Ohio set a record low in 2023 for its average annual unemployment rate, according to recent report from the federal Bureau of Labor Statistics.

Ohio’s unemployment rate for 2023 was 3.5%. In 2022, the state’s jobless rate was 4%, or 0.5 of a percentage point higher. Last year marked Ohio’s lowest average annual unemployment rate since 1976, when BLS began recording state unemployment statistics in this manner. Ohio’s jobless rate for 2023 was below the national rate of 3.6%, according to the report released March 1.

Ohio was one only six states to set record lows for annual average unemployment in 2023. The others were: Maryland, which had a 2.1% unemployment rate, Mississippi at 3.2%,North Dakota at 1.9%, Pennsylvania at 3.4% and Vermont at 2%.

Sometimes unemployment rates fall for statistical reasons having little to do with job creation. This was not the case for Ohio in 2023, according to the two economists Signal Cleveland interviewed for this article.  Sining Wang is an assistant professor of economics at the Case Western Reserve University’s Weatherhead School of Management. Michael Shields is a labor economist at Policy Matters Ohio, a progressive think tank.

“We now have the most jobs in Ohio than we have ever had in our state’s history,” Shields said.

A long road to recovery

In many ways, Ohio had struggled with job growth since the early 2000s, he said. In May 2000, Ohio had about 5.6 million jobs. It wasn’t until the second half of 2023 that the state surpassed this number. Ohio had nearly 5.7 million jobs by December 2023. Shields noted that it is a preliminary number that could be adjusted as the Ohio Department of Job and Family Services receives more data. 

“It took us 23 years to get back the jobs we lost in the early 2000s,” Shields said.

(Though the report only looked at statewide numbers, BLS reports throughout the year showed Greater Cleveland with steady job growth. For example, the metro area had the second largest drop in the unemployment rate in March.)

Wang said Ohio’s Gross Domestic Product, or GDP, a measure of the state’s economic output, is among the factors “reflecting a positive trend in the state’s economic health.”

“The real GDP for Ohio in the third quarter of 2023 was $861.4 billion in goods and services per year, with manufacturing being the highest contributor at $126.5 billion per year,” Wang wrote in an email to Signal Cleveland. “These statistics are likely the result of a combination of factors, including strategic economic policies, investment in key industries, and a conducive environment for business and job creation.”

He noted that the GDP data is seasonally adjusted. This means that it takes into account any seasonal patterns that may affect the numbers.

Shields said Ohio’s record-setting low jobless rate in 2023 confirms how quickly the state’s labor market recovered from the recession caused by the pandemic. He said it took Ohio 37 months to recover from the Covid recession. Contrast this with the Great Recession, which ran nationally from December 2007 to June 2009. Ohio entered that recession earlier than the nation and came out of it later. Shields said it took Ohio anywhere from seven to nine years to recover, based on whether one counts the state’s job loss prior to the start of the national Great Recession.

Why has Ohio had steady job growth since the Covid recession?

Wang points to good GDP growth.

“These statistics are likely the result of a combination of factors, including strategic economic policies, investment in key industries and a conducive environment for business and job creation,” he wrote.

Shields said pandemic relief from the federal government played a role.

 “I attribute this growth to the fact that we had a response from the federal government to this crisis that was scaled to the size of the problem,” he said. “Congress dispatched historic levels of fiscal stimulus, or aid, to people and they directed it to the people who needed it the most.”

The report also looked at the employment-to-population ratio. This shows the number of people employed in 2023 as a share of the total working-age population 16 and over. Ohio’s rate increased slightly from 2022, when it was 59.1%, to 59.7% last year. However, the rate is still below the national rate of 60.3%.

“The increase in the employment-to-population ratio for Ohio, while modest, is a positive sign of economic and labor market health,” Wang said. “Although slightly below the national average, the state shows a strong potential for further improvement and alignment with or exceeding national employment trends.”

In a related matter, Shields is concerned that Ohio had 93,000 fewer people in the labor force in December 2023 than it had in February 2020. When people drop out of the labor force they aren’t counted in the unemployment rate.

“They left the workforce for a number of reasons,” he said. “They could have been forced into early retirement or they could be struggling with childcare. Some people died. If those 93,000 weren’t gone from our workforce, our unemployment rate would be reasonable, but it would be more like 5%.”