By Tom Blumer | Special to Ohio Watchdog
June’s Regional and State Employment and Unemployment Summary carried relatively good news for Ohioans, but not for most of the nation.
The U.S. Bureau of Labor Statistics, which issued the report on July 20, told us that “Twenty-seven states recorded unemployment rate increases, 11 states and the District of Columbia posted rate decreases, and 12 states had no change.”
Ohio was among the states with decreases, as its seasonally adjusted unemployment rate declined from 7.3 percent in May to 7.2 percent. With the exception of Missouri, all other states ordinarily associated with the Rust Belt turned in declines.
Ohio’s June rate is a full point below last month’s national unemployment rate of 8.2 percent. The last time the Buckeye State‘s rate was a percentage point or more below the national level was in 1995, when its rate of 4.7 percent was 1.1 percentage points below the nation’s 5.8 percent. The only other such occurrence in the 36 years of state-related information on the bureau’s website was in January of that same year, when Ohio’s 4.6 percent rate trailed the national average by exactly 1 percentage point.
Additionally, though caution is advised because of ongoing subsequent revisions, June’s BLS report tells us that Ohio’s seasonally adjusted employment increased by 18,400, and is up by 100,000 in the past 12 months.
That is all nice, but it’s not enough. Ohio has a long way to go before anyone can declare that it has achieved a legitimate recovery from the recession. Policymakers in Columbus also need to figure out how to buck the tide of general economic deterioration and stagnant job growth we’re clearly beginning to see nationwide.
Fortunately, the solution is right beneath us — well, thousands of feet below.
Officials with the Division of Geological Survey at the Ohio Department of Natural Resources revealed in a presentation last year that the portion of the Utica-Point Pleasant shale formation within the state’s borders may contain between 1.3 billion to 5.5 billion barrels of recoverable oil, and between 3.75 trillion and 15.7 trillion cubic feet of natural gas. At its current price of about $100 a barrel, the recoverable oil alone may be worth up to $550 billion.
As energy companies drill for these reserves, the economically challenged southern and eastern parts of the Buckeye State could see an energy-related boom every bit as impressive as what North Dakota has experienced in the past few years. North Dakota’s jobless rate in June was a 2.9 percent. Though its workforce is less than 10 percent of Ohio’s size, employment there has grown by almost 26,000 in the past year.
Ohio Gov. John Kasich‘s administration should move away from its insistence on increasing the state’s severance tax on oil by 1,900 percent and instead apply what I will call the “North Dakota solution.” That means Ohio should watch what has happened in North Dakota take place here.
The additional spin-off economic activity and related tax collections resulting from oil and gas drilling will in the long term accomplish far more to improve the state’s economy and financial coffers than radically increasing the severance tax will in the short term. The North Dakota solution also won’t encourage energy companies looking at ramping up their activities in Ohio to go somewhere else, leaving the state high and dry.