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.