January 2014 Employment: Lots of Last

As Rhode Island’s employment data has remained a topic of morbid fascination, month after month, we’ve been treated to reminders that there’s only so much that can be said of the month-to-month changes.  Long-term trends are the more important thing to watch, along with comparisons with other states.

These monthly posts that I put up when the Bureau of Labor Statistics (BLS) releases its state-level employment results got their start in a study for the RI Center for Freedom & Prosperity.  Looking at the latest data as of July 2012, I despaired to observe that Rhode Island was in the bottom three for three different cuts of the data:

  • We were second worst in unemployment, between Nevada and California.
  • We were second farthest from our pre-employment peak employment, between Michigan and Alabama.  (Although, the bottom two were so far removed as to be outliers.)
  • We were last when it came to employment gained since the national employment scene hit bottom, actually one of only three states to have lost employment since February 2010, trailed by Arizona and New York.

As of January 2014, the State of Rhode Island is last by every one of these measures.

  • At 9.2%, we have the worst unemployment rate by one-half of a percentage point, trailed by Nevada and Illinois (tied at 8.7%).
  • Michigan, which became a right-to-work state in 2012, has had strong enough employment growth to start to leave us behind when it comes to distance from peak employment.  (Indiana, which had spent some time in the bottom three and went right-to-work a little earlier has climbed its way out of the bottom 10.)
  • We’re now one of only four states that have lost employment since February 2010, and just overcame Connecticut for the title of dead last.

The basic chart of Rhode Island’s number of employed residents and the number of people in our labor force (those employed plus those who are actively looking for work) tells the tale:

Rhode Island dipped along with the country for two nail-biting years and caught a little bit of a rebound in the first half of 2010.  But there was no steam for a recovery, and the improvements in the Ocean State’s unemployment rate since then have purely been a function of people exiting the labor force.

This picture continues to be in contrast to the two states that border Rhode Island, especially Massachusetts:

The following chart is the one that bears the worst news.  For the first time since I began producing this chart, Rhode Island is at the bottom.  Rhode Island’s current seasonally adjusted number of employed residents is only 91.0% of what it was at its peak (in December 2006).  Michigan has worked its way up to 91.4%.

Although Rhode Island has been at the bottom of the following chart before, it’s still jarring to be there again.

The newest addition to this series of charts compares the employment results with the updated data for RI-based jobs.  My explanation of the difference has been a matter of some dispute, and I’ll have the results of further research in the near future.  But this month’s iteration of the chart leads to an interesting point, mainly because the revised numbers for RI-based jobs went up, while the revised number for employment went down.

At the beginning of this chart (which was the month following Rhode Island’s peak employment), the gap between Rhode Islanders who say that they are employed and the number of jobs counted in Rhode Island was 53,637.  It is now 24,716.

Some of this difference might be explained if the proportion of jobs that are part-time has gone up, because the light area counts each part-time job distinctly, whereas the dark area would count a person only once, no matter how many jobs he or she holds.  Of course, adjusting this effect by only counting the people in part-time jobs would subtract from the light area (jobs), not add to the dark area (employment).

Another difference would be if the number of non-Rhode Islanders working in the state and the number of Rhode Islanders working outside of it didn’t cancel out.  Some datasets do suggest that the former have been increasing in the balance, but again, this would subtract from the light area, not add to the dark area.

Putting those two considerations aside, however, a gap of 24,716 between employment and jobs means that there theoretically can only be that many Rhode Islanders who own businesses or are self employed.  That’s astonishing when one considers that, at my last check, there were over 30,000 open licenses to collect sales taxes, which is obviously something that not every business has to have.

If Rhode Island is going to have any hope of turning its employment picture around and forging a more prosperous future for its residents, it needs more of them who are invested in their own ventures and have every incentive to innovate and find those pockets of the economy for which their state is particularly well suited.

Opinions may differ with regard to bringing that about, but it seems more likely than not that the solution lies in setting Rhode Islanders free, not tightening their reins and confiscating their resources in order for political insiders to pick a direction.

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