Paychecks of Ohioans continue to decline

Columbus Dispatch

The paychecks of Ohio workers dipped last year, according to a report released today that highlights the struggles of working Ohioans six years after the end of the recession.

The average Ohioan earned $16.05 an hour last year, more than $1.25 below the peak levels in 2006, 2000 and 1979 when adjusted for inflation, according to the report from Policy Matters Ohio. The labor-backed research group released the study in time for Labor Day to support its position that the state and federal governments should do more to create jobs and bolster Ohio workers’ pay.

The report demonstrates that workers aren’t benefiting financially despite being more productive and taking steps to improve their skills, said Amy Hanauer, the group’s executive director.

“In the economy most broadly, we do have rising productivity, but it’s not necessarily translating into higher wages,” she said.

Worker pay in Ohio used to be above the national average but is now 5 percent below it, the report said.

Other studies also have found wages for workers lagging, and not just in Ohio.

A Federal Reserve Bank of Cleveland report released last month noted that wages in 12 of 22 major occupation groups fell from 2004 to 2014 when adjusted for inflation. In Ohio, average inflation-adjusted wages fell 3.5 percent between 2007 and 2013, the report found.

“It’s a bit puzzling how wage growth has been so depressed,” Filippo Occhino, the bank’s senior research economist, said in the report. “We are in the later stages of the recovery, and typically in past recoveries, wage growth had picked up much, much earlier.”

The Federal Reserve report noted that productivity improvement over the past 10 years has been slower than in prior periods, and that can be partly to blame.

There might be other factors at work as well, including technology, the loss of bargaining power by labor, and decisions made by companies to move some production overseas to reduce labor costs, the report said.

Hanauer put some of the blame on rising health-care costs for employers and an erosion of the federal minimum wage and union strength.

‘Those two things (unions and the minimum wage) kind of created a floor for wages and bargaining power,’ she said.

PNC Bank economist Mekael Teshome said one measure of labor costs has risen by just 3 percent since 2008, well below the rate of inflation.

‘Part of it is that there’s slack in the labor market. Even if the unemployment rate is not terribly high, a lot of people aren’t included in that,’ he said, referring to jobless people who have given up the search.

Ohio’s unemployment rate has fallen to a 13-year low of 5 percent, and the state has recovered most of the nearly 420,000 jobs lost during the recession, but job creation has been slower here than for the country as a whole.

‘We really need to do something to generate jobs,’ Hanauer said.

Investments in razing or rehabbing vacant homes in cities would be a help, she said. Developing pre-kindergarten programs that would put people to work and get children off to a good start in school would, too.

The economy would benefit if more people shared in its growth, she said.

‘I’ve just watched so many professionals go through such instability in the past decade,’ she said.

Teshome said ultimately what will drive wages higher is tighter labor markets.

‘Getting the slack out of the labor market and keep adding jobs month on month,’ he said. ‘Ultimately, the best support for a worker is having options. If there aren’t workers to fill spots, that typically works to the employee’s benefit.’