This Labor Day, American workers face as many challenges as they do triumphs. The nation’s standard of living has grown at an unprecedented level in the past century, thanks to gains in productivity, yet wages haven’t kept pace with worker output, contributing to grotesque levels of inequality unseen since the Gilded Age.
A greater proportion of Americans have health insurance than ever before, yet workers are paying much more for their own care, and millions still lack access to insurance at all. More Americans are graduating from college, but families’ purchasing power has diminished.
In Ohio, workers fare worse than they do elsewhere in the nation. Ohio has about 35,000 fewer jobs than it did before the Great Recession, while most states have recovered to prerecession levels, according to a new analysis by progressive think tank Policy Matters Ohio.
As of last year, the median wage in Ohio is $16.05 an hour, 5 percent below the national median. The wage gap between white and African-American workers has widened to its highest since the 1970s; unemployment for black workers is more than twice what it is for whites.
The nation’s, including Ohio’s, economy is growing, but most of that growth has been captured by the top 1 percent of earners since the recession. Adjusted for inflation, Ohio workers aren’t making more than they did four decades ago. Even more alarming, Ohio’s labor force participation rate, which measures the proportion of adults working or looking for work, dropped to 62.8 percent last year, lower than at any point since the the 1970s, when many women didn’t work.
That suggests that although the official unemployment rate has dropped back to normal levels since the recession, the real rate of unemployment is much higher — perhaps permanently so — because many have dropped out of the labor force entirely.
Deindustrialization in Rust Belt economies such as Toledo have driven these changes, yet they’ve been aggravated by state government’s regressive, anti-tax agenda. The top 1 percent of Ohioans bring home more than $850,000 a year. These households will enjoy an average tax cut of $17,600 under Gov. John Kasich’s new tax plan, while the poorest quintile of Ohioans, who earn less than $20,000 annually, will be left paying more, according to the nonpartisan Institute on Taxation and Economic Policy.
Mr. Kasich eliminated Ohio’s estate tax. Levied on large inheritances in the wealthiest households, it helped pay for aid to local communities. The resulting loss in revenue has weakened low-income cities such as Toledo. Making matters worse, the governor has not invested in public projects, such as a stronger mass transit system that connects Ohioans to jobs and other opportunities.
These changes have undermined government’s mission to provide all citizens with the resources they need to become educated, find work, and enjoy a decent standard of living. The growing gaps in wealth are not only morally troubling but also economically risky, as workers have less discretionary income to make the purchases that fuel a healthy economy. These gaps in wealth are not caused, primarily, by intractable market forces or personal failure, but deliberate policy choices that can be reversed.
It’s in the nation’s best interest, economically and socially, to advance an agenda that improves the incomes and buying power of middle and working-class Americans and reduces the growing levels of income inequality. Policies such as a higher minimum wage and expanded health-care coverage wouldn’t just benefit those at the bottom, but they’d also promote the growth of the middle class and broader economy.
Such changes would make next Labor Day an even bigger celebration.
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