May 28, 2014

Ohio Update: Recent Job Growth Is Decent, But the Statewide Workforce Is Still Shrinking; Most of the State Continues to Suffer While Metro Columbus Prospers

Filed under: Ohio Economy,Ohio Politics — Tom @ 12:03 pm

The good news is that Ohio’s official unemployment rate has fallen sharply during the first four months of 2014. After staying above 7 percent during all of 2013, the rate is now a seasonally adjusted 5.7 percent, and is finally meaningfully below the national rate, currently at 6.3 percent.

But the news is far from all good.

Preliminary results indicate that Ohio employers, both public and private, added 12,600 seasonally adjusted payroll jobs in April. That’s a strong number, and I hope it doesn’t get revised away. But that’s what the state’s economy really needs to be adding every month — and it hasn’t been. Only 55,300 payroll jobs have been added in the past 12 months; Ohio is #29 in the nation in percentage employment growth during that time. Take out April’s preliminary number, and that leaves 42,700, an average of less than 4,000 during the previous 11 months. Total payroll employment of 5.298 million is still 156,000 below the March 2007 peak of 5.454 million.

Since Team Kasich likes to crow about private sector jobs added, let’s look at that:


Yes, since January of 2011, Ohio’s private-sector employers have added 252,000 jobs. But total private-sector employment is still almost 112,000 shy of the March 2006 peak. Adding 6,500 private-sector jobs per month (rounded), as the state’s economy has done since John Kasich became governor, will get Ohio back to its pre-recession private-sector employment peak in September or October of 2015. I don’t recall Kasich basing his 2010 campaign on the idea of taking almost five years to achieve a turnaround.

The recent employment news from the Household Survey is better, but it has needed to be — and there’s a long, long way to go.

During all of 2013, fewer than 15,000 additional Buckeye State residents found employment. In 2014 (seasonally adjusted), almost 66,000 more found work in just four months. But after basically holding steady all of last year, Ohio’s workforce has shrunk by almost 17,000. The state’s workforce is 64,000, or about 1.1 percent, smaller now than it was in January 2011, even after declining by almost 153,000 during the preceding 48 months. Household Survey employment is still over 230,000 below its December 2006 peak. The state’s economy has only regained about 40 percent of the 389,000 Household Survey jobs which were shed before things finally bottomed out in September 2010. At that rate, full Household Survey jobs recovery will occur sometime during the summer of 2019 (seriously — and excluding the first four months of the 43-month period involved and using a Kasich-only average slightly worsens the result).

Now let’s look at the other bug in Ohio’s job-market performance, namely how the recovery has been great in Metro Columbus, and mediocre or worse in most of the rest of the state. I’m using not seasonally adjusted figures for the past 36 months, since not all data is available on a seasonally adjusted basis:


Household Survey employment growth in Metro Columbus is four times greater than what we’ve seen in the rest of the state. The rest of the state’s Household Survey employment growth is less than one-third of the overall U.S growth rate.

The news in Establishment Survey payroll growth isn’t as awful, but it’s unacceptable. Columbus has added payroll jobs at over double the rate in the rest of state, which in turn badly trails the national average.

Additionally, while Columbus’s workforce has grown by over 19,000 in the past 36 months, the rest of the state’s workforce has contracted by almost 95,000.

Except for Columbus, it’s safe to say that Ohio is losing a lot of existing and potential productive workers (i.e., college grads) either to other states or to general discouragement.

One has to wonder how much different the rest of the state’s results would have been if the Kasich administration hadn’t continually threatened to quadruple the severance tax on oil and gas extraction. When resources to be had are available in multiple states, companies choose the path of least resistance in deciding where they will deploy their equipment. I believe that further investigation would reveal that other states have seen much faster growth in fracking and other forms of extraction during that past three years than Ohio has.

Fortunately for John Kasich, he’s facing one of the worst opponents ever in this fall’s general election. Unfortunately for him, he’s not running for “County Executive of Franklin and Surrounding Counties.” He’s trying to be reelected governor of the entire Buckeye State. If his bumbling opponent figures out a way to leverage the rest of the state’s misery and credibly blame the incumbent, what possible response (other than to claim that Edward FitzGerald would be worse — which is likely the case, but no one can prove that) will Mr. “New Way, New Day” have?


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