The recession is still here, and hurting Ohioans

[aeadmin]

Headlines in the October 29 papers announced that the recession was officially over. US gross domestic product grew by 3.5 percent in real terms, driven in large part by the "cash for clunkers" car buying incentive program and the homebuyers' tax incentive. What does this mean for the average Ohioan? In the long run, hopefully we can look back on the third quarter as a turning point that marked the end of the longest postwar recession.

In the short-run, the average Ohioan will not see much difference in the economy. The number of jobs in Ohio continued to decline through September. Although our headline state unemployment rate declined from 10.8 percent to 10.1 percent, this was mainly due to some of the unemployed giving up on their job searches and dropping out of the labor force, so they are not counted in the U.S. Labor Department's most widely cited measure of unemployment. The Labor Department's broadest measure of unemployment, which counts such "discouraged" workers as well as those who are working part-time involuntarily, now stands at 16.1 percent for the most recent four calendar quarters. This represents nearly 1 in every 6 adults who have at least a marginal attachment to the labor force. The broadest measure for the U.S. is 15.2 percent.

Widespread unemployment and underemployment create unprecedented need for health and human services, while sending state revenues into a downward spiral. In previous recessions, the state raised taxes and made spending cuts in order to balance the budget. This time around, state leaders have relied almost exclusively on cuts, and health and human services have been some of the hardest-hit programs.

Our report "A Balanced Approach Promoted Ohio Recovery after Previous Recessions" (October 2009)looks backs at recent decades and finds that strong job growth followed tax increases under Governor Celeste, a Democrat, and Governor Voinovich, a Republican. A weak tax base will not promote a strong recovery. Denying services to families in need will only send some of them into a downward spiral that will take them years to recover from.

The Governor's proposal to cancel the final year's installment of five years of income tax cuts is necessary to protect the education budget, but will not restore funding to social services. More revenue needs to be raised, especially in light of the enormous gaps that will occur in two years if the federal stimulus funds for the state budget expire as planned.

[joanalex]

As a teacher, I have had to lose 2% of my salary, which was taken out of the last paycheck before summer break. We do not get paid during the summer, so that takes several hundred dollars out of my budget. I also just found out that the state wants to cut an additional 10% off of our salaries next year also to help balance the budget. We are already underpaid and overworked!