August 2014 Unemployment: Turning Down from the Clouds


The pause in Rhode Island’s (probably illusory) employment boom turned into a reversal in August.  The unemployment rate may have held at 7.7%, but that’s only because the labor force joined the employment numbers in decreasing.  And it won’t be surprising if the January revision reveals that the Ocean State never really got below 8% unemployment at all.

The basic chart showing the labor force and employment, as reported by the Bureau of Labor Statistics, tells the story.  From the reported peak of the latest mound, in May, the Rhode Island labor force lost 3,110 people, over the summer, and 1,498 fewer people report being employed.  Because the first number is bigger than the second one, the number of people who are technically “unemployed” fell by the difference, which is what’s keeping the unemployment rate down.

As the next chart shows, Connecticut has experienced some of the downturn, but Massachusetts not so much.  Consequently, the number of employed Massachusetts residents now make up almost the same percentage of the state’s January 2007 labor force as the number of people who are now in Rhode Island’s labor force versus its January 2007 labor force.

One area in which the six month run of big employment growth (even if only on paper) has made a notable difference is with the monthly distance-from-peak-employment chart.  It will be interesting to see what future revisions to the data do to this chart, but for now, Rhode Island is at least on par with a few other states.  Of course, the Ocean State is still a substantial distance from any other state in its region.

Finally, independent of the up and down results when the BLS asks Rhode Islanders whether they’re employed, the number of people on Rhode Island-based payrolls continues its steady, sub-inflation climb.  As discussed in previous iterations of this monthly post, the employment numbers are likely not accurate, at this point, while the payroll numbers may reflect some shift toward part-time jobs.

For our purposes, the the most persuasive thesis is that Rhode Island is squeezing out its self-starters and other independent types.

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