Job gains cast shadow on recovery

At times it’s seemed like nothing can get Rhode Islanders back to work, even the creation of thousands of new in-state jobs.
Ocean State employers in February reported the largest number of workers on their payrolls since economic boom was giving way to crisis in September 2008 and there were nearly 21,000 more Rhode Island-based jobs than at the bottom of the crisis in July 2009.
Yet despite those job gains, the number of employed Rhode Island residents is virtually the same since that recession-plagued summer of 2009. The 503,300 Rhode Island residents working in February was 45,586 fewer than the pre-recession peak in December 2006 and 6,799 more than the Sept. 2011 low point, according to figures from the R.I Department of Labor and Training.
So who is filling new Rhode Island jobs and why aren’t they living here?
Labor statistics and economists point to several factors separating job growth from resident employment, none of them easy to address. Nationally, labor-force participation, the share of the adult population working or looking for work, has been on the decline in recent years – from a peak of 67 percent in 2000 to 63 percent now – partly the result of the population aging.
That trend is more severe in Rhode Island, where labor participation has fallen from 65 percent in 2007 to 59 percent at the start of this year.
Another pattern has seen employers looking to residents of neighboring states, especially Massachusetts, to fill more of their Rhode Island jobs than they did before the recession.
And in many industries employment is shifting from full-time work to part-time work, boosting the number of names appearing on payrolls even when the amount of work isn’t changing.
Taken together, the economic and demographic patterns sapping Rhode Island resident employment paint a somewhat discouraging picture of the labor force and shadow progress made during the recovery.
“It’s a weird recovery,” said University of Rhode Island Economist Leonard Lardaro. “We are not alone in this but the things happening elsewhere are happening even more here.”
For Lardaro, the split between the number of Rhode Island jobs and the number of Rhode Islanders working is best explained by the shift toward part-time work and how the government measures it. The federal Bureau of Labor Statistics determines how many jobs there are by asking employers how many people are on their payrolls on the 12th day of each month.
To calculate how many residents in a given area are employed, unemployed or dropping out of the labor force, the government goes door-to-door surveying households about their work status.
Each part-time job, even it only involves a few hours a week, is counted in the employer survey as one job, while a resident can only be counted as employed once, even if they are working multiple part-time jobs.
As a result, if a company lays off a full-time employee and replaces her with three part-time workers, the employer survey will show two new jobs created, while the household survey may not change at all.
“There are a lot of Rhode Islanders who are multiple-job holders, and I think a lot of the job growth has been in part-time jobs,” Lardaro said.
According to Bureau of Labor Statistics figures provided by the DLT, the share of Rhode Islanders working part time spiked during the recession, from 20.4 percent in 2006 to 25 percent in 2009. Since then it settled back down to 22.9 percent in 2012.
On top of part-time jobs being counted twice, Lardaro said a decline in those who are successfully self employed could be helping drive down the number of employed residents even as the number of employer-based jobs climbs. The self-employed do not show up in the payroll survey but would in the household survey.
“Small-business economics in general and self employment in particular [have] become harder because of a return to sanity by lenders,” Lardaro said. “If you want to get a loan you cannot have a blemish on your credit history and you have to have collateral. In past years those sole-proprietor businesses with credit blemishes and no collateral would keep the resident employment number up, but there are not a lot left.”
While the shift to part-time work and the struggles of the self-employed are national phenomena, other indicators show issues Rhode Island is having in relation to its neighbors. In the decade between the 2000 and 2010 censuses, the share of Rhode Island residents who work out of state has remained fairly constant, dropping from 14.3 percent in 2000 to 14.2 percent in 2010.
However, the share of Rhode Island jobs held by out-of-state residents climbed nearly 2 percentage points over the same period, from 8.4 percent in 2000 to 10.3 percent in 2010.
According to DLT Assistant Director Donna A. Murray, that translates into 48,900 residents from neighboring states with Rhode Island jobs in 2010, 8,500 more than a decade earlier.
And it’s not just Rhode Island companies importing more workers from Connecticut and Massachusetts than they did before.
Across the border, Bay State employers appear to be disproportionately laying off Ocean State residents.
Between 2010 and 2013, 22 percent of Rhode Island unemployment-insurance recipients indicated they had been laid off from Massachusetts jobs, according to an analysis by the Bureau of Labor Statistics’ Boston office.
“In a perfect world that percentage would be 14.2 percent, the same as the percentage of Rhode Island residents working out of state,” Murray at DLT said. “This higher percentage would be reflected in the employment numbers but not in the job counts.”
Paul Dion, chief of the R.I. Office of Revenue Analysis, identified the aging of the Rhode Island population and an increasing number of people earning income in Rhode Island but living outside the state as the primary causes of the split between jobs and resident employment.
From the start of 2008 to the third quarter of 2013, the state’s population over 65 years old rose from 150,000 to about 163,000, according to federal data provided by Dion.
Earlier this year Dion co-authored a study tracking tax returns of residents making more than $200,000 per year and found that, between 2008 and 2011, 13.5 percent of them stopped filing as resident taxpayers, with most going to Florida or Massachusetts.
The total of nonresident income tax filings also spiked by approximately 10,000 between 2010 and 2011, Dion found. If the employed are leaving Rhode Island for Massachusetts and Connecticut suburbs, perhaps for better schools or more space, they are being replaced by new residents from elsewhere as the state’s total population remains relatively stable, dipping in the recession but rising slightly in 2013, according to Census Bureau estimates.
As it turns out, Massachusetts has also seen job creation outpace resident employment, but job gains there have been so significant, resident employment has risen with it.
Between February 2010 and February 2014, Massachusetts payrolls have swelled by 183,600 jobs and resident employment has increased by 92,000 people.
Over the last 30 years, most of the large corporate campuses built or expanded in Rhode Island – including CVS Caremark Corp., Fidelity Investments, Hasbro Inc. and FM Global – are located, perhaps not coincidentally, in the northeast part of the state close to Massachusetts.
Both the number of Rhode Island jobs being filled by out-of-state residents and the number of Rhode Island residents losing their out-of-state jobs is likely to intensify concerns about the local education system and the often-discussed “skills gap” of the local workforce.
Laurie White, president of the Greater Providence Chamber of Commerce, said many of her members routinely look outside Rhode Island to find workers with the skills they need.
“I think it is clear there is a very significant skills gap and jobs that were once attainable for individuals who had basic levels of education are not there because of advanced technology and automation,” White said. “Major employers have hundreds of vacancies they can’t fill because job requirements are highly specialized and just a diploma isn’t enough to bring to the table.”
Of course, although the longer-term trend has not been good for the Rhode Island labor force, this year could be the beginning of a turnaround, or at least a return to a closer relationship between job growth and resident employment.
After payrolls swelled and resident employment dropped again in January, February saw a 3,600-person increase in employed Rhode Islanders, the largest monthly rise since the recession. •

No posts to display