As usual, the news media focused on the dropping unemployment rate in Rhode Island, to 3.9%. Unfortunately, the reason for that drop was that fewer Rhode Islanders were looking for work. So, while employment was up a paltry 174 Rhode Islanders in September (seasonally adjusted), the labor force fell 333. Jobs based in the state were completely flat after a big drop the month before.
One month can be a blip. Two months begins to seem like a warning sign. In the following chart, the red line shows the labor force (people working or looking for work) and the blue line shows employment since the start of the Great Recession.
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If we hold the labor force steady at its number from the start of the recession, we can see that the unemployment rate would not have fallen this month — instead remaining 6.1%.
Broadening our window to view the Ocean State’s two neighbors, we see that this slowdown isn’t a regional phenomenon. Massachusetts continues to rocket in employment and labor force, and Connecticut has seen a recent upturn.
Turning to our monthly chart of states’ distance from peak employment, one could possibly hope that it is inevitable that Rhode Island will eventually get back to where it was in 2007. For the time being, however, our state is one of just 10 that haven’t achieved that milestone.
The next chart brings in the effect of stagnation of jobs based in Rhode Island. The dark area shows the number of Rhode Islanders who claim that they are employed. The lighter area shows the number of jobs available within the state, which has had a slower year. The recent slowdown could help explain the dropping labor force. If jobs aren’t available, people will stop looking for them.
The last chart for this monthly report shows New England states’ positions on the Rhode Island Center for Freedom & Prosperity’s Jobs & Opportunity Index (JOI). JOI takes into account 12 data points, including these employment and jobs numbers as well as income, taxes, and welfare, and it finds Rhode Island to be 47th in the country.
As somewhat expected, the Ocean State’s brief improvement to 46th place had mostly to do with the fact that new income numbers were not yet available. In September, New York’s better income growth overwhelmed Rhode Island, and the two states switched places again. That said, Rhode Island’s annualized 4.1% increase from the prior quarter was respectable, if middle-of-the-pack.