Saturday, Mar 25, 2017
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Economy

JOBS, WAGES TROUBLE SPOTS

Ohio makes gains, but recovery has way to go

As Ohio recovers from what many have called the Great Recession, the state unemployment rate is well below prerecession levels and wages are climbing.

But Ohio’s workers have a ways to go, according to a report released Sunday by Cleveland-based Policy Matters Ohio, a nonprofit left-leaning advocacy group.

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While Ohio's economy has improved, the state's workers have a ways to go when it comes to pockets of unemployment and income inequality.

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Pockets of high unemployment remain, median wages adjusted for inflation are well below what they were three decades ago, labor-force participation is low, and income inequality persists.

Celebrate the low jobless rate of 4.8 percent and the increased wages last year, said Amy Hanauer, co-author of the report and executive director of Policy Matters. The unemployment rate was 5.6 percent in Ohio in 2007 when the recession began, and median worker wages rose to $16.61 an hour last year after years of decline.

Still, she said, “We’re just not quite where we want to be.”

Mekael Teshome, an economist with PNC Bank in Pittsburgh who keeps tabs on Ohio, said it’s important to remember that the state economy is headed in the right direction.

“The economy has made steady gains. We’re not going backward,” he said. “As far as catching up to the rest of the country, we’re not. But in some ways, that’s an apples and oranges comparison.”

Mr. Teshome said Ohio has a “two-track economy” — one a modern, knowledge-based model mainly in Columbus and Cincinnati, the other an older manufacturing-based model in the rest of the state. It’s hard to compare Ohio with other parts of the country that have recovered faster because “manufacturing was never a big part of their economies,” he said.

The Policy Matters report said worker productivity in Ohio rose by 61.5 percent from 1979 to 2013, but average compensation fell by 1.1 percent during that period. Labor force participation is now at an all-time low in Ohio over that 34-year span, with just 62.3 percent of adults in the labor market.

Ohio had 5.6 million jobs in 2001, but now the number is 5.5 million, the study said. The public sector, in particular, has slashed more than 17,000 state and local government jobs since the Great Recession of 2007. 

The hourly figure for a median Ohio worker last year, when adjusted for inflation, is below the 1979 median wage, which equates to $17.44 in 2015 dollars, the report said.

The think-tank said wages are lagging because the fastest growing job sectors in Ohio mostly have low-paying jobs. Of the 13 most common occupations, only two pay above 200 percent of the official poverty line for a family of three, and nine jobs pay less than $30,000 a year with full-time year-round work.

Wages could be helped, Ms. Hanauer said, by more unionization, which tends to negotiate higher wages with employers than pay for nonunion counterparts in the same jobs. The Policy Matters study is released in conjunction with Labor Day, which is a holiday celebrated by organized labor.

Creating more jobs is the best solution to the state’s labor-market woes, Policy Matters said. It advocates keeping interest rates low, investing in infrastructure, investing in educating the work force, and several other measures.

Joe Nichols, a policy analyst with the Buckeye Institute in Columbus, a conservative think tank, agreed that a more educated work force is good, but other Policy Matters recommendations are unworkable. “All of these solutions have been tried before, and none of them work,” Mr. Nichols said.

The Buckeye Institute maintains that the state’s regulatory burden on businesses needs to be reduced and that stronger labor unions “make it harder to get jobs” in some instances.

Mr. Nichols said cutting government is the best way to create jobs because that would put money back into the private sector. “There is a lot of pork spending on things the state of Ohio doesn’t need to be doing,” he said.

Mr. Teshome of PNC Bank said he is optimistic that Ohio’s economy will keep improving. “We’ve got great talent, great infrastructure here. And if there’s one consensus, it’s that having a higher skilled work force is a plus, and I don’t think there’s disagreement on that,” he said.

“On more unionization — there’s room for debate on that one,” he said. “I wouldn’t put that as a policy priority that will jump-start growth.”

One aspect that gets neglected, he explained, is entrepreneurship. “People want companies to add workers, or they want companies to relocate to Ohio. But I think we could get growth from entrepreneurs starting new companies.”

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.

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