July 22, 2014

Medina
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Ohio is losing middle-class jobs

Read an interactive version of this breakdown on Ohio’s high-tech job losses

Does new technology destroy jobs? Obviously. Just ask the assembly line worker replaced by robots or the grocery clerk who lost a job to scanners. But there is supposed to be a tradeoff: better jobs in new industries to take the place of those made obsolete.

Job seekers wait in a line at a job fair in Southfield, Mich., in 2011. Half of the 7.5 million jobs lost in the U.S. during the Great Recession were middle-class wages, ranging from $37,000 to $68,000. But only 2 percent of the 3.4 million jobs gained since the recession are at that level. (AP PHOTO)

That’s what happened in the early 20th century when millions of farm workers replaced by tractors found higher-paying, middle-class jobs in factories and offices in cities. But that isn’t happening this century.

Quite the opposite. Instead of growing employment, most high-tech industries are seeing jobs vanish, according to a Gazette analysis of data compiled by the Ohio Department of Job and Family Services:

• Since 2000, employment has declined in 24 of 30 industries categorized by the state as both high technology and high wage.

• The net loss over the decade totaled about 120,000 jobs — nearly a quarter of the about half-million employed in those industries in 2000.

• The losses aren’t solely the result of the Great Recession of 2008-09. About half the jobs disappeared from 2000 through 2006.

While most of the high-tech industry sectors in Ohio are manufacturers, many that shed workers are in cutting-edge industries, including aerospace, chemical, computers, turbine and power transmission, electronics and medical devices.

And although workers in high-tech industries make up only about 10 percent of all Ohio workers, they earn solidly middle-class wages, averaging nearly $67,000 a year in 2011.

Lewis Horner, chief of workforce research for the Ohio Bureau of Labor Market Information, cautioned that some of the jobs may not have disappeared. He pointed out that many manufacturers have outsourced some of their jobs, such as maintenance and cleaning, to firms classified as part of the service sector.

“The job is still in the factory, but it’s not counted as being in manufacturing anymore,” Horner said, citing studies by Chicago Federal Reserve researchers.

But Horner acknowledged Ohio has seen substantial, apparently permanent, job losses in the past decade.

“After 2000, we saw a decline in many jobs that never reappeared in Ohio,” he said. “And it’s hit high-tech industries as well as the more low-tech ones.”

Horner also noted that the six high-tech sectors that have grown, including software publishers, computer system design, drug and medicine manufacturing and colleges and universities, have hired relatively few workers — adding fewer than 27,000 new jobs statewide since 2000.

So what’s happening?

Horner said some researchers argue the U.S. economy fundamentally has changed and the old rules don’t apply.

He cited the work of David Autor, a Massachusetts Institute of Technology economist.

“He’s arguing that the American workforce is being polarized and what we’re seeing is the growth of a lot of low-skill, low-wage jobs and a group of high-skill, high-wage jobs. In between, you have the loss of the middle-skill, middle-wage jobs — both white collar and blue collar.”

Mead Wilkins, the director of Medina County Job and Family Services, goes further, arguing that slower job growth and a higher level of unemployment is “the new norm.”

“I think it’s a structural change in economy needed to be globally competitive,” he said.

As a result of the downward pressure on wages in the global economy, many workers already have dropped out of the middle class, he said.

The proportion of families who are middle class has been shrinking for the past decade and probably will continue to shrink,” he said.

While saying there are “no good answers,” Wilkins argued a more educated labor force could help.

“We just have to be smarter than the rest of the world,” he said. “That’s the only way we’re going to continue to be an economic powerhouse.”

While education is the most often cited prescription for the nation’s “jobless recovery,” some experts disagree.

One of the most outspoken is Alan Tonelson, a researcher with the United States Business and Industry Council, a Washington-based advocacy group representing medium and small manufacturers.

Tonelson argues education alone won’t help American workers get jobs because U.S. trade policy gives Third World nations an unfair advantage in global markets.

China, India and other developing nations “like every other government on earth understands the value of improving its population’s education and skill levels,” he said. “At the same time, they retrain such enormous amounts of surplus labor that their wages will remain very low even for highly skilled workers.”

Tonelson said the effect of the tilted playing field is seen in the continued loss of the market share held by U.S. firms within their own country.

“Companies losing market share in their own backyard would never be described as successes,” he said in a report released earlier this month.

Tonelson said his research showed imports in 2011 had captured a record share of U.S. markets for advanced manufactured goods, such semiconductors, construction machinery, high-tech medical equipment and machine tools.

Many of those manufacturers were among those Ohio high-tech industries that have seen shrinking payrolls in the past decade.

Bethany Dentler, executive director of the Medina County Economic Development Corp., said it was too early to conclude the job market will continue to stagnate.

“Anytime you are in a time of transition and change, it’s going to be very painful for those affected. Right now, it’s those who have been downsized and lost their jobs.

“There seems to be a structural shift happening — I agree those jobs are not coming back. I just happen to believe there are other jobs around the corner.”

Contact reporter David Knox at (330) 721-4065 or dknox@medina-gazette.com.