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DLT Director: RI’s Unemployment Rate Won’t “Turn Around Overnight”

Saturday, March 09, 2013

 

Should Rhode Islanders feel good or bad about the latest unemployment report? It depends on how you look at it.

When the RI Department of Labor and Training (RIDLT) released its January report detailing the fact that Rhode Island’s unemployment rate had dropped one-tenth a percentage point since December to 9.8 percent, one of the most concerning figures inside the numbers was the fact that the Ocean State lost a total of 1,400 unemployed and employed residents during the first month of 2013.

And news this week that Hasbro was laying off 40 of its employees and MetLife was transferring its entire U.S. Retail Life Insurance Administrative division from its Warwick location, at the expense of another 500-600 RI-based jobs, didn’t help the perception that the job market isn’t really improving all that much in the state.

But RIDLT Director Charles J. Fogarty says he’s not as distressed as others with the latest report and believes the only story that matters is the one in which you look at where Rhode Island is now and where it was before.

“The trend shows a continuing decline in the unemployment rate to 9.8 percent,” Fogarty said this week. “We’re down a full percentage point year over year and that compares with a decline of 0.4 at the national level so even though the national unemployment rate is still lower than Rhode Island, we actually declined at a rate almost two and a half times what the federal decline was.”

A Rhode Island Exodus?

Fogarty points to the 2,800 new Rhode Island-based jobs that were added in January as proof that the state is on the rebound but not everyone is convinced.

“I can understand DLT grasping at any good news they can but everyone knows that as the number of the overall survey universe decreases the percentage impact increases for anything being tracked against that group,” said

Mark Zaccaria, chair of the Rhode Island GOP. “In other words, if you added those 1,400 now in the Ocean State Diaspora back into the base sample, we would not have a 9.8% Unemployment Rate at all. Moreover, if you add back all those who have ‘Given Up’ searching for work we would be lucky to see our real unemployment rate only in the high teens.”

Fogarty says that the increase in jobs in the state shouldn’t be ignored and is a critical step toward recovery.

“Before you can get people from being unemployed to employed, there have to be job opportunities out there and I think that measure is good,” he said. “And by the way it’s the third consecutive monthly jobs gain we’ve had in Rhode Island. We’re up 4,100 jobs since January 2012.”

Edward M. Mazze, a professor of business administration at the University of Rhode Island, says the reason WHY workers left Rhode Island is just as important to the discussion as the actual numbers themselves.

“There may be a number of explanations,” he said. “Workers [may have] left the workforce because they are no longer searching for jobs that do not exist, have entered early retirement, work part-time because full-time jobs are not available and/or work as independent contractors.”

Mazze says another concern to note is the impact the loss of these residents will have on the state’s future work-force if they were employees who have skills that will be needed going forward.

“If so, this affects the growth of existing companies and our ability to attract new companies to the state where these skills are needed,” he said.

Fogarty thinks too much emphasis can be put on numbers on a month-to-month basis and says it takes time to really analyze trends in the state’s workforce.

“Month to month, there can be a fluctuation,” he said. “This is the first time in a year that the number has declined in that respect and if you look at the labor force, year over year, it’s a 3,700 increase. We’ll be looking at this over the next two months obviously because if the trend continues that might be a little bit worrisome but one month’s numbers aren’t alarming at this point, particularly if you’ve got job growth and you have unemployment down and you have the unemployment rate declining as well.”

A National Problem

While Rhode Island’s unemployment rate dropped to its lowest level since January, 2009, the state is still at the very bottom of the category nationally, a fact not lost on Fogarty, who says the state is doing everything it can to “get it lower.”

“Obviously I think the governor and the department and all Rhode Islanders would like to see our state No. 1 or in the top states for job growth and economic recovery and that’s where we’re focusing our efforts, to get us there,” he said. “Clearly we’re above the national average and we still have a way to go.”

Zaccaria believes that current efforts simply aren’t enough.

“The point is that our economy is failing and government is not taking any substantive steps to improve the environment in which it operates,” he said. “Crowing about a statistical anomaly may make the Governor’s Office feel good, and it may play to a narrative that the Speaker would like to spin, but what it really does is divert everyone from the real problem.”

For Mazze, how Rhode Island compares to the rest of the country isn’t as important as continuing the trend of a declining unemployment rate.

“Any reduction in the unemployment rate, no matter how small, is an indicator that jobs are being created in Rhode Island,” he said. “How we rank nationally is of little importance to those looking for jobs. We should celebrate that we are finally under a double-digit unemployment rate. This means companies are getting orders for their products and services and consumers and businesses are more confident about the state’s economy.”

Moving Forward

Despite a slight improvement in January, Rhode Island's unemployment rate remains nearly two full percentage points higher than the national average.

University of Rhode Island economist Dr. Leonard Lardaro feels more attention needs to be paid to how the state compares to others, particularly in terms of unemployment.

“Our state’s leaders tend to look at our levels independent of all else,” he said. “At present, they are assuming that any improvement here is an improvement relative to other states. Sadly, as we know from recent experience, while

Rhode Island’s jobless rate was falling, so too were rates for almost every other state. So, in terms of levels, our jobless rate remained very, very high, and in relative terms, our state’s jobless rate was either the highest or close to the highest in the entire country.”

Because of this, he says, the Ocean State is receiving national attention for all the wrong reasons.

“While the Director seems to dismiss one month changes, which we all should do, I would remind him that Rhode Island’s unemployment rate has been among the highest in the US since 2007,” he said. “As a result, Rhode Island is now known for two things: its beautiful beaches and its persistently high unemployment rate.”

Fogarty says he believes Rhode Island has had a harder time dealing with the recession than most in the country and, as such, the recovery is taking longer.

“We started in this recession earlier than the rest of the country, it’s been more severe here than elsewhere and obviously the recovery is taking a longer period of time but the national recovery itself is slower than we’ve seen in previous recessions,” he said. “So obviously Rhode Island being hit harder, that’s going to reverberate here as well.”

Fogarty says, historically, it’s taken Rhode Island time to recover when its fallen on hard times.

“And just as a point of reference, it took us a little over eight years or eight years to regain all of the lost jobs we had lost in the last recession in the early 90s and we need to keep that in mind in terms of perspective,” he said. “The situation does not turn around overnight and it’s step-by-step, month-by-month where progress is made and we want to get to a point where we have stable economic growth in the areas that provide good paying jobs for Rhode Islanders.”

The Bottom Line

So how much stock should Rhode Islanders put in the new unemployment rate?

That depends on whom you ask.

“Every slight-of-hand artist knows the value of a shinny object when it comes time to draw attention away from the flimflam of a trick of parlor magic,” Zaccaria said. “That’s what our 9.8% Unemployment Rate report is: A Shinny Object that will prevent us from attending to the real work at hand.”

For Fogarty, that type of thinking isn’t a surprise.

“We know the frustration is out there,” he said. “But I think that we want to provide a balanced approach in terms of how we look at things. Clearly the fact is that the numbers are getting better in terms of more jobs, fewer people unemployed and the unemployment rate is coming down. We want to see that trend continue and accelerate.”

 

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