Worst in roughly three decades.
This item went up at Ohio Watchdog earlier today.
Real median household income (MHI) in Ohio dropped again last year, according to data published by the Census Bureau on September 20 as part of its American Community Survey. The drop in 2010 already took the state to a 27-year low in that statistic.
Overall, 14 states registered MHI gains last year, while 36 states showed declines. Unlike several preceding years, Ohio’s on 1.1 percent decline in 2011, which placed it 26th among the 50 states, was not quite as steep as the overall 1.3 percent drop in the U.S. median. The Buckeye State’s MHI of $45,749 in 2011 was the 16th-lowest in the nation and over 9 percent below the national median of $50,502. A quarter century ago in 1986, Ohio stood 21st in this category and one percent above the national median.
What has happened? Perhaps we should look at the 14 states which have passed Ohio during the intervening 25 years and see what they’ve been doing right.
Eight of them — Georgia, Iowa, Kansas, Nebraska, North Dakota, South Dakota, Texas, and Wyoming — are right to work states where employees can “decide for themselves whether or not to join or financially support a union.” Ohio, by contrast, is a “closed shop” state, meaning that “workers can be forced to join a union whether they wish to or not.” Several of these right to work states have made startling gains which cannot be explained away by citing growth in fossil-fuel exploration and drilling. Two examples: In 1986, MHI in Nebraska and South Dakota trailed Ohio by 13 percent and 21 percent, respectively; now they have respective 10 percent and 6 percent leads over the Buckeye State.
Speaking of energy, Pennsylvania, where MHI trailed Ohio by 5 percent in 1986, is now ahead by 10 percent, even though the Keystone State’s domination by union interests is arguably at least as strong as Ohio’s. One likely reason for Pennsylvania’s progress is recent growth in shale oil and gas drilling, which the state’s government has wisely allowed to grow and prosper without excessive industry-specific taxation. Recent discoveries of vast oil and gas resources in Ohio have unfortunately led the administration of current Ohio Governor John Kasich to push for a quadrupling of the oil and gas severance tax. Based on the results seen in the Buckeye State’s eastern neighbor, it would seem obvious that Kasich should reconsider his position.
The decline in Ohio’ business tax climate, which Kasich has otherwise begun to reverse, is also a factor. The Tax Foundation now rates Ohio’s business tax climate 39th-best, i.e., the 12th-worst, in the nation. In 1986, it was 20th-best. Ten of the 14 states which have leapfrogged Ohio in the past quarter-century currently have better tax climates, including first- and second-place Wyoming and South Dakota.
Of course, policy specifics also matter. Indiana, where MHI trailed Ohio by 9 percent in 1986, is now slightly ahead of the Buckeye State despite facing many of the same manufacturing and other challenges. Unlike Ohio, which increased its income and other taxes roughly a decade ago and until recently has allowed its bureaucracy to grow excessively, Indiana, especially under Governor Mitch Daniels during the past eight years, has restructured government, held relatively firm on government spending, and, as seen in the state’s privatization of the Indiana Toll Road, hasn’t been afraid to be bold. Earlier this year, the Hoosier State also became a right to work state, likely foreshadowing further progress.
If it expects to see a course reversal, Kasich and other Ohio leaders need to do much more of what has worked elsewhere and much less of what hasn’t.