This morning, Ted Nesi asked why the picture of employed Rhode Islanders looks so different from the picture of jobs in Rhode Island. I answered by citing my post suggesting that the explanation is steady (roughly with inflation) growth of existing businesses versus the continued stagnation and reduction among the self-employed.

Despite what I was able to fit into 140-character bursts in the ensuing Twitter discussion, my conclusion isn’t pure Rorschach interpretation of the chart, but rather, it derives from the picture that I’ve been developing over years of researching various angles of Rhode Island’s economy. It just fits. It fits the chart (helping to explain the steady job growth’s contrast with the roller-coaster of employment); it fits the demographics of who’s been leaving Rhode Island for the past fifteen years; and it fits with others of Rhode Island’s dismal pictures, like taxes and regulations.

Moreover, the important thing isn’t the gap between employment and jobs, but the change in that gap, and opposing theories, like that offered by Jason Becker, don’t seem adequate to explain a relatively rapid change.  (As usual, the conversation branched into multiple threads, but here’s the terminus of one.)

I’m probably oversimplifying his argument, but on the whole Becker believes that Rhode Islanders are not qualified for the jobs that Rhode Island businesses are creating, so the businesses are having to hire people who live over the border. Because the RI-based jobs data counts the out-of-state employees of RI businesses, while the employment data counts Rhode Islanders, no matter where they work, a wave of out-of-state hiring could explain why jobs would go up while employment goes down.

To be honest, that was my initial thought a few years ago. I’ve changed my mind, over time, because that just doesn’t seem to fit as well with other data sets, and it seems odd to me that, over the past five, ugly years, Rhode Island’s relatively weak economy would attract more people from Massachusetts and Connecticut versus the number of Rhode Islanders that their relatively healthy economies would draw out.  Job growth in Massachusetts overall and even in the New Bedford area, in isolation, has been much stronger than in Rhode Island.

It also doesn’t fit as well with anecdotal evidence of actual people leaving.

And that gets to the core point. I haven’t seen a data set that allows us to get to the bottom of this. We’re trying to explain fluctuations of some thousands of people in a region with millions, and so many factors come into play that it’s impossible to know which are decisive, which cancel out which, and which don’t matter at all. If you look at non-resident state tax return data, for example, you could swamp the entire increase in RI-based jobs with people who don’t live here. But then, the largest income group is those below $30,000, which doesn’t serve the “jobs Rhode Islanders can’t do” thesis.

The bottom line is that there’s enough slack in the data that interpretation remains necessary, so we’re really looking at two incompatible worldviews. Becker’s is top-down; mine is bottom-up.

He takes the testimony of business owners that they can’t find workers and concludes that Rhode Islanders have to be made to improve or adjust their skill sets. I take testimony from workers who’ve found jobs in neighboring states (which accords exactly with my experience looking for work in white-collar fields) and conclude that Rhode Island needs to increase the ease with which people can start and operate businesses here.

To make matters worse, the solutions that each view suggests are not just neutral, but harmful from the other perspective. His solution is government-driven education reform and centralized control so technocrats can lure in more of the types of businesses they think will define the future economy; mine is freedom, with lower taxes and school choice to increase Rhode Islanders’ ability to build their own futures.

If he’s right, my solutions would take money away from the masterminds. If I’m right, his solution reinforces monopolies and winds up educating Rhode Islanders for jobs in other states.

Persuading people of each position is the work of layers of research and argumentation, but I’ll say this: I’m inclined to be skeptical of solutions that give more resources and power to the people who’ve been setting Rhode Island policy on its calamitous course. By contrast, giving businesses and school children’s parents more flexibility would produce a better result no matter who’s right about the employment situation.