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.