Ohio Jobs That Apparently Are Not Worth Preserving

Never mind that the Ohio legislature continues to cut funding to K-12 education and local communities or that those cuts have resulted in the loss of thousands of teaching positions and local civil-service jobs.

Never mind that the Ohio legislature continues to give tax breaks to the most affluent Ohioans and Ohio corporations, even as median wages for average workers and household incomes continue to decline.

Never mind that the Ohio legislature pursues a radical ideological agenda saliently illustrated by its adding draconian restrictions on women’s health centers to the biennial budget bill literally in the last hour before the vote on the bill.

Never mind all of that. Governor Kasich and the leaders of the legislature have continued to insist that they are focused on jobs.

Never mind that they have not passed any job-creation legislation.

Never mind that the new “privatized” but publicly funded economic-development agency, JobsOhio, has provided incentives to corporations that have had a net job loss in Ohio—at least as far as anyone can determine, since the legislation that created this new agency also made it immune from any formal public oversight.

Never mind that the unemployment rate in the state has edged above the national average, making it clear that without the jobs created by President Obama’s “bailout” of the auto industry, Ohio’s unemployment rate would have been well above the national average for the last three years (one out of six private-sector jobs in Ohio are related to the auto industry).

Never mind all of that evidence to the contrary. Governor Kasich and the leaders of the legislature have continued to insist that they are focused on jobs.

So, in such a context, it may seem incongruous that Governor Kasich has failed to step in to protect more than 1,000 good-paying jobs in an area of the state that has been chronically economically depressed.

Those jobs were provided at the Ormet aluminum smelter, which is located in Monroe County along the Ohio River. It has been the major employer in the region for more than five decades. Monroe County’s population peaked in 1900 at about 27,000. It is now only slightly more than half that peak population, with 14,459 residents as of 2012. That represents a 4.1% decrease just since the 2000 census. The county’s main attraction is the Wayne National Forest, which covers much of the county. The Utica Shale Gas Field also extends through the county, and companies such as the Exxon subsidiary XTO Energy have acquired drilling rites on tens of thousands of acres in the county.

In short, Monroe County is part of Appalachia in Ohio, and the economic opportunities for the people who live there have been very limited for a long time.

So why has the Ormet smelter laid off its entire workforce and ceased operations? American Electric Power raised the utility rates for the plant by more than $20 million per year. The company appealed the rate increase to the state Public Utilities Commission (PUCO), asking that a rate reduction be approved because the owners were trying to negotiate the sale of the plant and the new owner planned to take advantage of the regional boom in shale-gas drilling by constructing a gas-powered generating plant to power the smelter. But PUCO refused to order the rate adjustment.

In response to appeals to his office, Governor Kasich has said (1) that it would be illegal for him to try to influence PUCO’s decisions, (2) that the issue is not really the increase in utility rates but the decline in aluminum prices that has prevented the company from paying the increased rates, (3) that the economic issues are not as acute as they are being portrayed because many of the laid-off workers actually live across the river in West Virginia, and not in Ohio; so the issue is really more about the United Steel Workers trying to preserve its membership than about the economic impact of the plant’s closing on Ohio, and (4) that the state is providing job-training and job-placement services to the displaced workers.

Let’s work backwards through this list of rationalizations.

First, job-training and job-placement services don’t serve anyone if there are very limited local jobs to be had.

Second, even if some of the laid-off workers do live in West Virginia, it is ridiculous to suggest that a regional economy can be segmented along state boundaries. The plant’s closure has meant the immediate loss of $100,000 in property taxes for Monroe County’s single school district. And given how the economic impact of wages is compounded throughout a local economy, the loss of 1,000 good-paying jobs is going to have a tremendous economic impact of the small communities in this county—and in surrounding Ohio counties.

Third, the decline in aluminum prices would not have led to the immediate closure of the plant were it not for the steep increase in utility costs. One might speculate that the long-term future of the plant was questionable because of the projected trend in aluminum prices, but rationalizing current actual jobs lost as the equivalent of future possible job losses is, at best, a very dubious position to take, especially since neither the state nor the utility company were being asked to providing any direct funding to the company. Instead, the company was simply asking for a short-term reprieve from a steep rate hike in its utility costs, and the declining prices of both coal and natural gas make it extremely unlikely that the utility company is simply passing on its own escalating costs of operation.

Finally, Governor Kasich has promoted the creation of JobsOhio as a “privatized” alternative to a supposedly more bureaucratic and inadequately responsive state agency. JobsOhio is supposed to allow the state to be much more immediately responsive to economic-development opportunities and to issues that might cause current employers to consider leaving Ohio. But, if something as basic to business operations as utility costs are beyond the scope of the administration’s influence, even with this new development agency in place, then one has to question the basic efficacy of the agency and of the administration.

Moreover, JobsOhio has offered millions of dollars in grants to companies that have agreed simply not to reduce their Ohio workforces below some set percentage. Even if the state had to step in to cover the entire $20 million increase in utility costs at Ormet, that investment would be much smaller than what it has offered other companies to rebuild or renovate their corporate headquarters without any promise of adding employees or even maintaining their current levels of employment.

I am not sure exactly how the following factors may have played into the decision-making by the Kasich administration. But all three county commissioners in Monroe County are Democrats. The United Steelworkers is a union that has typically supported Democratic candidates–because they have typically been more pro-labor than Republicans. And the “fracking” industry is rapidly replacing coal mining as the primary energy-related industry in Ohio and especially in the Appalachian counties in Ohio. Although Governor Kasich provoked a great deal of criticism from the Far Right for proposing reasonable tax policies related to the “fracking” industry, the actual taxes that have subsequently been imposed on the industry have ended up being as minimal as the regulatory oversight of the industry. It will be interesting to see which candidates receive the political contributions from that industry.

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