The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Ohio in May had the fifth-highest unemployment in the United States.
The people behind state programs that are supposed to create jobs aren’t taking credit for Ohio’s relatively high jobless rate.
The U.S. Bureau of Labor Statistics on June 24 released May unemployment rates. Ohio tied with Rhode Island for the fifth-highest rate at 4.9%. Exceeding them were Kentucky, at 5%, California, at 5.3%, Michigan, at 5.4% and Nevada, at 5.5%.
Ohio had the nation’s sixth-highest unemployment rate in April.
Those jobless rates come despite a long history of state lawmakers and political leaders foregoing huge amounts of tax revenue on the argument that giving wealthy people and businesses tax breaks and other perks will prompt them to make new investments and create jobs.
For example, under the guidance of then-Gov. John Kasich, Ohio in 2013 created the LLC tax break, allowing people to incorporate as “pass through” entities and avoid a big portion of state income tax.
The tax break costs the state about $1 billion a year, and there’s little evidence that it’s done much in the way of create jobs.
Ohio’s non-farm employment in December 2023 was 112.3% of its 2010 level, according to the Ohio Department of Job and Family Services. That lags the national average of 121.2% by nearly nine percentage points.
Meanwhile, the group of Ohioans already doing the best have done well under the LLC tax break. Policy Matters of Ohio in 2022 reported that the top 7% claiming qualifying business income in 2020 received 39% of the overall value of the tax break — about $390 million.
Despite the fact that the LLC loophole hasn’t lived up to its promises, the Ohio legislature hasn’t repealed it.
Around the same time that program was created, the Kasich administration also led the way in creating JobsOhio. Even though it was created by the legislature and was given a deal to lease the state’s liquor franchise, the Ohio Supreme Court has allowed it to operate as a “private” corporation, exempting it from Ohio’s open-records laws.
The agency has spent more than $1 billion in what used to be state money, providing much of it to wealthy corporations in the form of incentives to locate or expand in Ohio, or at least not to leave.
Research has shown that such incentives rarely play a deciding role in businesses’ strategic decisions. And JobsOhio has struggled to produce data that show it has improved the state’s employment picture.
Asked if Ohio’s relatively high unemployment rate reflected poorly on the work of his agency, spokesman Matt Englehart said it would be even worse — if not for JobsOhio.
“Much of the current unemployment is the result of federal layoffs and their ripple effects,” he said in an email. “Because of Ohio’s large number of federal workers, those federal layoffs could have created a severe shock to Ohio’s economy. Still, unemployment is only slightly elevated because of JobsOhio’s focus on industrial diversity. We focus on growing 10 sectors of Ohio’s economy, accounting for 22% of jobs, 29% of payroll, and 36% of Ohio’s gross state product.”
Ohio’s per-capita federal workforce isn’t all that big, according to a March report by Columbus-based Scioto Analysis. With 10 federal employees per 1,000 workers, Ohio tied with seven other states for the 26th-highest rate of federal employees.
Englehart didn’t furnish any data showing that JobsOhio has diminished the state’s unemployment rate.
“While JobsOhio does not directly impact month-to-month swings in preliminary data, we are investing aggressively for the long term to build a highly diverse, resilient economy across strategic industries,” he said.
Despite questions about its efficacy, Gov. Mike DeWine and legislative leaders in February extended JobsOhio’s control of the liquor franchise for an additional 15 years — until 2053. And while JobsOhio agreed to pay the state $1.41 billion for its initial lease, it wasn’t required to pay anything for its lucrative extension.
DeWine this week signed another windfall to the wealthiest Ohioans that was pitched as a way to help the economy. The now flat, 2.75% state income tax was touted as an “economic driver” by Ohio Senate Republicans.
But Policy Matters Ohio said it will cost $1.1 billion a year and the wealthiest 20% of households — those making more than $138,000 a year — will reap 96% of the benefit.
And Ohio is giving up tax revenue as President Donald Trump appears poised to slash Medicaid and food assistance to the poor. Ohio would have to fill those gaps or see hundreds of thousands lose health care and go hungry, advocates say. In addition, the cuts could plunge the economy into recession, depressing state tax collections as it voluntarily foregoes part of them.
DeWine’s office was asked, in light of Ohio’s relatively high unemployment, if it was wise to keep creating windfalls for the richest people in the state. It didn’t respond.
