The bad news in today’s RI jobs reportSeptember 17th, 2010 at 9:37 am by Ted Nesi under General Talk
Most of the headlines about today’s Rhode Island jobs report for August lead off with the tenth-of-a-point decline in the state’s unemployment rate, from 11.9% in July to 11.8% in August. Slow but steady progress, right?
Dig a little deeper, though, and this was a very discouraging report. Let me explain.
The jobless rate is a very simple calculation – it takes the number of unemployed Rhode Islanders and divides them by the state’s total number of workers. So there are two ways to make the rate go down: reduce the number of unemployed people, or reduce the number of workers (employed plus unemployed).
In August, both of those things happened. The number of unemployed Rhode Islanders fell by 800 to 67,500. But the total number of workers fell even more – by 1,700, to 572,100.
What’s more, this was the fourth month in a row that the state’s labor force shrank – 7,200 Rhode Islanders have now dropped out of the work force since May. If they had stuck around, the state’s unemployment rate would have been much higher last month – 12.9%.
Here’s a graph showing the monthly change in the labor force since 2006:
As you can see, the drop in the state’s total number of workers since May has happened much faster than during the depths of the recession from 2007 to 2009. Where are all those missing workers going?
They could be moving out of state. Or they could be giving up on looking for work – possibly for good reasons, like going back to school or entering a training program, and possibly for not-so-good reasons, like a lack of job opportunities. It may be that last fall and winter, people rushed back into the work force on signs of a recovery, and now some of them are dropping out again. But those are just guesses.
The details aren’t really what’s important, though. The fact is, Rhode Island’s job market is barely recovering – the state has added only 3,400 jobs since payrolls bottomed in April, with fewer than 1,000 added in the last two months.
To put that in context, Rhode Island needs to add another 44,500 jobs to regain the previous employment peak achieved in January 2007. At the rate we’re going, we won’t get there for more than four years – around the start of 2015.
Hopefully job growth will accelerate soon, so more Rhode Islanders can get back to work. But the state is in a deep hole, and right now we’re not climbing out of it nearly as quickly as we climbed in.