job market

3 charts that show how construction has collapsed in RI

April 22nd, 2014 at 4:06 pm by under Nesi's Notes, On the Main Site

The Rhode Island Construction Coalition, a newly formed industry group, released a short paper today put together by Bryant economics professor Ed Tebaldi examining the challenges facing Rhode Island’s construction sector four years after the official end of the Great Recession.

“The widespread difficulties in the housing market and weak construction outlook in the nation makes the short term a difficult time for the construction industry in Rhode Island,” Tebaldi concludes.

While Tebaldi’s findings won’t be a surprise to anyone who’s been tracking Rhode Island’s economy in recent years, the paper includes a few striking charts that demonstrate just how hard-hit the construction sector has been – and hints at why it was set up for such a hard fall.


RI unemployment rate dips to 9% as employers hire

March 20th, 2014 at 2:18 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s unemployment rate dropped to 9% in February as local employers added 1,500 jobs, new data released Thursday shows.

February also marked a key symbolic milestone for Rhode Island: after four-and-a-half years of slow progress, the state finally gained back more than half the 39,800 jobs it lost between December 2006 and July 2009. However, another 19,000 would need to be added to return to the record pre-recession peak of 495,700 achieved at the end of 2006.

Read the rest of this story »

• Related: The share of RI residents working is now the lowest in 30 years (March 7)

Chart: The strange RI job numbers – a tale of two surveys

March 7th, 2014 at 5:00 am by under Nesi's Notes, On the Main Site

Which of the following statements is true: “Rhode Island is making slow but steady progress regaining all the jobs the state lost during the Great Recession,” or “Rhode Island has made almost no progress recovering from the drop in employment during the Great Recession”?

The answer: both, at least according to the latest data from the Department of Labor and Training.

Each month the DLT (along with the U.S. Labor Department) conducts two surveys to come up with the numbers for the monthly employment report. One survey asks households to say whether their residents are working or looking for work; the other asks employers how many people they have on their payrolls.

The responses provide two different numbers. The household survey produces the official unemployment rate – it’s a count of how many Rhode Island residents are working or looking for work. The employer survey, on the other hand, produces the monthly job count (formally known as “nonfarm payrolls“).

You wouldn’t expect the numbers to be identical – after all, a Rhode Island resident from Cumberland can hold a Massachusetts-based job in Attleboro, just as a Massachusetts resident from Seekonk can hold a Rhode Island-based job in Tiverton. Since 2010, though, the two measures have diverged sharply:

RI household vs employer surveys 2006 to 2013

This chart tracks the monthly counts from both surveys – Rhode Island nonfarm payrolls in blue, Rhode Island resident employment in red – with both of them shown as a percentage of their December 2006 levels (the peak of the previous economic expansion). The two job counts moved roughly in tandem from 2007 through the middle of 2010, but then they began to move apart – and have stayed apart for more than three years.

As of January, Rhode Island nonfarm payrolls had made up 19,100 of the 39,800 jobs lost during the recession, or 48% of the total. (Not necessarily the same jobs, of course.) But Rhode Island resident employment had gone up by just 3,200 after a decline of 52,400, for a recovery of barely 6%.

This is a perplexing turn of events. Are Rhode Island employers hiring lots of non-residents from, say, Massachusetts and Connecticut? Is there something wrong with the data? Also, which side of the equation should Rhode Island policymakers focus on – the slow but clear recovery seen in the employer payroll data, or the almost nonexistent post-recession recovery in resident employment? What do you think?

• Related: The share of RI residents working is now the lowest in 30 years (March 6)

RI unemployment rate dips to 9.2%; 3,800 jobs added

March 6th, 2014 at 4:03 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s jobless rate dipped to 9.2% in January as the state’s employers added 3,800 positions, according to new data released Thursday.

Read the rest of this story »

• Related: The share of RI residents working is now the lowest in 30 years (March 6)

The share of RI residents working is now the lowest in 30 years

March 6th, 2014 at 5:00 am by under Nesi's Notes, On the Main Site

Rhode Island achieved a worrying new milestone at the end of 2013: the share of the state’s residents who were working dropped to the lowest level in 30 years.

Just 58.8% of Rhode Islanders ages 16 and up were employed as of November and December, according to revised employment data released last week by the R.I. Department of Labor and Training. (The count excludes institutionalized individuals and active-duty military personnel.)

Before that point, Rhode Island’s employment-population ratio hadn’t fallen as low as 58.8% since April 1983, when the economic recovery during President Reagan’s first term was getting started.


The RI job market is in even worse shape than we thought

February 27th, 2014 at 2:43 pm by under Nesi's Notes, On the Main Site

State officials released their annual revised employment data Thursday, and the news is grim.

Until now, it had been possible to hold out hope the annual February/March benchmark revisions to the employment data – which replaces the original survey results with more comprehensive data – would show a brighter picture in the job market than initially reported. But the new data dashes those hopes.

As this chart shows, Rhode Island’s unemployment rate was higher than initially reported during all but one month of 2013 (January), finishing the year at 9.3% rather than 9.1%:RI unemployment rate original vs benchmark revised March 2014That wouldn’t always be bad news – sometimes the unemployment rate goes up because more people are joining the work force, out of growing optimism about job prospects. But that wasn’t the case here: the revisions show even more Rhode Islanders left the labor force – 9,900 total – during 2013 than originally reported, with about two-thirds of that reduction caused by a decline in the number of employed residents.

All of those numbers are seasonally adjusted. There was a bit of good news in the non-seasonally-adjusted numbers for how many jobs were on the payrolls of Rhode Island employers as of December: 470,800, up from the initial estimate of 467,700. However, even that number was below the 471,900 total a year earlier.

DLT also noted that the December unemployment rate of 9.3% was the lowest since November 2008.

• Related: Watch: The 5 charts you need to see to get RI’s jobs crisis (Jan. 23)

An earlier version of this post incorrectly said unemployment was higher in all but two months of 2013.

Unemployment up to 9.2% in Rhode Island

November 21st, 2013 at 4:27 pm by under Nesi's Notes, On the Main Site

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s workers continued to lose ground in September and October despite a growing number of jobs in the state, as the unemployment rate rose to 9.2% and stayed there, according to new data released Thursday.

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Why is RI unemployment down without more people working?

November 12th, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

The Economist has published an interesting chart that compares the official U.S. unemployment rate (which counts those Americans who don’t have a job but are actively looking for one) with the “non-employment rate” (the share of all 16-and-older Americans who don’t have a job, some of whom don’t want one).

The two statistics differ because “non-employment” includes senior citizens, students, stay-at-home parents and others who are choosing not to work. They wouldn’t be working even in a robust job market.

The Economist’s chart demonstrates pretty vividly that, contrary to what you might expect, the recent decline in the U.S. unemployment rate is not a sign that a larger share of the American population is actually working. So what does the same chart look like for Rhode Island?

It’s not as stark, but still worrying. After rising roughly in lockstep through mid-2009, the two statistics decoupled. Whereas Rhode Island unemployment peaked in January 2010 at 11.9%, “non-employment” didn’t peak until September 2011 – more than a year and a half later – at 41.1%. Take a look:



IHS: RI won’t get back to its pre-recession job count until 2018

September 30th, 2013 at 10:55 am by under Nesi's Notes, On the Main Site

A top forecasting firm says the Rhode Island job market will remain depressed for another half a decade.

Rhode Island won’t finish recovering all the jobs it lost during the Great Recession until sometime in 2018, five years from now, according to the latest analysis by IHS Global Insight reported by The Wall Street Journal.

IHS continues to predict that Rhode Island is one of only three states – along with Michigan and Nevada – where payroll employment will be stuck below pre-recession level until 2018. By contrast, Massachusetts and New York have already reached new employment highs, and Rhode Island is also projected to lag New Hampshire (2014), Vermont (2014), Maine (2016) and Connecticut (2016).

Nonfarm payroll employment in Rhode Island fell from 496,400 in December 2006 to 456,800 in August 2009, a drop of 39,600 or nearly 8%, according to the U.S. Labor Department. Employment totaled 468,100 last month, up by 11,300 from the August 2009 trough – which comes out to an average annual gain of 2,825 jobs since August 2009, suggesting it could take 14 years to recover employment unless the pace speeds up.


• Related: RI regains only 22% of jobs lost in recession as Mass. passes 100% (April 17)

Unemployment back up to 9.1% in RI despite Aug. job gains

September 19th, 2013 at 3:03 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s already disappointing economic recovery suffered a new setback in August as the jobless rate rose and more than 50,000 residents remained on the unemployment rolls five years after the financial crisis, according to new data released Thursday.

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• Related: Chart: Rhode Island’s government work force keeps shrinking (Sept. 4)

Unemployment ticked up to 8.9% in Rhode Island in July

August 15th, 2013 at 3:49 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The Rhode Island job market’s weak recovery took a worrying step backwards in July as thousands of residents stopped working, according to new data released Thursday.

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RI jobless rate stays at 8.9% in June; labor force shrinks again

July 18th, 2013 at 2:26 pm by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s jobless rate stayed steady in June as the number of workers continued to shrink long after the official end of the Great Recession, data released Thursday shows.

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The RI job market looks like it’s finally – slowly – recovering

July 2nd, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

Don’t look now, but it appears that Rhode Island’s long-suffering job market is finally on the mend.

Rhode Island’s unemployment rate has been falling steadily for more than three years now – from 11.9% in February 2010 to 8.9% last month – but veteran Nesi’s Notes readers know the level of joblessness can be a misleading indicator because it doesn’t count those who’ve dropped out of the work force altogether.

That’s why it’s helpful to look at another measurement: the employment-population ratio, which measures how many Rhode Islanders have a job out of all the state’s residents ages 16 and up (unless they’re in the military or behind bars). And for the first time in years, Rhode Island’s employment-population ratio is looking up.

The improvement isn’t as speedy or significant as you’d hope to see in the wake of such a devastating recession, but the trend is clearly in the right direction. As this chart shows, the share of the Rhode Island population with a job has risen from a low of 58.9% in October 2011 to 60.1% last month:


As you can see, the unemployment rate has fallen much more quickly than the employment-population ratio has risen, which is part of why the jobless number alone doesn’t tell the whole story. But the ongoing increase in the share of adult Rhode Islanders with a job is a hopeful phenomenon.


Unemployment rate in Rhode Island declines to 8.8%

May 16th, 2013 at 3:01 pm by under Nesi's Notes

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.

Read the rest of this story »

Providence one of only two big US metro areas still losing jobs

April 13th, 2012 at 5:00 am by under Nesi's Notes, On the Main Site

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.”


RI would have 14.2% jobless rate if 22,000 workers weren’t MIA

February 8th, 2012 at 6:00 am by under Nesi's Notes, On the Main Site

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%.


RI jobless rate rises to 10.8%, but economist questions data

January 20th, 2012 at 12:01 am by under Nesi's Notes

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, 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.

Read the rest of this story »

Brown University graduate outsources himself to India

December 6th, 2011 at 10:12 am by under Nesi's Notes, On the Main Site

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.

The grim mental health toll of long-term unemployment

August 17th, 2011 at 9:11 am by under Nesi's Notes

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.

A year of unemployment for 1 in 3 jobless Rhode Islanders

July 25th, 2011 at 7:00 am by under Nesi's Notes

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:

Fogg/Harrington: Fear ‘mal-employment,’ not grad shortage

July 7th, 2011 at 7:00 am by under Nesi's Notes

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.

Don’t believe the jobless rate – RI jobs crisis getting worse

June 23rd, 2011 at 7:00 am by under Nesi's Notes

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.

Surprise study calls RI 10th-friendliest state for employment

June 20th, 2011 at 7:00 am by under Nesi's Notes

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 )

Missing workers would push RI’s jobless rate up to 13%

May 4th, 2011 at 7:00 am by under Nesi's Notes

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.

The bad news behind RI’s falling unemployment rate

April 25th, 2011 at 7:00 am by under Nesi's Notes

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.

RI jobless rate may not fall below 8%, IMF warns

January 17th, 2011 at 4:23 pm by under General Talk

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.