Ohio’s Middle Class Has Not Seen the Benefits of Economic Gains, and Regressive Public Policy Choices Have Exacerbated the Economic Situation of Middle-Class Ohioans
Washington, D.C. — Even as the rest of the country experiences a steady economic recovery, Ohio’s middle class has fallen behind, a new analysis from the Center for American Progress Action Fund reveals. Regressive public policy choices—including the state tax system, as implemented by Gov. John Kasich (R) and which largely favors the state’s wealthy top earners—have exacerbated the economic situation of middle-class Ohioans.
“Ohio’s economy has grown, but many working Ohioans have yet to see the benefits of the recovery. Middle-class Ohioans have less household income than they did in 1984, and the most recent data show that they have less household income than Americans in most other states,” said David Madland, Managing Director of the Economic Policy team and Director of the American Worker Project at the Center for American Progress Action Fund. “Policies designed to help Ohio’s wealthiest earners—such as the ones put forth by the Republican-controlled state government that result in the middle class shouldering a bigger tax burden—have made a direct contribution to the worsening inequality in Ohio.”
The issue brief, released in advance of the Republican presidential primary debate that will take place in Cleveland this week, shows how economic gains have not translated into tangible benefits for Ohio’s middle class. The typical Ohio household is now earning less than it did in 1984—and below the U.S. average. In 2013, Ohio’s median household income was just $46,398—less than it was in 1984, the earliest year for which data are available—and sits more than $5,500 below the 2013 median household income nationally.
While Ohio’s economy overall is relatively healthy—personal income per capita increased 57.8 percent in inflation-adjusted terms between 1984 and 2013—this growth has not translated into gains for the middle and working classes because a significant share of the state’s economic gains has gone to Ohio’s wealthy top earners. CAP Action’s brief shows that over the past 30 years, the share of the total income generated across Ohio that has gone to the middle class has declined sharply. In 1984, Ohio’s middle class took home 52.6 percent of the state’s collective income—but by 2013, that number dropped to just 47.2 percent. Conversely, the share of income taken home by Ohio’s top 20 percent of earners rose from 43.1 percent to 49.2 percent. In other words, by 2013, one-fifth of Ohio residents took home nearly half of the total income generated across the state.
CAP Action’s brief points to regressive public policy choices—including the state’s tax system, an insufficient minimum wage, and the weakening of unions and the erosion of collective bargaining rights—as drivers that have contributed to worsening inequality in Ohio. On tax policy in particular, the state’s Republican-controlled legislature and Republican governor have enacted tax policies that force middle- and low-income earners to shoulder a greater tax burden, while delivering big tax breaks to Ohio’s wealthiest earners. For instance, Gov. Kasich’s June 2015 budget decreased income taxes by 6.3 percent across the board, reducing the top tax rate to less than 5 percent. This across-the-board tax cut means that Ohio’s middle class will receive an average cut of just $24, while the state’s top 1 percent of taxpayers will see an average cut of more than $10,000. As a result, Ohio’s middle-class earners will effectively contribute a greater share of their income to taxes than will the wealthiest earners.
Click here to read “Ohio’s Struggling Middle Class” by David Madland and Danielle Corley.
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