The Corner

The Battle Over Ohio’s Unemployment Rate

According to the Bureau of Labor Statistics, Ohio’s unemployment rate in August was 7.2 percent (September’s figures are preliminary and, given the BLS swings of late, I don’t use preliminary numbers in any of my analyses). Naturally, President Barack Obama and U.S. senator Sherrod Brown are trumpeting this “low” rate because it’s below the national average and lends credence to their claim that Ohio under President Obama (and the auto bailout) is coming back. Both men use the low unemployment rate to bolster their campaigns for reelection.

Is Ohio’s unemployment rate and its recovery as good as advertised? Leaving the conspiracy theories about BLS figures aside, the short answer, as discussed in this piece I wrote for Opportunity Ohio, is no.

The reality is that Ohio’s unemployment rate is being driven down by the exodus of workers from the labor force far more than by job growth. Labor-force reductions in Ohio and Michigan, unlike the other 48 states, are greater than the number of people added to the official unemployment figures. In fact, from January 2008 to August 2012, Ohio had the second worst loss of labor-force participants — Michigan’s reduction was worst. From January 2010 to August 2012, Ohio’s labor force drop has been America’s biggest.

At the same time, Ohio only added 28,263 jobs from July 2009 (when its unemployment rate hit a high of 10.6 percent) to August 2012. From 2008 to 2012, as Ohio added 76,993 workers to the official unemployment rolls, its labor force shrunk by nearly 200,000 people. What happened to the other 123,000 workers?

The BLS tries to account for those workers in its U4 unemployment rate, which includes both workers officially on unemployment and discouraged workers who no longer are actively seeking work, thus, no longer part of the labor force. The BLS U4 rate in Ohio stands at 8.3 percent. That rate, however, still fails to account for roughly 58,000 Ohio workers no longer in the labor force, receiving unemployment, or counted as discouraged. To fully account for the workers who are no longer included in the labor force and don’t receive unemployment, the revised U4 unemployment rate would need to be 9.3 percent. (The details on these calculations are in the piece mentioned above.)

The bottom line in Ohio is that, due to such a large drop in the labor force, an unemployment rate that fails to account for all 199,239 lost workers is grossly misleading, especially when Ohioans are going to the polls to decide if President Obama and Senator Brown deserve reelection. In the three years since Ohio’s economy hit bottom at 10.6 percent unemployment, it undoubtedly has made gains. Those gains, however, do not get us to the 7.2 percent success story being promoted by self-serving politicians; rather, we’re at a more modest 9.3 percent — good, but not great.

— Matt A. Mayer is the president of Opportunity Ohio, a state-based free market think tank in Dublin, Ohio, and author of Taxpayers Don’t Stand a Chance: Why Battleground Ohio Loses No Matter Who Wins (and What to Do About It). Mayer is also a Visiting Fellow with The Heritage Foundation and a Research Fellow at the Oklahoma Council of Public Affairs.

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