43
Wage reports remain a mixed bag in the Valley
YOUNGSTOWN
The past seven years hasn’t been a good time to be employed in the Mahoning Valley, with total wages falling around 3.5 percent after inflation.
Workers in the Youngstown Metropolitan Statistical Area, which includes Mahoning, Trumbull and Mercer (Pa.) counties, are doing worse now than they were at the end of 2007.
Income growth from the last quarter of 2007 to the last quarter of 2013 is 7.8 percent in the Valley, compared with 11.7 percent nationally, said Guhan Venkatu, vice president and senior regional officer at the Federal Reserve Bank of Cleveland.
“When you look at inflation over that time, which has been about 11.2 percent, what you see is wage growth nationally has been very modest,” he said.
When you look at the Youngstown MSA, there is a decline in real wages of about 3.5 percent, Venkatu said.
The decline is a bad indication of what is occurring in the local job market, he said. The growth in wages that normally would be seen after a recession just hasn’t been seen here yet, he added.
Statewide results
Recent results at the statewide level haven’t been much better.
“We know with certainty that mean earnings of a job fell in Ohio during 2013. Median wages are not available, but if they were, the decline would be larger since mean earnings are pulled up by very high-wage workers,” said George Zeller, a Cleveland-based economist.
The Federal Reserve Bank of Cleveland recently presented a fiscal report about the Youngstown MSA.
“Overall statistics on the Youngstown MSA’s economy indicate that although the Mahoning Valley may be down, it’s definitely not out,” according to the report. “There are a number of obstacles to overcome.”
Those obstacles include:
The region’s industries are still restructuring.
Employment has not recovered from either the 2000 or 2007 recessions.
The population is declining.
The level of education in the Valley is lower than the national average.
The brighter side of the picture is that per-capita income growth in the MSA is on par with, or slightly better than, the national average, according to the Federal Reserve of Cleveland.
In addition, employment in the professional- and business-services sector, one of the sectors leading the national recovery, is increasing in the area.
But the figures are only slightly better when looking back to 2000 and the first recession in Ohio. From that point, real wages are up by 1.2 percent after inflation, Zeller noted.
So, the phenomenon of falling mean wages is an artifact of the aftermath of the 2007 Great Recession, he said. Before the 2007 recession, mean wages were increasing above inflation in Ohio.
A huge rise in the inequality of wages is apparent even in the mean earnings data, Zeller said. Corporate headquarters jobs are up by a strong 19.8 percent. At the same time, though, mean wages fell by 9.4 percent in retail trade and by 2.4 percent in manufacturing.
Unemployment
Unemployment is a key factor impacting the Valley’s labor force.
“One of the things that is striking in the Mahoning Valley is the unemployment rate,” Venkatu said.
The unemployment rate was more than 12 percent — nearly 13 percent at the depths of the 2007 recession — and the Valley’s unemployment rate started to fall quickly as the recession ended, he said.
It has even caught up to the national average, Venkatu said.
Youngstown, overall, has a lot of the same issues that are present in any type of midsized Midwestern town that relies on manufacturing. But here there are some mitigating factors, with the Youngstown market being slightly older, Venkatu said.
According to the Federal Reserve report, employment has fallen almost continuously in the Valley since the 2000 recession and has not shown the traditional rebound after an economic downturn. The number of people employed in the area is 10 percent below where it was at its peak in 2001.
Age and Education
The Federal Reserve shows the area’s workforce has declined much faster than the population overall. Nearly 19 percent of the population within the MSA is older than 65.
The area also is 9 percent behind the rest of the country, at 23 percent, in terms of the percentage of the population between age 25 and 34 that has a bachelor’s degree or higher.
Those figures still present a negative picture of the Youngstown employment market, because if things were really improving, “people would be relocating here from elsewhere,” he said.
For example, the Pittsburgh market has negative workforce numbers over the long term, but more recently those figures have been going up, Venkatu said.
stagnation
Fairly stagnant wages are occurring throughout Ohio, Zeller said.
“The state still hasn’t recovered from the small national recession in 2000,” he said.
This especially doesn’t take into account the larger national recession in 2007.
“We have two problems. There are still 100,000 people who had jobs in 2000 who don’t now,” he said. “The second is the downward pressure on wages, which affects all of us who have jobs.”
At the current extremely slow rate of recovery, it still will take more than nine years for Ohio to recover the jobs that it has lost during the past decade, he noted.
Ohio experienced subpar job growth for 20-consecutive months between November 2012 and June 2014.
The lack of job growth related to shale oil and gas industries also has had an impact. The area has just not seen the growth from the industry that some had predicted.
The projections based on potential jobs from the shale boom may be overstated, Venkatu said, citing a study from Ohio State University professors that showed the job impact of shale could be very limited.
The Federal Reserve report on the Youngstown MSA, however, references the opening of the Vallourec Star facility, which created 350 local jobs, as a sign of potential job growth in the area related to shale.
“When you add everything up, it’s not the best circumstances,” he said.
Diversification
It’s not a good idea for any area to rely too much on job creation from shale industries, said Amanda Woodrum, a researcher at Policy Matters Ohio.
“The industry is a minute fraction of the workforce less than one-tenth of one percent,” she said.
In addition many of the workers are from other states, so there have been limited opportunities available for local workers, Woodrum said.
Energy might be a good area for workforce development, but communities should try to have industries built around multiple types of energy, she said.