December 2016 Employment: Erasing 2016

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The promoted headline may be that Rhode Island’s unemployment rate fell three-tenths of a percent in December, to 5.0%, which is the biggest drop in the rate since the recession.  However, it was only slightly bigger than the drop from October to November, which was the second biggest reduction in the rate since 2007 began.  So Rhode Island’s economy is humming, right?

Not at all.  The reason the unemployment rate fell so much is that the biggest number of Rhode Islanders since the recession just stopped looking for work: 2,311.  That followed a loss of 1,661 the month before, which was the third biggest loss of Rhode Islanders working or looking for work.

Indeed the December employment and jobs numbers from the federal Bureau of Labor Statistics (BLS) were abysmal, erasing most of any gains the state saw during 2016.  Indeed, as the following chart shows, the number of Rhode Islanders who say they’re employed has barely gone up since July 2015, and one might well predict that the BLS’s revisions to the numbers in the next few weeks will make the apparent bump in the later half of 2016 disappear entirely.

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Driving home the deceptive nature of the unemployment rate as a gauge in the current economy, the following chart shows what the unemployment rate would have done if the labor force had remained at its pre-recession level.  Rather than falling three-tenths of a percent to 5.0%, it would have increased two-tenths of a percent, to 8.6% — by far the biggest jump since the recovery began.

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Although Massachusetts and Connecticut also lost labor force (but not employment), the picture for Rhode Island is (as always) significantly worse, both in level and in trend.

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Looking nationwide, Rhode Island is effectively tied for second-to-last when it comes to recovering employment and not far from last.

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Bringing Rhode Island–based jobs into the picture, while not as bad as employment, the numbers have barely increased since March 2016, at an average rate of only 166 per month.

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Finally, with employment and job numbers’ slipping and Medicaid enrollment up by more than 5,000 enrollees, the Ocean State made no progress in the RI Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI), despite some increase in Rhode Islanders’ income.

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