September, 1999

Conventional wisdom says that the economy is booming.  And it is true that inflation and unemployment are low and the stock market and corporate profits are high.  However, 80 percent of Ohio’s workers and 70 percent of the nation’s make less money in real dollars  per hour than comparable workers did twenty years ago. The poor have gotten poorer, but so has the middle class, and both lie further than ever from the wealthy.  In this state, as in the rest of the country, men in general, black men in particular, high school dropouts, and those earning less than the median have seen especially dramatic wage erosion.  Vast inequalities remain, with women lagging behind men (despite male wage decline), minorities lagging behind whites, and those with education beyond high school lagging behind those with post-collegiate education. This quantitative assessment of wages and employment since 1979 is designed to deepen our understanding of how recent economic changes are affecting Ohio’s workers. All values are inflation-adjusted and expressed in 1997 dollars.  For further methodology information, see Appendix A.

• Number of Jobs Grows; Unemployment falls:  Ohio added 1,273,000 jobs between 1973 and 1997, for a total of 5,386,000 non-farm jobs by the end of the period. This increase in employment has triggered an encouraging decline in Ohio’s unemployment that mirrors the national decline. As of early 1999, Ohio’s 4.6 percent unemployment rate was slightly lower than the national 4.9 percent.
• Median Wage Drops: Unfortunately, lower unemployment has not translated into increases in real income for most workers.  In fact, real wages have dropped for the typical worker in Ohio from $12.47 per hour in 1979 to $10.94 in 1997, a 12 percent fall.  While the drop was steeper during the 1980s, the median wage has continued to erode over the 1990s, despite other elements of a strong economy.
• Gender Gap Persists: Women still earn considerably less than men in Ohio and in the nation. The gender gap has narrowed over the last twenty years, but the narrowing in this state is primarily due to a drop in men’s wages, rather than an increase in women’s.  Women’s median wages, in real terms, have continued to hover just above $9.00 an hour since 1979.  Men’s median wages, which were more than $15.00 an hour in 1979, have since fallen to just $12.69, a significant drop, but still 37 percent above what women earn.
• Black Male Wages Drop; Race Gap Widens: Minority workers in Ohio, as in the rest of the country, also get by on a substantially lower wage. Ohio’s black male workers have been hardest hit by wage erosion, with a 28 percent plunge in their real median hourly wage, from $13.88 to $10.00.  Because of this dramatic decline, a race gap continues to exist and indeed to widen in Ohio, despite drops in white male wages. Further, while white women have seen a very slight increase in their median wages, black women’s real wages have declined since 1979.
• Education Gap Widens, But Even College-educated Lose Ground in Early 1990s: While there has always been a significant economic penalty for not completing school, the penalty has grown stiffer in the 80s and 90s.  Workers without high school diplomas – a full 24.3 percent of Ohio’s over-25 population in 1990 – have seen their real median wages plunge from $11.17 an hour in 1979 to a dismal $6.75 in 1997, a 40 percent total drop. Though dropouts struggled most, workers in almost every educational category lost earning power between 1979 and 1997. Only those with graduate degrees substantially increased their inflation-adjusted earnings – by 12 percent between 1979 and 1997.
• Unions: Higher Wages and More Equality: Unionized workers – those covered by collective bargaining agreements -- have higher wages, more equal wages overall, and less variation in wages between men and women, between blacks and whites, and between less- and more-educated workers.  Across the board, workers benefit from being covered by collective bargaining agreements.  Amid a flurry of statistics in which poverty-wage jobs and wage inequality are growing and race and gender disparities remain entrenched, the potential gains from unionization provide possibilities for reversal of these trends.
• Distribution: Unequal and Growing More So:  Wage inequality has grown in Ohio over the last two decades.  Although real wages have eroded for workers across almost the entire income spectrum, those who were already earning less have had steeper declines.  The very lowest earning ten percent of workers had the largest drop in median wages, 17 percent, from $6.47 to $5.36.  This was followed by the next four deciles (the 20th through 50th percentiles), all of which dropped between 12 percent and 14 percent. Only the top two deciles kept pace over the eighteen-year period, with the 8th decile (80th percentile) of workers seeing only a 2 percent drop in wages, and the 9th decile (90th percentile) seeing a 1 percent gain, from $21.85 to $22.01 per hour.
• Rich Splitting Off from Shrinking Middle-Class:  In 1979, an earner at the 90th  percentile earned 1.75 times as much as someone at the 50th percentile.  By 1997, that gap had widened considerably, with the 90th percentile earner having a salary that was nearly double what the median worker was paid.  Further, despite a painful 12 percent drop in real earnings at the median, differences between the poor and the middle widened as well, with the ratio between median and “low-wage” (10th percentile)  workers’ earnings growing from 1.92 to 2.04 between 1979 and 1997.  The middle dropped, the poor dropped further, and many of those who had been closer to the middle sunk to poverty-level wages.
• More Poor and Poorer Poor: Increasingly, in Ohio and in the rest of the country, full-time work can not bring a family out of poverty.   The number of Ohio workers earning sub-poverty wages grew dramatically between 1979 and 1989, and has edged only slightly downward during the nineties. Furthermore, the gap between the wage of those in poverty and the poverty line is growing.  That is, not only are more workers earning less than the $7.90 needed to pull a family out of poverty, but these workers are earning less in real dollars than sub-poverty workers did in the past.  In 1979, the 21.4 percent of workers in poverty needed an average raise of $1.60 to reach poverty-level wages. Now the 28.4 percent of workers under the poverty line need a higher raise, of $2.01, to reach this subsistence wage.

The 1999 State of Working Ohio was supported in part by a grant from the Urban University Project of the Northeast Ohio Research Consortium.