As Ohioans lose jobs, unemployment falls. What’s going on?

Ohio lost 5,400 jobs in February, and yet the unemployment rate somehow dropped.

According to Policy Matters Ohio, the reason is not encouraging. A statement released last week said the two apparently contradictory events occurred because people had left the labor market and were therefore not counted as unemployed.

An estimated 2,000 Ohioans have left the workforce.

“Job losses in February deepen the drag on economic growth we have seen through 2025.” Molly Bryden, a researcher at Policy Matters, said in a statement.

She said the government shutdown will delay the release of Ohio’s March jobs report until next month. The national jobs report for March was better than expected, so Bryden said that could bode well for Ohio.

However, she noted, “Ohio’s economy may be more vulnerable to economic headwinds generated by federal policy decisions; we continue to lag behind most states in job growth in the wake of the Covid-19 pandemic.”

Job losses in the public sector have been disproportionate, with 3,600 job losses in March. Bryden said this is partly due to service cuts by the state and federal government.

“Sustained efforts to cut federal funding – largely targeted at key public assistance programs such as (Supplemental Nutrition Assistance Program) and Medicaid, along with public education funding – could strain state and local budgets,” Bryden said.

Ohio’s anemic job growth comes after years of tax cuts and other programs that favor the wealthy and are sold on promises they will do so. develop the economy. Despite failing to deliver on their commitments, Republican lawmakers continue to propose tax cuts that benefit disproportionately to Ohio’s wealthiest residents.

Bryden mentioned one such cut when she said it weakened the state’s ability to address indigent employment. In 2025, the GOP-led Legislature passed a “flat-rate” tax that costs the state about $1 billion a year, and 40% of benefits go to people earning more than $1.8 million a year.

“Ohio faces enormous constraints in increasing state appropriate revenues due to changes in the law tax policy under Ohio’s 2026-27 operating budgetthat disproportionately favors highest-income households and wealthy corporations,” Bryden said. “Tightened state and federal spending could destabilize local government budgets while increasing the impact on public employment, which has further implications for the availability and delivery of key public supports for Ohio’s working families.”

With unemployment at 4.3%, Ohio was in a six-way tie in January 21st highest unemployment. This appears to be a huge improvement over last May, when the Buckeye State had the fifth-highest unemployment rate.

But Bryden said the basic story isn’t very elated.

“Lower unemployment due to a shrinking labor force is nothing to celebrate,” she said. “Ohio’s labor force participation rate still has not returned to pre-pandemic levels. The exodus of working Ohioans from the workforce has serious implications for our long-term economic growth and may indicate that the pro-business stance of Ohio lawmakers is not fostering an economy that works for Ohio’s working families.”