April 26, 2013

Ohio’s March job losses: Columbus, we have a problem

Filed under: Economy,Ohio Economy,Taxes & Government — Tom @ 3:13 pm

This column went up at Watchdog.org with minor edits earlier this afternoon.

_________________________________

A week ago, the federal government’s Bureau of Labor Statistics reported that Ohio lost 20,400 seasonally adjusted jobs in March, and that its unemployment rate remained at 7.1 percent.

The overused caution that we shouldn’t read too much into one month applies to an extent to this job-loss figure. At the state level, BLS’s initial estimates have been notoriously unreliable and subject to significant subsequent revision. That said, the size of the negative number virtually ensures that the Buckeye State will still show a March job loss after all is said and done.

It is also troubling that the state’s unemployment rate is up from 6.7 percent at the end of the year. With the nation’s economy seemingly headed into a fourth straight “spring and summer bummer,” that rate appears destined to remain stuck right where it is, or even get worse.

Is Ohio’s economy in the early stages of a major stall-out?

If so, the state may have plenty of company. Seasonally adjusted job losses abounded in neighboring and nearby states during March. Indiana’s employment fell by 12,600. Kentucky lost 8,400 jobs. Michigan shed 6,600. The drop in Illinois was 17,800. Pennsylvania saw 5,900 jobs disappear. West Virginia was the only Ohio neighbor which showed a paltry gain of 400.

But Ohio’s job loss, again pending revisions, was the largest of the bunch, not just absolutely but also as a percentage of its workforce. It also comes at the worst possible time, at the start of when actual job growth — i.e., before seasonal adjustments which smooth out monthly fluctuations — is supposed to be at its most robust, as seen in the following BLS table:

OhioNSAjobs2000toMarch2013

The table shows that March’s actual job gain before seasonal adjustments was far below the previous three years. With the exception of 2008 and 2009, when the national economy was tanking as Ohio under former Democratic Governor Ted Strickland was in the process of shedding over 400,000 jobs, the state’s 18,800 jobs actually added in March is by far the worst March result so far this century. It also represents a sharp U-turn from February, which, as seen above, was the century’s best total for that month to date.

If March was so bad, what should make us think that April and May, which as seen in the table are months when substantial actual employment increases should occur, won’t be similar?

As if we needed more evidence of trouble on the horizon, there’s this: More than half of Ohio’s reported pickup of 120,000 jobs since December 2010 — an already unimpressive result, given the extent of job recovery required — may be illusory.

Here’s why. BLS conducts two surveys to compile its monthly jobs and unemployment reports:

  • In its Establishment Survey, the bureau asks employers how many people they have working at their locations. It is the basis for their official monthly estimates of employment and jobs added or lost. At the state level, it tells us how many employees work at employer locations in that state.
  • Meanwhile, its Household Survey contacts households to identify the number of working-age household members who are and aren’t working. It results are used to estimate the various reported unemployment rates. At the state level, it also tells us how many residents are employed.
  • The Household Survey’s total employment estimate is higher than the Establishment Survey’s, primarily because it includes the self-employed, and secondarily because it includes an undetermined number of illegal immigrants who say they are “employed” but are really not on anyone’s payroll.

Here’s the problem. Ohio’s Household Survey shows seasonally adjusted employment growth of less than 54,000 since December 2010. In the past 12 months, it shows almost 7,700 jobs lost.

What in the name of current Ohio Republican Governor John Kasich is going on here?

More illegal immigrants could possibly be sneaking their way into employment at Buckeye State companies, but it’s hard to imagine that this could be a major factor.

A more legitimate possibility is that there has been a negative sea change in self-employment heavily influenced by oppressive economic policies in Washington. The one remaining additional possible though unlikely significant factor is that more residents of other states are coming into Ohio to work, causing the Household Survey not to grow as quickly as the Establishment Survey.

On balance, it seems more likely that the Establishment Survey’s employment figures will come down or at least increase less quickly than the analogous values in the Household Survey.

Kasich deserved and received plaudits from yours truly and many others late last year for his administration’s fiscal stewardship and, especially relative to what we saw during Strickland’s tenure, spending restraint. But I have to take back something else I wrote in November: “One thing I don’t expect to see is complacency.”

The complacency concern I erroneously waved off was that Kasich would take his eye off the economic ball and venture into other matters which will either do nothing or harm employment growth. I’m afraid that he’s doing just that.

The Governor has spent the past several months wasting political capital on an ObamaCare-driven expansion of Medicaid which will have at best a neutral impact on job growth and further bankrupt the federal government. He has also been supremely stubborn in insisting on a 400 percent increase in the state’s oil and gas severance tax, while engaging in the kind of “Big Oil”-bashing rhetoric which is usually the province of the left. Industry officials accurately warn, given better competitive conditions in other states, that the tax hike “could” — I believe it’s “will” — “drive up costs for drilling companies to the point where they would delay investments in other Utica shale projects.”

Employers, entrepreneurs, and investors already demotivated by President Obama’s election victory in November didn’t need any more reasons to hold back on expansion and hiring plans in the Buckeye State. But Kasich, even if his Medicaid and tax-hike efforts are unsuccessful, as appears to be the case at this point, has given them plenty of additional ones. His fundamental governing philosophy appears to have changed, and not for the better. Other states are looking more attractive as business locales. As a result, Ohio’s economy may indeed be headed for a fall.

Share

3 Comments

  1. The BLS did some rather massive readjustments of the 2010 numbers in either the March 2012 or March 2013 rebenchmarking of LAUS (or both). For example, the number of employed (seasonally adjusted) in Wisconsin in December 2010 went from 2,817,000 (rounded to the nearest 1,000) in the December 2011 jobs press release to 2,826,000 (again rounded to the nearest 1,000) in the current database.

    Comment by steveegg — April 26, 2013 @ 9:51 pm

  2. Yes, it’s extremely frustrating trying to keep up with what BLS is doing at the state level with the benchmarking.

    Comment by Tom — April 27, 2013 @ 8:49 am

  3. [...] March job losses: Columbus, we have a problem April 27, 2013 bizzyblog.com BizzyBlog No comments Ohio’s March job losses: Columbus, we have a problem, [...]

    Pingback by Ohio’s March job losses: Columbus, we have a problem | PERSUASION IN INK — April 27, 2013 @ 10:05 am

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.