Beacon Journal editorial board: After a decade of tax cuts — Ohioans in financial hardship
Oct 06, 2017
When Statehouse Republicans started reducing taxes in 2005, they didn’t promise that a decade later a larger share of working Ohioans would be struggling to make ends meet. They promised a stronger economy for all, more jobs, higher incomes, an improved quality of life. They would do well to spend time with the new ALICE report from the Ohio United Way.
ALICE stands for “Asset Limited, Income Constrained, Employed.” The nonprofit agency makes periodic assessments of where such Ohioans stand, those who are working, who carry incomes above the poverty level yet face financial hardships. They often lack the income to cover the cost of basic needs.
When combined with those in poverty, they account for 40 percent of Ohio households, nearly 1.9 million in all, 1.2 million households fitting the ALICE category. The share was 37 percent in 2007.
The Ohio United Way performs a service in offering a more realistic assessment of the income necessary for households to get by. The current federal poverty level for a family of four is $28,290. Yet the report puts the annual “Household Survival Budget” at $60,396.
For many working Ohioans, that income level is out of reach. The report notes that two-thirds of the all jobs in the state pay less than $20 per hour, and three-quarters of those pay between $10 per hour and $15 per hour. The report adds that during the next decade, such jobs will “grow far faster than higher wage jobs.”
These findings are reinforced by the National Survey of Financial Well-Being, recently released by the federal Consumer Financial Protection Bureau. It reports one-third of consumers experiencing “material hardships,” for instance, lacking enough food or unable to find an affordable place to live.
The collective portrait is grim, so many unable to get ahead. Part of the problem goes to the changing economy. Ohio, in particular, has been slow to recognize in its decision-making that a well-educated workforce is essential to advancing prosperity.
The ALICE report brings attention to income inequality, so many paid so little for their contribution. In this context, Statehouse Republicans have engineered tax relief the past decade skewed to the wealthiest 1 percent of Ohioans, averaging $20,000 per year. This has been the course even as those at the top rungs have enjoyed a disproportionate share of the new income generated since the recession and even earlier.
All told, the Republican tax-cutting translates to $3 billion a year less in state revenue. Might a portion of that money go to better use? Foodbanks facing increased demand merit additional funding. So does the successful Ohio House Trust Fund. The ALICE report points to a 40 percent financial gap in meeting basic housing needs, and a 50 percent gap in child care.
This is how the Medicaid expansion has elevated lives. At the same time, many ALICE Ohioans would be helped by congressional repairs to the Affordable Care Act, the current subsidies falling short.
Make the state Earned Income Tax Credit refundable, and working Ohioans with lower incomes would have more money. Studies repeatedly have found that such financial improvements add stability to households and result in children performing better in school.
And education, also deserving more support from preschool to college levels, drives opportunity and mobility, instilling hope. So, yes, Ohio leaders should spend time reading and thinking about the ALICE report.