Rhode Island Employment Snapshot, October 2015: Two Losses Don’t Make a Gain

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For yet another month, Rhode Island’s unemployment rate dropped, from 5.4% in September, to 5.3% in September, according to data from the federal Bureau of Labor Statistics (BLS). And for yet another month, that positive outcome resulted from two negative results. Employment actually dropped by 630 people, but 1,636 Rhode Islanders gave up looking. Meanwhile, jobs based in the state increased by a mere 100 after a sizable drop the month before.

The first chart shows that October’s results represent a turnaround in Rhode Island’s employment fortunes. (Although the likelihood remains that the year’s early increases will be revised away.) The trend of large early gains which are revised downward substnatially has been established for several years, now.

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Every state in New England lost employment, in October, so the columns in the second chart are smaller for both Massachusetts and Connecticut, this month, but Rhode Island remains the only Southern New England state well below its employment and labor force as of January 2007.

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The third chart is the most illustrative of the skepticism that readers should have when watching the unemployment rate, the red line shows what Rhode Island’s unemployment rate would have been if the labor force had not shrunk since January 2007. As of October, the unemployment rate would actually be going back up, having never dipped below 8%. For October, the unemployment rate would be 8.2%.

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NEW: Failing RI Report Card Grades Not Advancing Social Justice

FOR IMMEDIATE RELEASE
November 17, 2015

Non-Competitive Grades Harming Work, Mobility, and Opportunity for Rhode Islanders
Preponderance of Fs and Ds Should Signal Need for Change in Policy Culture

Providence, RI — The opportunity for upward mobility for many Ocean Staters continues to be hampered by a non-competitive business climate and onerous family tax burdens, as evidenced by the poor grades the State of Rhode Island received on the 2015 Report Card on Rhode Island Competitiveness, the fourth annual such report, released today by the Rhode Island Center for Freedom & Prosperity.

Burdened with public policies that discourage work and a productive lifestyle, the state’s poor grades in 10 major categories (two F’s, seven D’s, and one C) reflect a government culture geared to benefit special interest insiders, while at the same time promoting job-crushing and soul-crushing dependency among the general populace.

Raising even further alarm, Rhode Island ranked dead-last, overall, when compared with report cards from other New England states.

“This report card clearly demonstrates the wreckage that decades of liberal policies have wrought upon our state. These unacceptable grades should be a wake-up call to lawmakers that a government-centric approach is not producing the social justice and self-sufficiency that Rhode Islanders crave,” suggested Mike Stenhouse, CEO for the Center. “If we want to provide more mobility and opportunity for our neighbors and entrepreneurs, we must completely reform our public policy approach. We must learn to trust in our people and remove the tax and regulatory boot of government off of their backs by advancing policies that empower the average family with choices, that reward work, and that grow the economy.”

The two categories with F grades are Infrastructure and Health Care; the seven D’s are Business Climate, Tax Burden, Spending & Debt, Employment & Income, Energy, Public Sector labor, and Living & Retirement in Rhode Island; while Education received a C-. Among the 52 sub-categories evaluated, Rhode Island received 19 F’s, 24 D’s, 5 Cs, 3 Bs, and just one lone A.

In a related 1-page brief, the Center also analyzes report card trends over recent years as well as comparisons to grades for other New England states.

The RI Report Card, originally developed for the Center by a national economist, compiles into a single document the state rankings among key economic and social indexes, as published by dozens of credible 3rd party national organizations.

The 2015 report card, with citations, as well as reports from prior years can be downloaded at RIFreedom.org/RIReportCard.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise research and advocacy organization. The mission of the 501-C-3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

Rhode Island Employment Snapshot, September 2015: Growth Stops in Employment and Jobs

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Once again, Rhode Island’s unemployment rate dropped, from 5.7% in August, to 5.4% in September, according to data from the federal Bureau of Labor Statistics (BLS). That was, however, a silver lining built on an entirely dark cloud. Employment actually dropped by 521 people, but 1,860 Rhode Islanders gave up looking. At the same time, the number of jobs based in the state fell by 1,800 — for a total drop of 3,700 from July.

The first chart below shows that this dip follows a long increase in employment and labor force. However, the number of jobs based in the state has been relatively stagnant, suggesting that the employment numbers will be revised downward at the end of the year. Employment data is based on a phone survey that the BLS conducts in each state and heavily adjusts according to benchmarks and assumptions about seasonal changes.

In the second chart, both Massachusetts and Connecticut are down from last month’s results. Still, Rhode Island alone remains well below its employment and labor force as of January 2007.

The third chart is the most illustrative of the skepticism that readers should have when watching the unemployment rate. The red line shows what the curve would have been if the labor force had not shrunk since January 2007. In that case, the unemployment rate would still be 8.1% and would have begun edging back up, in September.

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Rhode Island Employment Snapshot, July 2015: RI the Gem of the Southern New England Economy

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With another drop in unemployment, to 5.8%, July was another banner month for the Rhode Island economy, according to data from the federal Bureau of Labor Statistics (BLS). That showing was on the strength of a 1,299 gain in the workforce from revised numbers for June and a 2,086 increase in employment.

As the first chart below shows, 2015 has brought an unabated boom in employiment, in Rhode Island — at least according to these statistics. Employment data is based on a phone survey that the BLS conducts in each state and heavily adjusts according to benchmarks and assumptions about seasonal changes.

The second chart shows that Rhode Island remains well below its employment and labor force as of January 2007 and that this is unique in Southern New England. Comparing this chart to last month’s
iteration, however, would show that Massachusetts and Connecticut are headed in the other direction. If one believes the numbers, Massachusetts lost more than 21,000 employed residents, while Connecticut lost nearly 2,000.

How Rhode Island is moving in the other direction isn’t immediately clear.

The third chart illustrates the significance of the size of the labor force. The red line shows what the curve would have been if the labor force had not shrunk since January 2007, and it ends in a conspicuous cliff. In June, unemployment would still have been 8.2%. Even that represents a huge drop, over the course of this year so far, from 11.0% in December.

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Rhode Island Employment Snapshot, June 2015: RI Bucks Southern New England Trend?

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The June employment data from the federal Bureau of Labor Statistics (BLS) provides a good lesson in a number of the ways in which the data can be misleading. For one thing, looking at the unemployment rate, one could say that Rhode Island dipped below 6% for the first time since November 2007. Of course, one could have said the same thing last month. But the BLS revised May up to 6%, so the Ocean State gets to repeat its milestone.

As the first chart below shows, this has been a banner, booming year, for Rhode Island. More and more people are looking for work and, at least when it comes to the statistics, more and more people are finding it. The curious thing is that this growth has been unabated for so many months, yet the news and anecdotes around Rhode Island wouldn’t lead one to expect such a boom. Indeed, in June, the number of jobs available in Rhode Island, as measured by another BLS dataset, actually went down. Readers should keep in mind that two years in a row have brought dramatic downward revisions come the following January.

Another bit of conflicting information is related to the second chart. The fact that Massachusetts and Connecticut are doing so much better than Rhode Island, when it comes to making up for losses during the recession, is not new. What’s new is that Massachusetts and Connecticut slowed or lost ground in June, while Rhode Island’s sprint continues. That could be accurate, but it seems unlikely.

The third chart illustrates the significance of the size of the labor force. The red line shows what the curve would have been if the labor force had not shrunk since January 2007, and it ends in a conspicuous cliff. It also illustrates that Rhode Island has a long way to go, even according to the questionable statistics. In June, unemployment would still have been 8.5%. Even that represents a huge drop, over the course of this year so far, from 11.0% in December.

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Rhode Island Employment Snapshot, May 2015: Hockey Sticks and Cliff Jumping

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The headline news is that Rhode Island’s unemployment rate dipped below 6% in May for the first time since November 2007, according to the federal Bureau of Labor Statistics (BLS). For some perspective, a fifth grader grinding out the space between Thanksgiving and Christmas when the Ocean State’s unemployment rate left the 5-6% range behind was preparing to graduate from high school when it slipped the other way.

Improvement in Rhode Island’s employment numbers has been a long slog, and as recently as this October, the unemployment rate was still over 7%. In late 2013, the unemployment rate began falling about a full percentage point every six months, roughly. The big difference of the last six months, as the first chart below shows, is that the reason isn’t that the labor force kept disappearing. We’re in hockey-stick territory, now. (That is if one believes the numbers; these first-half boosts have tended to be revised down significantly.)

The second chart shows that Rhode Island remains far behind its neighbors when it comes to recovering lost employment. Both Connecticut and Massachusetts are now well above their labor force and employment rates as of January 2007, while Rhode Island isn’t even close. For those two states, however, the increase in employment and (especially) labor force is not quite as recent a development.

The third chart shows how peculiar the numbers actually are. Both labor force and employment are supposed to come independently from survey data, pegged to certain benchmarks, but the blue line, which shows the actual employment data, presents a smooth downward curve. The red line shows what the curve would have been if the labor force had not shrunk since January 2007, and it ends in a conspicuous cliff.

In May, unemployment would still have been 8.9%. More tellingly, though, it would still have been 11.0% as recently as December.

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Rhode Island Employment Snapshot, April 2015: The Annual Wait for Realistic Numbers

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In a news report that drifted into this author’s awareness, recently, an analyst explained Rhode Island’s employment boost in terms of seasonal changes. To the contrary, the numbers are supposed to be seasonally adjusted (to bring out underlying trends), and the pattern of this year looks a lot like the patter of last year. Rhode Island begins the first six months with an inexplicable jump in employment, which levels off or decreases and is followed by a substantial downward revision when the data for the year is in.

Therefore, as we assess the Ocean State’s 6.1% unemployment rate, as reported by the federal Bureau of Labor Statistics (BLS), which is now out of the bottom 10 nationally and is not the last in New England, we should be aware that we’re likely just in the (largely unrealistic) annual upswing.

According to the BLS, in March, a net 2,846 Rhode Islanders gained employment, while 1,826 joined the labor force. Those two variables are the basis for the unemployment rate. The first chart below shows that this year represents the start of a rebound in a long decline… if the numbers are correct.

The second chart shows how far Rhode Island is behind its neighbors. (Note that this month’s iteration has a different axis to accommodate Massachusetts’s growth.) Both Connecticut and Massachusetts are now well above their labor force and employment rates as of January 2007, while Rhode Island isn’t even close. Indeed, beginning in April, Massachusetts now has better growth in employment than in labor force.

The final chart shows the importance of labor force. The blue line is the official unemployment rate; the red line is what the rate would be if residents weren’t giving up their quest for work. Unemployment would still be 9.5% in Rhode Island with the January 2007 size of the labor force.

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Rhode Island Employment Snapshot, March 2015: A Return to Seasonal Overstatement?

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Rhode Island’s employment data has developed a seasonal pattern — and it isn’t captured in the “seasonal adjustments” that the federal Bureau of Labor Statistics (BLS) applies to the data. Throughout the spring and early summer, employment numbers in the Ocean State undergo inexplicable improvement with no relation to other empirical or anecdotal evidence in the state. In the latter half of the year, the increases stop, perhaps receding a bit. Then, the BLS revises the numbers the following January, dropping both employment and the labor force (employed plus looking for work) and smoothing out the curves.

We’re currently in the inexplicable-growth season.

According to the BLS, in March, a net 2,401 Rhode Islanders gained employment, while 2,074 joined the labor force. Those two variables are the basis for the unemployment rate. The first chart below shows that, with the melting of the snow, the labor force turned around its steady, eight-year decline, while employment has taken off like a rocket. We’ll see.

The second chart shows the degree to which it will take more than statistical blips for the Ocean State to catch up with its neighbors. Both Connecticut and Massachusetts are now well above their labor force and employment rates as of January 2007, while Rhode Island isn’t even close. With the annual downward revisions of the monthly estimates, it’s been a long, frustrating climb for Rhode Islanders.

The final chart illustrates the point from a different angle. The blue line shows the official unemployment rate; the red line shows what the state’s unemployment rate would be if residents weren’t giving up their quest for work. With the big jump in the labor force, the difference between the two lines dropped, this month. Still, unemployment would be 10% with the January 2007 size of the labor force. Conspicuously, though, the labor force only jumps when employment does. Otherwise, the unemployment rate would go up, which is something the public would notice.

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Rhode Island Employment Snapshot, February 2015: The Darker Way to Improve the Unemployment Rate

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If Rhode Islanders haven’t completely tuned out reports about the state’s unemployment rate, they may have heard the triumphant call, this week, that not only has their state climbed out of the lonely pit in the bottom three of the national ranking, but it’s no longer even last in New England. Looking at the data, however, shows how inapplicable a metaphor like “climbed out” is.

According to the federal Bureau of Labor Statistics (BLS), in February, a net 1,725 Rhode Islanders gained employment, while 659 joined the labor force. Those two variables are the basis for the unemployment rate, and as the first chart below shows, the lines are generally moving toward each other. That has the effect of reducing the unemployment rate more quickly than the modest increases in employment would generally suggest.

The second chart shows how ridiculous it is to portray Rhode Island as doing better than Connecticut. The Nutmeg State has a higher unemployment rate because, despite its much stronger increases in employment, even more people have decided to look for work, there. In other words, its higher unemployment rate is ultimately an indication of its better economic health.

The final chart illustrates the condition that the Ocean State would be in if its residents weren’t giving up their quest for work. Even with recent improvements in employment, the unemployment would still be 10.4% if as many people were looking for work as were doing so in January 2007.

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Rhode Island Employment Snapshot, January 2015: After Revision, Still in Decline

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The headline that people invested in Rhode Island’s status quo would like to see, based on the latest employment numbers for the state, is that the unemployment rate is now 6.5% — the best since early 2008 and fully eight slots from worst in the country. As the charts below show, such a headline would be misleadingly sunny.

According to the federal Bureau of Labor Statistics (BLS), in January, a net 1,489 Rhode Islanders gained employment, while 19 left the labor force. The first number is positive, but the second one illustrates how trumpeting the unemployment rate misses the point. As the first chart shows, the number of people either working or looking for work continues on a long-term decline. In fact, Rhode Island’s labor force hasn’t been this small for thirteen years, in 2002.

As for the one-month improvement in Rhode Island, the second chart shows it to be a mere drop in the bucket compared with the neighboring states of Massachusetts and Connecticut. (Experience also suggests that it will be revised down in the months and years to come.)

The final chart illustrates the condition that the Ocean State would be in if its residents weren’t giving up their quest for work. Unemployment would still be well above 10% if as many people were looking for work as in January 2007.

Indeed, the best news that Rhode Island could receive would arguably be that it’s unemployment rate is going up because more people were returning to the labor force than the economy could supply with jobs.

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