Ohio’s Labor Market Cycles
Now that it appears that the worst of the “great recession” is over, assessing the damage done to Ohio’s labor market offers insights into what a potential recovery might look like in the state.
Over the course of this recession, Ohio’s payroll employment losses have continuously fared worse than the state average. To date, Ohio’s payroll employment losses of −6.1 percent have not been the largest in the country (that would be Nevada, with 10.7 percent), but they have been worse that the state average (−4.8 percent). Similarly, Ohio’s unemployment rate did not increase the most during the recession (again, that would be Nevada, at 7.8 percentage points), but it has increased more than the state average. (Ohio’s unemployment rate has increased 5.2 percentage points since the beginning of the recession, compared to the state average of 4.4 percentage points.) These numbers suggest that Ohio’s labor market recovery will also be slower than the average state.
Examining Ohio’s previous labor market cycles also allows one to glean information about the pending recovery. Comparing cycles reveals the severe impact that the current recession has had on Ohio’s labor markets. Payroll employment typically bottoms out 15 months after the peak, but it has yet to reach bottom, and we are currently 24 months from the peak. Also notice that payroll employment does not return to peak levels until 35 months after the peak in the average payroll employment cycle. An even more worrisome pattern emerged in the previous two recessions. During the 1990-91 recession, employment never fell that far relatively speaking, but it took every bit of 35 months for it to return to peak levels. Moreover, Ohio has still not returned to peak employment levels since the 2001 recession.
Ohio’s unemployment rate cycles tell a similar story. This recession saw unemployment rates increase much more than the average recession (5.2 percentage points compared to 2.6 percentage points). Fortunately, it appears that Ohio’s unemployment rate has stabilized, as it has remained 10.8 percent over the past three months. However, after the 1990-91 recession, Ohio’s unemployment rate declined very slowly (48 months) and has yet to return to its March 2001 level (3.9 percent).
Discounting the structural problems in Ohio’s economy such as human capital accumulation, population loss, manufacturing decline, and so on, labor market data indicate significant damage has been done to Ohio’s economy during the recession. Previous patterns in the labor market data point to a prolonged recovery.