Ohio job gains colored by stagnant wages

More than six years into recovery from the Great Recession, Ohio’s unemployment rate has dropped to its lowest level in more than a decade and labor market fundamentals have improved dramatically, but wages remain depressed and not all Ohioans on this Labor Day are sharing equally in the state’s economic prosperity.

Ohio’s median wage dipped last year to $16.05 an hour, lower than the state’s median wage in all but eight of the past 36 years, adjusted for inflation, according to a new report from the Columbus-based think-tank, Policy Matters Ohio.

From 1979 to 2014, inflation-adjusted compensation fell 1.1 percent, even though productivity was up 66.9 percent over the same period, according to the report entitled, Left Behind: The State of Working Ohio 2015.

“Our wages are just in quicksand,” said Amy Hanauer, Policy Matters’ executive director. “Ohio workers used to earn more than 8 percent more than workers as a whole, we now earn 5 percent less than the nation.”

While wages are stagnant across the board, some segments of the population have suffered more than others.

For example, Ohio men last year earned $3.30 more per hour than women — $17.94, compared to $14.64. Meanwhile, the median wage for black workers was just 76 percent of the median for white workers, $12.81 vs. $16.87, according to the Policy Matters’ report.

“We continue to see these big gender and race gaps, and the data on African American employment in particular is just very, very distressing,” Hanauer said. “Even when you adjust for education levels, you still see gaps between what white workers earn and what African American workers earn. We want an inclusive economy that works for everyone, and African American employment is just a glaring example and evidence that it’s not.”

Blacks have been hit especially hard by cutbacks in well-paying government jobs, while low-wage sectors continue to account for most of the job gains in Ohio,

“People can contribute to the economy in a variety of ways, and growth in health services, leisure and hospitality, professional and business services is great,” Hanauer said. “But what we need to do is to make sure that those are actually good jobs that people can support a family on.”

Hanauer supports such steps are raising the the minimum wage to $12 an hour by 2021, and investing in clean energy, which could help the state recover jobs lost during the recession in manufacturing, which has historically been the backbone of the statewide economy.

The decline in manufacturing and it’s largely unionized workforce is one of the biggest reasons for the decline in median wages in Ohio.

Unionized workers earned about 32 percent more than non-union workers, $20.17 an hour compared to $15.27, according to Policy Matters’ research, but the number of unionized workers is a fraction of what it once was.

Ohio had 688,000 union members last year, representing about 14 percent of the of the total employed, Policy Matters found. But that’s down from nearly 1 million workers representing about 20 percent of the workforce in the late 1990s, according to figures from the U.S. Bureau of Labor Statistics.

Greg Lawson, state house liaison and policy analyst with the Buckeye Institute for Public Policy Solutions, said Ohio must face the reality that most of the manufacturing jobs that have left the state over the past several decades aren’t coming back and look for free-market solutions to promote job growth, including adopting employer-friendly right-to-work laws, like Indiana and Michigan, which became right-to-work states in 2012.

“What you’re beginning to see is the industrial Midwest shifting its labor policy,” Lawson said. “That’s going to create a magnet for investment, and paves the way for some manufacturing jobs to come back. We’re not going to get all of them back, but we have regained about 70,000 to 80,000 jobs over the past five years, and that’s not going to continue if we continue to have an unreformed labor situation, especially if we continue to see our neighbors doing labor reforms.”

Still, there are no quick fixes for Ohio’s long-term labor market struggles, Lawson said: “Even if you look outside of the scope of the Great Recession, Ohio has been under-performing for decades.”

While Ohio’s 5 percent unemployment in July was about half the rate at the height of the recession, job growth remains anemic and still lags the rest of the nation.

Ohio still had 35,400 fewer jobs in June 2015 than when the recession officially started in December 2007, according to Policy Matters. The U.S. recovered recovered all the jobs lost in the recession a year earlier.

And despite all the job gains of recent years, the labor force participation rate, both nationally and in Ohio, remains stuck near historic lows at about 63 percent, meaning the economy is performing nowhere near its potential.

“Weak job growth and real wage decline are at the root of Ohio’s deep labor market woes on Labor Day,” Hanauer said.

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