August 2016 Employment: Getting in the Increases Before the Revision


If Rhode Island’s employment statistics can be believed, the Ocean State’s unemployment rate increased in August, but for good reasons.  The increase from 5.5% to 5.6% unemployment resulted from a growing number of Rhode Islanders looking for work, which overwhelmed the number of people finding it.  If these findings are accurate, the Bureau of Labor Statistics (BLS) data could be an indication of a recovery.

Of course, that’s a big “if.”  Every year, the BLS revises the data the following January, and in recent years what looked like booming employment was substantially revised away, and the boom typically started sooner in the year than it has in 2016.  For the moment, however, the labor force and employment numbers look like this:


In August, the increase in employment was coupled with a decrease in the number of jobs available in Rhode Island.  If that isn’t an indication that the employment numbers are overly optimistic, it might be explained by some increase in employment outside of the state, and the fact that Massachusetts employment increased more than its labor force could (potentially) indicate greater availability of work than Massachusetts natives flooding into the labor force.


On the national stage, Rhode Island is still the third-farthest from its pre-recession peak employment, although the increase has left the Ocean State not looking like as much of an outlier.  On the other hand, West Virginia is not as far behind as it has been recently.


Comparing employment numbers with RI-based jobs shows the contrast between the two measures.  Employment has continued up for a number of months, while jobs are essentially back where they were in March.  That finding could mean that those counted as employed not in RI-based jobs (including not only out-of-state workers, but also business owners and the self-employed, are on the upswing.  Again, such a development could be a positive indication… or the stagnant jobs picture could be a predictor of a future downward revision of the employment results.


Returning to just the employment numbers, another interesting perspective is to check what the unemployment rate would be if the labor force had not changed.  Holding the labor force to its level at the start of the recession shows that the unemployment rate would be much higher, at 8.5%.  However, the chart also shows that the gap from the official unemployment rate is closing for now.


Turning from the narrow to the more-complex, the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI) takes into account 13 datapoints, from employment to income and taxes.  Owing to significantly higher state and local tax collections in the second quarter of the year than the first, Rhode Island slipped back to its long-time position as 48th in the country, having spent a month at 47th.  Either way, the Ocean State remains the worst state in New England for employment, income, and independence, by these measures.