Tuesday, April 12, 2011

Buckeye Institute Report on the State of Ohio

The Buckeye Institute has a report out called State of the State:  Ohio's Weak Economy Struggles to Prop up Oversized Government.  It's a comprehensive report - 117 pages - on the state of Ohio's economic health, including an analysis of each county.  

Unfortunately, there's not a lot to celebrate in Ohio.  From 2008 to 2009, Ohio's private sector lost jobs in every single county. Ohio's state government grew 131% between 1990 and 2009 and from 2000-2011, Ohio lost over half a million private sector jobs, second only to Michigan.  The median household income decreased from $48,011 to $45,467, far below the national median of $50,221.  

Ohio's government workers fared a lot better.  They make more on average than private sector workers, and while the income of Ohio's private sector workers decreased from 2008-2009,  government salaries increased over that same time period - an average of $1000. The average state government worker had a salary increase of $1500.  The average private sector worker made $40, 215; the average state employee - $50,188; the average federal employee - $65,005. 

The report also observes that some of the private sector job growth results in increased government spending:

"Of Ohio’s industries in the private sector, five of  ten (Mining & Logging; Construction; Manufacturing; Trade, Transportation & Utilities; and Information) have fewer jobs today than they did in 1990 . Another three of ten (Financial Activities; Professional  & Business Services; and Other Services) have fewer  jobs today than they did in 2000 . The only two private  industry sectors that have added jobs since 2000 are Leisure & Hospitality and Education & Health Services . Leisure & Hospitality has just over the number of jobs it had in 2000 . On the other hand, Education & Health Services has grown by nearly 185,000 jobs .
While both health care and education are important  and are vital to a prosperous society, it is important to realize that this industry sector, though considered private, is largely funded by the government through programs like Medicaid, Medicare, and public education."
 Ohio also has the 18th highest state and local tax burden. The 23% of Ohioans making over $60,000 pay 81% of the state's income taxes.  The 77% making under $60,000 pay only 19% of the tax burden. 

The report blames a lot of the state's problems on burdensome union contracts and argues that making Ohio a "Right to Work" state is one way to begin to reform the system:

"To put these numbers in perspective, in the 1990s forced-unionization states added one job for every 19 people. At the same time, Right-to-Work states added one job for every 11 people . From 1990 to 2011, Right-to-Work states added a total of 10,628,400 jobs growing 34 percent while forced-unionization states, including Ohio, only added 6,634,800 jobs and grew just 11 percent .During this period, Right-toWork states gained about four million more jobs than forced-unionization states even though forced-unionization states had roughly 60 million more people than Right-to-Work states . In other words, from 1990 to 2010, forced unionization states added one job for every 33 people while Right-to-Work states added one job for every 12 people."
Between 2007 and 2008, Ohio lost 5500 businesses.  They either left the state or closed their doors.  The report argues that the high tax burden and powerful unions are stifling job growth and a robust business atmosphere.   It concludes:

"Ohio can return to the great, prosperous state that it once was . However, the road to low taxes, low government costs, and high household wealth will not be paved through timid tweaks to a broken system . As Ronald Reagan said, our leaders must paint “a banner of bold colors—not pale pastels.”

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