Fourth year of RI jobs crisis, with no end in sightMarch 18th, 2011 at 3:34 pm by Ted Nesi under General Talk
Update: How’s this for depressing? URI economics professor Len Lardaro writes in to say my chart below slightly understates the situation. That’s because last month’s revised data moved the employment peak back a month, to 496,500 in December 2006. It’s not a huge difference – 300 jobs, or .06% – but important to note. Read more in this follow-up post; I’ve tweaked the original below to reflect it.
This morning’s unemployment report marked a grim milestone for Rhode Island: It’s now been more than four years since the state’s labor market tumbled headfirst into the Great Recession.
The number of jobs on payrolls in Rhode Island peaked at 496,500 in December 2006. What started as a slow downward slide in employment sped up by the end of the following year, as this chart comparing the percentage chance in payrolls since January 2007 shows:
As you can see there, the bleeding finally stopped in September 2009, when payrolls bottomed at 456,800. But those lost jobs are being replaced at a snail’s pace compared with how rapidly they were destroyed – in fact, it looks more like we’re just bumping along the bottom in a dreaded “L-shaped recovery.” The state’s official economic forecast doesn’t call for all the jobs to be recouped until around 2015 – four more years from now.
That employment problem is by no means Rhode Island’s alone; the recovery of the Massachusetts and U.S. labor markets has been similarly anemic over the last year or so, as evidenced by their unemployment rates:
But what makes the problem worse for Rhode Island is the greater damage that our job market sustained during the worst of the Great Recession. Unemployment rose higher here than it did in neighboring Massachusetts or the U.S. as a whole – so if everyone recovers at the same pace, Rhode Island’s pain will last even longer.
What has changed, I think, is the psychology of the jobs crisis. I’m not the first to point this out, but in 2008 and 2009 a huge number of workers feared for their jobs – far more than actually wound up losing them. Some of that concern has dissipated now; workers can feel more confident that their jobs are safe now that layoffs have slowed.
But with few new jobs being created, what happens to the 64,000 Rhode Islanders who were officially unemployed as of last month? That’s the big question; for them, the recession never ended. The New York Times’ David Leonhardt offered a good analogy about the two groups back in 2009:
Try thinking of it this way: All of the unemployed people in the country are gathered in a huge gymnasium that’s been turned into a job search center. The fact that this recession is the worst in a generation means that there are many, many people in the gym. The fact that the economy is churning so slowly means that there is not much traffic into and out of the gym.
If you’re inside, you will have a hard time getting out. Yet if you’re lucky enough to be outside the gym, you will probably be able to stay there. The consequences of a job loss are terribly high, but – given that the unemployment rate is almost 10 percent – the odds of job loss are surprisingly low.
One last point I’d make – the number of jobs in Rhode Island is not the same as the number of Rhode Islanders who have a job.
Some people travel from Rhode Island to Massachusetts for work; other people make the reverse trip. And that may help explain the gap between the number of Rhode Islanders who held a job in February – 509,800, an increase of 7,800 from the depths of the recession – and the number of new jobs created in Rhode Island since the state hit bottom: 2,500, about two-thirds fewer.