Economy Lagging in Key State

COLUMBUS, Ohio —  The recovery might be lifting spirits in other parts of the country, but somebody forgot to spread the word in Ohio.

More than two years after the recession officially ended, the U.S. economy finally seems to be breaking President Bush’s way. Job growth has accelerated rapidly in recent months, creating an economic tailwind behind his campaign.

Yet as the president tries to reap the political benefits of the strengthening national economy, he still has a problem in some places: Several of the swing states that could determine the outcome of the election are not participating fully in the revival.

“The recovery hasn’t started in the state of Ohio; it really hasn’t,” said Dick Kelch, president of Ashton Plastic Products in Xenia, where his 30 employees are working 30-hour weeks until business gets better. “I don’t know anybody that’s expanding. I know guys that are cutting back again and again and again.”

“Is the economy improving for us? Hell, no,” said Susan Deister, a software project manager in Columbus who has changed jobs twice since her position at bankrupt WorldCom Inc. was eliminated in 2002.

Among the 17 states expected to be most closely contested this fall, four states -- Florida, Arizona, Nevada and New Mexico -- have been thriving since Bush took office. But others are trailing the nation in economic growth and job creation. Four swing states -- Ohio, Michigan, Pennsylvania and West Virginia -- are still considered to be in recession 2 1/2 years after the national recession officially ended.

Unemployment did fall in Michigan last month, and Bush took note of the improvement in the jobless picture in his Saturday radio address. “This week brought further evidence that across America, more citizens are finding jobs ... and these figures show that America’s jobs engine is running strong,” Bush said.

Though Ohio’s unemployment rate has fallen slightly in recent months, the state is still near the bottom of the economic heap. Though there are signs of life, they may be too little, and too late, to erase the gloom and frustration caused by the state’s three-year slide, some analysts say.

“From an economic perspective, ground zero for the election is probably Columbus, Ohio,” said Mark Zandi, chief economist at the research firm Economy.com in West Chester, Pa. “You draw a circle around Columbus with a 250-mile radius, and you’ve got a very critical swing area where the economy is lagging. In all likelihood it will still be lagging on election day.”

Perhaps no state matters more in the electoral arithmetic of the presidential campaign than Ohio; some political analysts predict the election will be decided here. Ohio has picked the winner in 24 of the last 26 presidential elections, and no Republican has ever made it to the White House without the state’s endorsement.

Bush has visited the state twice this month alone and has been here 17 times as president, including a trip to Youngstown on Tuesday to talk about healthcare. Though Ohio picked Bush over Al Gore four years ago, 50% to 46%, recent polls show Democratic Sen. John F. Kerry of Massachusetts leading Bush slightly among likely voters in the state.

Political analysts expect the candidates to focus particular attention on Columbus and the rest of central Ohio, where independents far outnumber registered Republicans and Democrats and where political sentiment appears more evenly divided.

“The road to the White House goes through Ohio, and the road to Ohio goes through Columbus” said the city’s Democratic mayor, Michael B. Coleman. He said Bush’s base was in the state’s conservative south, while Kerry was popular in the industrial north. Central Ohio “is where they’ll be competing for that swing vote,” Coleman said.

Most states were battered and bruised by the employment downturn that began shortly before Bush arrived in Washington. Ohio got clobbered.

The state lost 249,300 payroll positions during the first three years of Bush’s presidency -- roughly one of every 23 jobs. The losses were concentrated in Ohio’s factories, which shed 171,100 jobs over that period.

Bush administration officials acknowledge the state’s pain. “Ohio lost more than its fair share of jobs during our recent recession,” Treasury Secretary John W. Snow said Friday at Ohio Transmission & Pump Co. in Columbus. But administration officials say the hard times would have been even harder and lasted longer if not for the president’s tax cuts.

On May 21, the state reported that Ohio employers added 4,300 jobs in April, part of a rebound that began in January. But the gains appear to be too incremental to convince many Ohioans the economy has turned the corner.

Last month, the University of Cincinnati’s Ohio Poll showed that 59% of likely voters disapproved of Bush’s handling of the economy, while 38% approved. A year earlier, the figures were almost reversed: 57% approved and 37% disapproved.

“That’s his No. 1 vulnerability now in Ohio,” said Ohio State University political scientist Herb Asher. “We still have too many companies that are announcing layoffs and places that are downsizing, shutting, moving. It doesn’t seem like we’re out of the woods.”

Last year, Bush traveled to Canton to meet with employees at the headquarters of the Timken Co., a manufacturer of ball bearings. Standing before a red, white and blue banner reading “Jobs and Growth,” he assured them the Timken family was working hard to make sure “the future of employment is bright for the families that work here.”

Two weeks ago, Timken officials stunned the community by announcing plans to shut down the Canton ball bearing plant, eliminating 1,300 jobs, because they could not come to terms with the union representing workers there.

“I don’t know what I’m going to do,” said 48-year-old machinist Bill Wright, who has worked at the Canton plant for 29 years. “I’m too young to retire, but I’m a little bit too old to start a whole new career. It’s all still sinking in.”

The decision became instant campaign fodder for Kerry, who asked the president to intervene in the dispute.

In Columbus, one notable casualty of the recession was Buckeye Steel Co., a firm headed for 22 years by the president’s great-grandfather, Samuel P. Bush.

More than 500 union workers lost their jobs making steel undercarriages for railroad cars after Buckeye declared bankruptcy in 2002. The foundry was acquired by a management group and reopened with a new, nonunion workforce. Most of the old workers were not offered jobs.

For some former Buckeye employees, the last two years have provided a harsh introduction to the new realities of the American workplace.

Steve Abraham, 42, was making $16 an hour running a tumble blast machine at the Buckeye plant. He now earns $11 an hour delivering windshields to body shops around Ohio. Two nights a week, he delivers pizza for pocket change.

“When I first got laid off, I was bound and determined I wasn’t going to work for that kind of money, but it became pretty evident I didn’t have a choice,” Abraham said. “As far as good-paying industrial jobs, there’s absolutely nothing.”

Scott Abrams, a former Buckeye welder, tried to retool himself for the new economy. He participated in a 12-month retraining program and earned certifications in computer maintenance, networking, servers and operating systems. But after six months of searching, he hasn’t found anyone interested in his new skills.

“Everybody I talked to about computers, they want experience,” Abrams said. “There are so many other computer technicians that have lost their jobs.”

Several temp agencies suggested he look for work again as a welder.

Don Wirth, who headed the local steelworkers union at Buckeye, went 10 months without work before landing a $12-an-hour job as a teller in the county treasurer’s office, a $4 pay cut. His wife is disabled, and he said the family was struggling financially.

Before Buckeye’s demise, Wirth sent a letter to the White House seeking federal assistance in securing loans to keep the company afloat. “I wrote to George Bush and reminded him about his great-grandfather and about the steel industry,” he said. “I never got a response.”

Some disgruntled workers were never in Bush’s corner, and others remain loyal to the president despite their economic anxiety. Some Ohioans say it is unfair to blame Bush for the job losses, saying the forces that caused the slump were already in place before he took office, and that there was little he could have done to head them off.

Factory workers were not the only victims of the downturn. Computer programmers and other white-collar professionals were hard-hit too. Many of those jobs are not expected to come back, and that realization may prompt Republicans to consider voting for Kerry.

John Pardon, who left a software job in Dayton last year when the firm began outsourcing work to India, said he was witnessing the “radicalization” of Ohio tech workers.

“I can’t tell you the number of guys who voted Republican and considered themselves conservatives who have lost all confidence that Bush is concerned about them,” said Pardon, still unemployed. “Frankly, they sound like the guys down at the union halls.”

Included in their ranks are Michael and Mary Kirschenbaum, who moved back to Ohio in October after Michael’s programming job in Tennessee was eliminated by a company that began moving work to other countries. “We used to be Republicans, but we’re voting for Kerry now,” Mary Kirschenbaum said.

Not only did her husband lose his job, the couple lost $25,000 on the sale of their Tennessee house. “For a middle-class family, that’s a lot of money,” she said. “If this happens with every job move, we’re going to end up under a bridge.” Michael Kirschenbaum is working again, but the family is still angry about the move.

The national employment slump ended in September, when the U.S. job count registered the first of seven consecutive monthly increases that had restored 43% of the jobs lost up to that point.

Ohio didn’t turn the corner until January. By April, employers had added 34,800 positions, restoring 14% of the state’s lost jobs.

Statewide unemployment, which peaked at 6.3% last year, declined to 5.8% in April.

But that may not be enough to assuage an anxious public, analysts said.

“It takes more than just seeing the unemployment number going down,” said University of Akron political scientist Rick Farmer. “People need to see help-wanted signs going up in the windows. They need to hear that the high school kid next door got a job at McDonald’s. They need to see job opportunities starting to open up.”

Though some employers say they are convinced the economy is on the mend, they remain reluctant to start hiring.

Business has been booming lately at Knape Industries, a Columbus machine parts maker that pared back from 16 to 12 workers during the downturn. Owner John Knape figures he could use one or two more people, but he’s hesitating.

“We were looking at running an ad in the paper this last week, but didn’t,” Knape said. “I’m just cautious.”

Jeff Davis, proprietor of the Cafe Brioso coffeehouse down the street from the state Capitol, said he sensed the change, too. Tips have been bigger, and people have started to buy his most expensive beans, Jamaican Blue Mountain, at $36.50 a pound. Last week he had his best sales day ever, taking in nearly $2,000.

If it keeps up, Davis said, he might add a part-time worker to his eight-person workforce. But not just yet. “Things are improving, but it’s painfully slow,” he said. “I feel uneasy trying to forecast too far into the future.”

Some employers are hiring in Ohio. But the number of jobs being created has barely begun to exceed the number of jobs being eliminated.

Mark Swepston, president of Atlas Butler Heating & Cooling in Columbus, said his commercial work was growing rapidly, and he was hiring new technicians as fast as he could train them. Over the last year, he has expanded his workforce from 86 to 105.

“A lot of businesses have been doing very well. They’re moving ahead with projects. There’s a lot of pent-up demand,” Swepston said. “We see people spending the money now.”

Data Exchange, a California firm that contracts with other companies to fix computers and other devices, has opened a big repair facility in Columbus. Most of the 200 jobs will go to trained technicians.

“Quite honestly, the fact that the Columbus area is a little depressed is helpful to us,” said Senior Vice President Alan Kheel in Camarillo. “It makes the real estate cheaper. It makes the labor cheaper. It’s certainly a lot less than in California.”

Others are still waiting for the recovery to show its face.

“They say the recession ended a couple of years ago,” said Bob Juniper, owner of 3C Body Shop of Columbus.

“Not in Ohio.”

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Swing state economies

The 17 states regarded as presidential election battlegrounds by strategists in both campaigns include some of the nation’s strongest and weakest regional economies.

*--* Household House Unemployment Employment income price rate (April) gain/loss growth growth (Electoral votes) 01/01-04/04 thru 1st qtr Nation (538) 5.6% -1.1% 1.6% 8.4% Surging Ahead: Florida (27) 4.6% 3.7% 1.0% 11.3% Arizona (10) 5.4% 3.0% 1.4% 7.5% New Mexico (5) 5.6% 4.4% 2.3% 6.4% Nevada (5) 4.3% 7.2% 1.0% 11.9% Stabilizing: Missouri (11) 4.7% -0.7% 1.7% 5.8% Washington (11) 6.3% -1.9% 2.8% 5.5% Minnesota (10) 4.1% -1.1% 2.2% 8.9% Wisconsin (10) 4.6% -0.9% 1.8% 6.9% Iowa (7) 3.9% -2.1% 4.0% 5.2% Oregon (7) 6.7% -1.9% 1.0% 6.4% Arkansas (6) 5.6% -1.1% 2.0% 4.5% Maine (4) 4.3% -0.4% 1.7% 11.0% New Hampshire (4) 3.9% -1.6% 1.5% 10.2% Still Suffering: Pennsylvania (21) 5.3% -1.9% 2.4% 8.0% Ohio (20) 5.8% -3.8% 1.5% 4.3% Michigan (17) 6.1% -4.4% 1.0% 4.2% West Virginia (5) 5.2% -1.3% 1.7% 5.0%

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Sources: Economy.com, Bureau of Labor Statistics