By Tom Blumer | Special to Ohio Watchdog
According to the federal government’s “County Employment and Wages News Release,” a quarterly report whose most recent edition went public June 28, “The U.S. average weekly wage decreased over the year by 1.7 percent to $955 in the fourth quarter of 2011.” This was only the fifth decline in the 33 years such statistics have been tracked.
Though the report includes some national statistics such as the one just cited, it primarily addresses employment and earnings in the 322 U.S. counties with 75,000 or more jobs. Eleven of those counties are in Ohio. Employment grew in every one of them in 2011, while average weekly earnings fell in all but two:
- Butler County with 0.6 percentage job growth and -1.8 percentage wage decline;
- Cuyahoga County with 0.9 percentage job growth and -1.9 percentage wage decline;
- Franklin County with 2.3 percentage job growth and -0.6 percentage wage decline;
- Hamilton County with 1.2 percentage job growth and -1.4 percentage wage decline;
- Lake County with 1.3 percentage job growth and 4.9 percentage wage increase;
- Lorain County with 2.1 percentage job growth and 1.1 percentage wage increase;
- Lucas County with 1.2 percentage job growth and -1.2 percentage wage decline;
- Mahoning County with 0.7 percentage job growth and -1.8 percentage wage decline;
- Montgomery County with 0.8 percentage job growth and -2 percentage wage decline;
- Stark County with 1.5 percentage job growth and -1.6 percentage wage decline;
- Summit County with 0.3 percentage job growth and -1.7 percentage wage decline.
Note that the average wage changes don’t consider inflation, which from December 2010 to December 2011 was 3 percent. This means that the U.S. average weekly wage in real terms declined by almost 5 percent last year. After taking a hit like that in 2011, it should be no surprise that consumer spending has failed to propel the nation’s economy to any meaningful degree so far this year.
One obvious question is why Lake and Lorain counties saw wage growth, while the rest of Ohio’s counties and the vast majority of the rest of the nation’s counties — 282 out 322 — saw declines. The answer, as the Dayton Daily News recently noted while bemoaning Montgomery County’s worst-in-the-state decline, is “fracking:” “A boom in oil and natural gas drilling spreading into eastern Ohio with the advent of horizontal fracturing, or ‘fracking,’ is largely responsible for the pay hikes in Lorain and Lake.” Lake County’s 4.9 percent wage gain was the third highest in the nation.
Counties benefiting from the boom in other states are seeing similar results. Average wages in Washington and Westmoreland counties in Pennsylvania, where Marcellus shale drilling is taking place, grew by 2 percent and 2.9 percent, respectively. The nation’s second-highest average wage increase of 5.8 percent came out of Maryland‘s Harford County, where fracking activity is also strong.
The Buckeye State‘s two large-county bright spots should cause Gov. John Kasich and his administration to have second thoughts about their plans for the severance tax. Kasich and his team want to increase that tax, which is tied to minerals extraction, by 1,900 percent. You read that right. It’s at 20 cents per barrel of oil obtained now, but the administration wants it to go to $4 while reducing the state’s income tax to offset that increase. It also wants to apply a similar increase to natural gas.
While some increase in the severance tax may be justified based on increased compliance and enforcement costs at the Ohio Department of Natural Resources, the governor’s current plan seems very unreasonable, especially when one accounts for the other taxes the companies involved now are paying, including commercial activities, income and property taxes.
Don’t kill the goose even before it lays most of its golden eggs, guys.