By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s unemployment rate fell to 8.8% in April, reaching the lowest level in four and a half years thanks to a shrinking work force, according to new data released Thursday.

Rhode Island employers added 500 jobs in April, the fifth increase in the last six months. The state would need to add another 29,000 jobs to get back to the peak employment level reached in 2006, which wouldn’t happen until February 2018 if the pace of job growth in April continued.

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Thank goodness for California.

If it weren’t for the Golden State capital of Sacramento, there wouldn’t be a single large metropolitan area in the United States where Providence could say the job market is worse.

Among the country’s 50 biggest metro areas, only two – Sacramento and Providence – reported an overall decrease in employment during the 12 months ended in February, the Bureau of Labor Statistics reported this week. The Providence metro area includes Rhode Island and part of Bristol County, Mass.

“In Sacramento, the decline was mostly due to continued drops in state and local government employment; private employment was essentially flat over the year,” The Economist’s Ryan Avent reports. “In Providence, by contrast, government employment rose; lingering weakness across the economy seemed to be the issue.”

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Rhode Island’s December unemployment rate would have been 14.2% - more than three percentage points above the official 10.8% rate – if residents hadn’t dropped out of the work force in droves over the last half-decade.

In December 2006, 69% of the state’s civilian noninstitutional population was in the labor force: 577,158 residents out of 837,598, a statistic also known as the participation rate. Only 28,272 of those residents didn’t have a job that month, giving Rhode Island an unemployment rate of 4.9%.

Over the next five years, the civilian noninstitutional population grew to 851,122 – but the percentage of the population in the labor force dropped from 69% to 66.3%. (Put another way, 586,546 Rhode Islanders out of 851,122 were either working or looking for work as of December.)

If the participation rate in December had been 69% instead of 66.3%, the number of workers – and therefore the number of people classified as unemployed, since by definition those people didn’t have a job – would have been significantly higher, pushing December’s unemployment rate to a whopping 14.2%.

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By Ted Nesi

PROVIDENCE, R.I. (WPRI) – More Rhode Islanders looked for work in December but failed to find it, boosting the unemployment rate as the state lost jobs for a fifth straight month.

Rhode Island’s jobless rate rose to 10.8%, up from 10.5% in November, the Department of Labor and Training said Friday. Rhode Island has had a double-digit unemployment rate since March 2009, and December marked a grim milestone – five years since the state’s job count peaked before the Great Recession.

Zachary Sears, an economist who tracks Rhode Island for Moody’s Economy.com, questioned the accuracy of the statistics that appear to show the state’s recovery reversing. He said the volatility in monthly data for Rhode Island and other small states probably “overstates the deterioration” in recent months.

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America’s job market is facing big long-term challenges, and that’s a particular concern for young workers who are having trouble kicking off their careers. One recently minted Brown University alum found greener pastures in the world’s largest democracy, The New York Times reports:

Born and raised in Minneapolis, Win Bennet traveled extensively with his parents growing up, part of a family that enjoyed exploring different cultures.

When he graduated from Brown University with a major in economics and international relations in 2009, the American job market was less than welcoming, to say the least — so he looked to India. …

Mr. Bennet landed a job as an analyst at ICICI, India’s largest private bank, and has lived in Mumbai for the past three years.

With the economy at home showing no signs of improving, an increasing number of recent graduates from the United States are job-hunting in India.

That’s one way to bring down the unemployment rate.

Rhode Island’s jobs crisis is now in its fourth year, and there is little reason to expect a recovery anytime soon. That’s particularly bad news for the tens of thousands of unemployed Rhode Islanders, one in three of whom had been out of a job for a year or more in 2010.

The lack of a steady paycheck is a burden and in of itself, but McClatchy’s Daniel Lippman reports it’s not the only reason to be concerned about what long-term unemployment is doing to people:

As Americans such as Banks struggle to find jobs, long-term unemployment is wreaking a psychological toll across the United States, with experts and a number of studies saying the jobless are especially at risk of depression, increased anxiety and physical ailments. …

Experts also warn that if the United States ignores the issue, the country will pay a price in the future with increased costs for mental health coverage. …

Jerald Jellison, a professor of psychology at the University of Southern California, said that when people lost their jobs, they tended to withdraw from society, shy away from seeing friends and stay holed up at home. …

But that behavior is usually self-defeating, because often the best way to get back into full-time work is by reaching out to friends and contacts to scope out promising leads.

A further complication for many unemployed people is that the longer they haven’t been earning paychecks, the harder it becomes to find work, as employers often look down on people who don’t currently hold jobs.

Nearly one in three jobless Rhode Islanders was out of work for a year or more in 2010, as the state’s unemployment rate averaged 11.6%.

That striking statistic is contained in new U.S. Labor Department data published by The Wall Street Journal. At 30.8%, Rhode Island was among a handful of states where more than 30% of the unemployed were out of work for 52 weeks or longer.

The situation was even worse in Connecticut, where 32.4% of jobless residents had been out of work for at least a year. In Massachusetts, the figure was 29.9%.

Here’s the full breakdown of the duration of unemployment for jobless Rhode Islanders last year:

By Neeta P. Fogg and Paul E. Harrington

The recovery from the Great Recession of 2007-09 that began in June 2009 has seen the nation’s level of economic output rebound back to its pre-recession peak, rising from $12.8 trillion at the trough of the recession to $13.4 trillion by the first quarter of this year. But there has been no such recovery in the job market.

At the beginning of the recession the nation had 137.9 million jobs. That fell to just 130.9 million through the second quarter of 2009, as GDP declined. But since the GDP recovery, the nation has been unable to create any new jobs. By the first quarter of this year, nonfarm payroll employment stood at 130.5 million – slightly lower than when GDP bottomed in mid-2009.

Our colleague Andy Sum found [pdf] that most of the rise in output and income in the nation since the recession ended went to business profits – with no job creation or pay increases that could help American workers.

Last year at this time, Georgetown University released a report suggesting that very large college graduate labor shortages could develop between now and 2020. This man-bites-dog report caught the media’s attention thanks to its argument that a shortage was imminent, even in the face of high unemployment, because of postsecondary institutions graduating too few students.

A year later, with the national unemployment rate at 9.1%, the labor force underutilization rate hovering at the 15% to 17% range, and the number of officially unemployed workers outnumbering available job openings by more than 4.5 to 1, Georgetown has doubled down on its forecast of labor shortages, this time extending the shortage period through 2025.

We recently analyzed the employment experiences of young people who have earned a college degree to gain some insight into the supposed college graduate shortage. Young college graduates experience problems in the labor market in a variety of ways.

Poor job prospects cause some new grads – those who can afford the expense – to withdraw from the labor market and enroll in graduate and professional programs. Others simply become unemployed. But a third option in the face of slack labor demand conditions is for the new graduate to choose “mal-employment” over unemployment.

Mal-employment simply means college graduates take jobs that don’t use the knowledge, skills and abilities that are thought to be developed in college; examples would be a nursing graduate taking a job as a retail clerk at a shopping mall, or a political science graduate working as an orderly in a nursing home.

This mal-employment means that college graduates can’t find work in professional, technical, managerial and high-level sales occupations that are organized to take advantage of the abilities developed in college – and this means sharp earnings losses. If nurses work as retail clerks they earn mall wages, and thus lose much of the economic benefit of a college degree. Our analysis revealed that by 2010, only 61% of employed recent college graduates were able to find work in a college labor market occupation, down from more than 70% in 2000.

An equally severe problem associated with mal-employment is the displacement that takes place in the labor market for high school graduates. With lots of young college grads trying to avoid unemployment and settling for high school labor market jobs, young high school graduates experience a sharp increase in joblessness as employers opt to hire better-educated workers. Such behavior is commonplace; during the Great Depression of the 1930s, elevator operators in Manhattan’s finest buildings were required to have a college degree.

We spoke with one of the most respected observers of American labor markets to get his views of the projected labor shortage. In his 40 years of experience, he told us, he’s learned that “those who project don’t know, and those who don’t know project.”

Projecting college labor shortages when the nation is now two years into a jobless recovery strikes us as an unhelpful diversion from the real problem of an American economy unable to create new jobs. We need educators, elected officials and business leaders focused on the real challenges of today’s job market, and not on fanciful and – we think – deeply flawed speculation about 2025.

Neeta P. Fogg is a senior economist at the Center for Labor Market Studies at Northeastern University. Paul E. Harrington is director of the Center for Labor Markets and Policy at Drexel University.

The new unemployment report came out last Friday, and the headline numbers weren’t horrific: Rhode Island’s jobless rate held steady at 10.9% in May, and the state added jobs for a fourth straight month.

But looking at a different metric I wrote about recently – the employment-population ratio – shows the state’s labor market is actually deteriorating. Take a look:

Just 59.9% of Rhode Islanders ages 16 and up were working in May (shown in red above). That was the smallest share since January 2010. It’s way down from the 65.6% who were working at the start of the economic downturn in the winter of 2007. And it’s barely up from the 59.5% who were working during the worst month of the recession, October 2009.

Same deal with the work force number (in blue above), which measures how many Rhode Islanders are either employed or unemployed but looking for a job. That fell to 67.2% of the 16-and-over population in May after declining for nearly a year. In fact, it’s almost back down to the lowest level recorded during the recession: 67.1% in the spring of 2009.

We may not be having an official double-dip recession, but it sure looks like one in the job market.

Nope, that’s not a typo.

Bloomberg ran the numbers and found Rhode Island to be No. 10 among the 50 states when it came to employment from 2008 through 2010. The only nine states that beat us out were Alaska, the Dakotas, Massachusetts, Nebraska, Texas, Arkansas, Vermont and Pennsylvania.

How is that possible, considering the state has had one of the nation’s highest unemployment rates for years now? Here’s how Bloomberg described its methodology:

To identify the states with the best employment conditions from 2008 to 2010, we used data from the Bureau of Labor Statistics. Each state was ranked on a scale of 1 to 50 on the changes in the estimated total employment for all occupations, the unemployment rate and the annual median salary for all occupations in the state. Scores were created by summing the individual ranks. The higher the score, the better the employment conditions in the state from 2008 to 2010.

I don’t want to be negative, but considering Rhode Island’s present condition it sure is counterintuitive for the state to score that highly in any ranking of job-friendliness. I see two things that helped us, one positive and one negative.

Rhode Island scored a 105; No. 1 Alaska scored a 147 and No. 50 Idaho scored a measly 14. Digging into Bloomberg’s three yardsticks shows Rhode Island’s total employment fell 6.3% from 2008 through 2010; its median salary rose 5.9%; and its unemployment rate increased 50.6%.

The nearly 6% increase in the median Rhode Island worker’s salary was the positive, and something I’d never read about before. A quick comparison with the other states shows salaries in the state posted some of the biggest gains in the country from 2008 through 2010. I’d be interested to learn more about that.

The negative factor is a little harder to explain, but it has to do with Bloomberg’s time frame.

While 2008-2010 captures most of the official Great Recession – it lasted from December 2007 to June 2009 nationwide – it misses an entire year of declining employment here, because Rhode Island began losing jobs in January 2007. If Bloomberg had looked at 2007-2010 instead of 2008-2010, it would have seen Rhode Island’s total employment fell 7.7% (instead of 6.3%) and its unemployment rate rose 134.7% (instead of 50.6%).

Including 2007 probably matches the actual lived experience of Rhode Islanders better. Still, it’s nice to see us near the top of an economic ranking list for once.

Related: Mass., Conn. economies have Rhode Island in the rear-view mirror (June 8 )

Last week, I wrote a post about the bad news behind Rhode Island’s falling unemployment rate – it’s mainly declining because fewer workers are out there looking for a job, not because more workers are finding one.

Here’s another way of making the same point: If the size of Rhode Island’s labor force had held steady since 2007, the state’s unemployment rate would have been 13% in March – two whole percentage points above the official figure, 11%.

Rhode Island’s employment situation has been trending downward since the winter of 2006-07. In January 2007, 69% of the state’s civilian noninstitutional population was in the labor force – 577,527 residents out of 837,548, a statistic also known as the participation rate. Only 28,162 of them didn’t have a job that month, giving us an unemployment rate of 4.9%.

Over the last four years, the civilian noninstitutional population has continued to grow – but the percentage of it in the labor force hasn’t, falling from 69% down to 67.5% as of March. Put another way, 571,882 Rhode Islanders out of 847,738 were either working or looking for work that month.

So if the participation rate had been 69% in March instead 67.5%, the number of workers – and the number of people classified as unemployed – would have been that much higher. That would have put March’s unemployment rate at 13%.

Now, that doesn’t mean Rhode Island’s unemployment rate is “actually” 13%. Those people really aren’t in the labor force, for whatever reason, so they don’t get counted. (By contrast, the state’s “underemployment” rate, which does count underemployed and discouraged workers, was 19% in the first quarter.)

It is a reminder, though, that the official unemployment rate only shows part of the jobs picture – and statistics like this may help explain why so many people think the economy is still in a recession or a depression.

What recovery?

Rhode Island’s punishing unemployment rate has been dropping for more than a year now. After peaking at 11.8% in the winter of 2009-10, the rate has ticked downward steadily, falling to 11% in March.

On the surface, that would seem to indicate Rhode Island’s job market is on the mend. But another metric – the employment-population ratio – reveals just how little improvement has really taken place over the last year and a half.

Take a look at this chart:

Only 60% of Rhode Islanders ages 16 and up were working in March, according to seasonally adjusted figures from the U.S. Labor Department (shown in red above).

That’s up just half a percentage point from the 59.5% who were working during the worst month of the recession, October 2009, and down from 65.6% at the start of 2007. It’s also lower than the annual averages for every year since 1983, when fewer women were in the work force.

In raw numbers, 508,874 Rhode Islanders were employed as of last month, while 63,008 were unemployed. Add those together and you’ve got the state’s total work force: 571,882 residents 16 and older.

The work force number (in blue above) tells a worrying story, too. That measures how many Rhode Islanders are either employed or unemployed but looking for a job; if you give up on looking, you stop getting counted. As of March, 67.5% of Rhode Island’s adult population was in the work force.

The percentage of Rhode Islanders in the work force slid during the recession, though much less steeply than the percentage employed did, since lots of people who lost their jobs kept trying to find a new one.

In the spring of 2009, though, something changed, and a lot of Rhode Islanders started coming back into the work force – perhaps resuming their job searches after seeing signs of a recovery. By the spring of 2010, 68.3% of adult Rhode Islanders were either working or looking for a job.

But then last summer, things changed again – perhaps because of the floods, or a lack of job opportunities. Whatever the reason, the adult work force began to shrink again at that point and has continued to do so for almost a year now – not exactly a sign of a healthy job market. The 67.5% of residents in the work force in March was only four-tenths of a point higher than the recession’s low of 67.1% two years earlier.

Bottom line: After taking a few tentative steps toward recovery through early 2010, Rhode Island’s employment picture has been worsening – or, at best, flatlining – since last June.

Bloomberg News noted a similar phenomenon nationally earlier this month:

The sharpest drop in unemployment in more than a quarter century obscures a simple fact: The jobs market still isn’t working for many Americans. …

The [employment-population] ratio is a better measure of the jobs market because, unlike the unemployment rate, it isn’t affected by changes in the size of the labor force, said Edward Leamer, a professor of management, economics and statistics at the University of California at Los Angeles.

About half of the fall in the jobless rate during the last four months was caused by Americans who gave up looking for work and left the labor force – a development that he said isn’t something to welcome. “It’s people getting so discouraged that they’re dropping out,” said Leamer, who is also director of UCLA Anderson Forecast.

That number may grow later this year as extended government unemployment benefits run out, Krueger added. To collect those benefits, the jobless must show that they are searching for work, and the longer people are without a job, the less time they spend looking, according to a study of 6,025 unemployed that Krueger conducted with Andreas Mueller of Stockholm University in 2009 and 2010.

Four long years ago, in January 2007, Rhode Island’s unemployment rate was just 4.9%. Over three decades of government records, joblessness had only been lower here during two periods: 1984-1989 and 1997-2002.

We all know what happened next. The credit bubble burst, the Great Recession hit, and Rhode Island’s unemployment rate more than doubled, peaking at a record 12.7% last winter. It’s stayed stubbornly high since then, clocking in at 11.6% in November.

Beyond the human tragedy of chronic long-term joblessness, we’re also faced with an important economic question: How far can we expect Rhode Island’s unemployment rate to fall as the recovery proceeds? Do we aim for 4.9%? Or is the best we can hope for – the so-called “equilibrium rate” – higher in the wake of the Great Recession?

Economists at the International Monetary Fund in Washington took a stab at answering that in a recent paper [pdf] and their conclusion was depressing. They think Rhode Island’s natural unemployment rate rose about two points, from 6% to 8%, between 2007 and 2009:

This hasn’t been an equal opportunity economic crisis; it “has created extremely disparities across states in terms of skill mismatches and housing market performance,” the IMF’s economists write, something we can see here in the Northeast where Rhode Island’s double-digit jobless rate is a major outlier. Like Florida, Nevada, Arizona and California, Rhode Island had a big housing bubble that left scores of foreclosures in its wake when it burst.

Worst still, the IMF’s experts found that “skill mismatches have been more acute in states with depressed housing markets,” creating a vicious circle. And people whose home values are underwater have a tougher time moving to places where more jobs are available. The figures above are for the end of 2009, more than a year ago, so the situation may have changed (though not necessarily for the better).

The IMF did offer one reason to be optimistic – or at least somewhat less pessimistic. It said its estimates are not set in stone, so the natural unemployment rates in Rhode Island and elsewhere could fall depending on “how quickly the skill mismatches and housing stress normalize,” according to the paper:

The U.S. economy is quite flexible and it is possible that current skill mismatches in the labor market and structural problems in the housing markets would be cleared before too long. However, ongoing high mortgage delinquency rates and evidence of record-high rates of negative housing equity suggest that the woes in that sector may constrain labor mobility for a while. Also, the sharp rise in skill mismatches may have a deeper base than in previous downturns, as sector-specific shocks and the pressure to reallocate resources away from declining sectors to tradable goods sectors have been enormous.