else in the state,'' he said. ''When you lose jobs and earnings, people have less money to spend.''
Zeller said his analysis of the last decade of state income tax return records found household incomes going up in only 25 of Ohio's 612 school districts and none in the five-county Akron-Canton area.
Costs go up
But lagging incomes aren't the only threat to the middle class, according to Amy Hanauer, executive director of Policy Matters Ohio, a nonprofit think tank specializing in economic research.
''Being middle class means being able to own your home, access to health care for you and your family, and being able to send your kids to college,'' Hanauer said. Those three factors, plus a secure retirement, are the ''essential elements of the middle class.''
The problem is the cost of achieving those goals has gone up much faster than incomes and inflation.
That's especially true for higher education in Ohio, which last year had the fifth highest tuition and fees — averaging $8,445 — among states with four-year public universities, according to the College Board's Trends in College Pricing.
This year, thanks to a freeze in undergraduate costs, Ohio dropped to seventh highest. Michigan was one of the two states to move ahead.
But for many Ohioans, the damage was already done — the price tag of a degree already was out of reach.
At the University of Akron, for example, the annual cost for a full-time student living on campus more than tripled within a generation — from $5,622 in the 1989-90 school year to $17,254 today.
Costs for commuter students rose even faster, from $2,672 to $9,503 — a 256 percent increase.
During the same period, the overall cost of living, as measured by the consumer price index, went up only about 60 percent. That means that even after adjusting for inflation, the cost of attending the University of Akron more than doubled.
''There's no question that compared to the previous generation, it is much, much harder to afford to attend college or to send your children,'' Hanauer said. ''That's a crying shame, because this is a time when higher education is much more essential to economic success than it was in the past.''
For many students, going deep into debt is the only way to pay for college.
Hanauer said that makes it even more difficult to get into the middle class.
''Loans are not a fair way to ask young people to start out their adult lives,'' she said, '' particularly not huge loans that are going to take years to repay at the same time that you're trying to gather together the down payment for a house that is going to be difficult to afford, and at the same time you may be in a job that is less likely to be offering health benefits than in the past.''
No relief from housing
Although home prices haven't gone up as fast as college costs, they've beaten inflation by a wide mark — even in Ohio, where home prices are slightly below the national average and much lower than the East and West coasts, where the housing bubble sent values soaring.
Summit County's median home value, adjusted for inflation, rose by 50 percent from 1990 to $142,800 in 2006, according to census figures.
Thanks to lower interest rates, the monthly costs of owning a mortgaged home in Summit County grew less, but still increased by about a third to $1,264, after adjusting for inflation.
While the increases in medical costs have moderated in recent years, they also remain well above inflation.
Since 2001, the cost of health insurance has increased 78 percent, while the overall cost of living went up only 17 percent, according to the latest Employer Health Benefits Survey by the Kaiser Family Foundation.
The study found the average family premium in 2007 was $12,106, with workers paying $3,281 and their employers paying the rest.
Higher in Ohio
Ohio's overall health costs have gone up slightly higher than the national average, according to William Hayes, president of the Health Policy Institute of Ohio, a Columbus nonprofit research center.
Hayes cited U.S. Health and Human Services data that showed Ohio's per capita spending on health care more than doubled to $5,725 between 1991 and 2004, an average annual increase of 6 percent, compared to 5.5 percent for the nation.
But out-of-pocket costs are increasing even faster, Hayes said. That's because employers are shifting more of the cost to their employees.
''To keep the premiums more affordable, employers are changing the cost-sharing aspect so the co-payments are going up,'' Hayes said.
Hayes cited another study that found out-of-pocket spending for premiums and services for workers with employer coverage rose $553 to $3,211 between 2001 and 2004 — a 21 percent increase.
''You're having a trade-off — health care or wages,'' Hayes said.
David Knox can be reached at 330-996-3532 or dknox@thebeaconjournal.com
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