Sean DeLong, 42, has applied for more than 800 jobs in Rhode Island and southeastern Massachusetts since November 2015.
On average, he gets about one interview per month. But nothing has stuck yet.
“It’s been abysmal,” he said.
A Rhode Island College graduate, DeLong was laid off in 2015 and now works driving for Uber and Lyft – the ride-hailing companies. The work helps pay for his mortgage and support his family. It also gives him flexibility to be ready for the infrequent job interviews.
He’s not alone.
“There are a lot of people in similar situations, regardless of background, who are out there driving for Uber,” he said. “There’s a lot of underemployment.”
That’s in part because nearly 45 percent of all jobs added in Rhode Island since August 2009 had an annual average wage of $27,323. Regional data was not immediately available, but a 2014 report by the National Employment Law Project showed a similar trend of post-recession employment growth nationwide.
“Yes, there are jobs, but those aren’t great jobs,” said Douglas Hall, director of economic and fiscal policy at the Economic Progress Institute, a progressive-leaning think tank in Providence. “At least as important to the strength of the economy is the quality of the jobs in it.”
Employment has grown in Rhode Island since 2012, and the state’s unemployment rate in May was 4.1 percent. In February, it fell below the national rate for the first time since the onset of the Great Recession.
But while jobs are growing, and unemployment is falling, the overall labor force is also shrinking, as it fell 4.2 percent between 2006 and 2016. The downward trend worries economists, as it makes the overarching workforce numbers less rosy.
“When we hear that our unemployment rate is low, it’s largely for the wrong reasons,” said Leonard Lardaro, an economist at the University of Rhode Island, of the shrinking labor force.
Add in the growth of low-wage jobs and it raises broader questions about how well Rhode Island is positioned for the next economic downturn.
“We’re not ready,” Lardaro said pointedly.
FIRST IN, LAST OUT
It’s no secret Rhode Island historically has been “first in, last out” of economic downturns, including the Great Recession.
The reasons why the Ocean State economy is less buoyant than other states are debatable, but economists and other economic observers say the composition of the state’s workforce helps explain it.
“When you go through the inevitable economic cycle … the minute the macroeconomy softens – and you’re dependent on low-wage jobs – those jobs get wiped out faster,” said Saul Kaplan, founder of the Business Innovation Factory in Providence, and former economic-development director for the state.
Rhode Island, once heavily reliant on manufacturing jobs, realized alarming job losses in the sector beginning in the 1980s, when companies started moving operations overseas. The losses accelerated through the 1990s and 2000s, exacerbated by the rise of automation that replaced many low-skilled jobs.
The number of manufacturing jobs in the Ocean State was cut nearly in half between 1990 and 2008, falling 49.6 percent to 47,900 jobs, according to the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis.
Enter the Great Recession in 2008.
[caption id="attachment_164383" align="aligncenter" width="640"]
Shrinking labor force: Since its peak in December 2006, the Rhode Island labor force has steadily declined more than any other New England state. Some argue the labor force is shrinking because Rhode Islanders are retiring. But population stagnation and a mismatch between available jobs and the skills of workers looking for employment are more likely contributing factors. The chart depicts the percentage change at the end of each year compared with December 2006. / Source: U.S. Bureau of Labor Statistics, U.S. Department of Labor, PBN Research[/caption]
Job losses in manufacturing, finance and government, along with a bad housing boom-and-bust cycle, hurt Rhode Island relative to other states in New England, according to a 2014 report by the Boston Federal Reserve.
“Our analysis suggests that excess manufacturing job losses in Rhode Island contributed to greater overall job losses in the state via multiplier effects than in the other New England states,” according to the report. “The state’s steep manufacturing losses most likely contained a large structural component that was already in force prior to the recession.”
The state’s vulnerable workforce was devastated. The unemployment rate soared to a high of 11.3 percent in 2009, and was the highest in the nation between October 2013 and June 2014.
Fast-forward nine years from the start of the recession, and economists and economic-development professionals worry that Rhode Island’s labor market hasn’t changed enough to safeguard against future downturns. Kaplan believes a lack of clear vision between public and private sectors contributes to this issue.
‘Everyone’s busy trying to protect their own interests.’
SAUL KAPLAN, Business Innovation Factory founder
“Everyone’s busy trying to protect their own interests, so we’re not able to move in a more concerted way to take advantage of our small size, which should allow us to move faster,” Kaplan said.
Low-wage jobs again play into the concern, as 44.6 percent of all new Rhode Island private-sector jobs created since the lowest point of the Great Recession had annual salaries totaling less than $35,000, according to EPI.
“The jobs that tend to be more resilient are those in sectors with higher wages,” Kaplan said. “That’s why we bear the brunt of these economic cycles.”
But it’s not necessarily the industry mix here that puts downward pressure on the labor market, but rather a skills gap – or skills mismatch – measured largely by educational attainment, according to Gov. Gina M. Raimondo, a proponent of tuition-free college.
“A high school education is no longer sufficient to prepare Rhode Islanders for jobs in the 21st century. Some education beyond high school is the new minimum,” said Raimondo. “More and more good jobs require a college degree, and I want Rhode Islanders to get the good jobs we’re creating.”
NONRESIDENT WORKERS
Rhode Islanders – on paper – are less educated than most of their New England neighbors.
Indeed, 31.9 percent of Rhode Islanders aged 25 years or older have a bachelor’s degree or higher, based on U.S. Census Bureau data in 2015. That’s the second lowest in New England, ahead of only Maine at 29 percent.
In Massachusetts, the number jumps to 40.5 percent.
[caption id="attachment_164387" align="alignleft" width="216"]
Education disadvantage: With the exception of Maine, Rhode Islanders are – on paper – the least educated New Englanders. The smaller proportion of adults earning a bachelor’s degree or higher is creating a labor shortage for businesses looking for more
highly qualified employees. / Source: U.S. Census Bureau, 2015 American Community Survey estimates, PBN research[/caption]
“Rhode Island finds itself in the worst place to be with an inadequately skilled workforce,” Lardaro said. “To me, that’s potentially catastrophic, because it limits our potential to expand.”
But how do you transform an economy that is overly reliant on low-wage jobs?
“During the industrial economy, it was pretty clear there were different paths: You went into manufacturing or you got a college degree,” Kaplan said. “When the rug got pulled out from under the manufacturing sector, we wanted everyone to get educated, but didn’t change the education system.”
Indeed, as the world economy rapidly integrates itself with high-skilled industries, including advanced manufacturing, employers are seeking workers with a specific skill set. In Rhode Island, those skills are scant, creating a labor shortage.
“We have both a chicken and an egg problem,” Kaplan added. “Where are the jobs with higher wages, and where is the education and workforce development that gives folks the 21st-century skills to work those jobs?”
Growth of good-paying jobs has been a central focus of Raimondo’s agenda during her first term as governor.
“It’s not enough to just bring new jobs to the state,” Raimondo said. “We need a sustainable talent pool that supplies businesses with the new hires they need to grow and flourish.”
And she’s right, according to the Boston Fed, which says the labor shortage locally is pushing many businesses to look outside of the state for employees.
“An upward trend of nonresident employment in Rhode Island since 2001 is documented; this trend is steepest for jobs filled by college-educated workers,” according to a 2016 Boston Fed report on the state’s skills gap. “This trend suggests that over the last 14 years, employers in the state may have found it increasingly difficult to fill high-skilled positions with resident Rhode Island workers.”
On paper, DeLong’s resume is solid. He’s personable and polite. And Mike Healey, chief public affairs officer at the R.I. Department of Labor and Training, characterized him as “the most diligent job seeker” he’s ever met.
But DeLong, as with many others, is stuck between a rock and a hard place. His professional background in business-operations management doesn’t necessarily lend itself to highly technical jobs, such as those in information technology or advanced manufacturing that pay higher wages. And his education and experience over-qualify him for many low-wage jobs.
In his 20s, DeLong worked mostly at restaurants and bars, rising to the level of manager at one establishment. By his late 20s, however, he felt like a higher-education degree was necessary for him to have a lifestyle with more regular work hours, allowing him to spend more time with his family. He decided to go back to school and earn his degree in psychology.
Now, as an Uber driver, he gives a lot of rides to out-of-town IT workers employed by the state who he says live part-time in downtown hotels. It all makes him wonder.
“I’ve actually thought about going back to school,” he said. “But why should I pay more money for a master’s degree? Am I going to spend all that money without any guarantee?”
[caption id="attachment_164384" align="aligncenter" width="640"]
PROACTIVE APPROACH: Tim Hebert, chief client officer for Carousel Industries of North America Inc., in Exeter, gives an in-house job-training program that’s produced dozens of employees for his company, Atrion, which was acquired by Carousel Industries last year. / PBN PHOTO/MICHAEL SALERNO[/caption]
REIMAGINE HIRES
The state and some employers are proactively trying to boost the skills of Rhode Island’s workforce through job-training programs and educational attainment, which – as Hall points out – would strengthen the business community and subsequently the overall economy.
“Lack of talent is the single greatest inhibitor to growth,” said Tim Hebert, chief client officer at Exeter-based Carousel Industries of North America Inc.
Hebert, whose IT company Atrion was acquired by Carousel Industries last year, found himself facing the very same issue eight years ago.
“We were unable to hire anyone,” he remembered. “We weren’t able to make a single hire.”
At the time, he was trying to find four employees. After about 200 interviews, and no success, he made jokes about likely having an easier time filling the position by going out on to the streets of Providence and training four random people.
“As I thought about it more, I realized we could become part of the solution to the problem. Instead of getting into the blame game, we asked what we could do to make a difference,” he said.
He subsequently launched the “
Atrion Apprentice Program,” a training program that has since graduated about 100 IT professionals that made up about one-third of Hebert’s workforce prior to joining Carousel.
The workers have typically come in without college degrees, or without classic IT training. Hebert boasts a 10 percent attrition rate in a profession in which employees are heavily sought after.
“There’s a high degree of loyalty, because loyalty is bidirectional and we’re investing in our people,” he said.
Hebert says upfront costs for the program totaled $1 million, which he admits isn’t realistic for everyone. But he argues this type of investment is about looking beyond the short term.
“As a business owner, there’s a balance of thinking about the short term and what’s good for the bottom line today, and what’s good for the long term,” he said. “We’re making skill sets more relevant, more vast and deeper than they were before.”
The lesson, he says, is that employers should reimagine how they think about potential hires. He sees his efforts as proof that skills can be taught more easily than degrees can be earned.
“Look for character and competence, not credentials and pedigree,” he said.
The company now employs about 500 people within a 30-mile radius of Providence. Carousel’s total headcount is 1,300 people across 26 states, and Hebert says the labor shortage is in cities across the company footprint. But he believes employers can overcome it.
“If I go looking for the negative, I’ll have no problem finding it,” he said. “If I’m looking for the glass half full, I can find employees all day long.”
Hebert’s success and optimism, however, isn’t shared by everyone.
At the same time there’s a shortage of skilled labor in Rhode Island, the state is seeing a decline in the labor force, measured by the percentage of Rhode Islanders who are employed or unemployed but actively looking for a job.
The size of the labor force fell 4.2 percent – or 24,067 people – since its peak in December 2006 through the end of last year, and it fell at a faster rate than any other New England state. Connecticut, Massachusetts and New Hampshire have all realized growth during the same period.
Recently there have been positive signs. As of May, it stood at 555,500, a 0.5 percent increase from 12 months earlier, according to the DLT.
[caption id="attachment_164385" align="alignright" width="300"]
IMPROVEMENT NEEDED: Leonard Lardaro, an economist at the University of Rhode Island, says the state is not well positioned for the next economic downturn, as it suffers from an inadequately skilled workforce, which limits its potential to expand. / PBN PHOTO/MICHAEL SALERNO[/caption]
“The [R.I.] labor force to me says, ‘Crisis.’ Alarm bells should be going off,” said Lardaro. “How much would it go down during a recession after a decade of decline? I have no idea, and I’m afraid to find out.”
Raimondo says the shrinking labor force does concern her, but argues Rhode Island is better positioned now to handle an economic downturn than it was pre-Great Recession.
“I believe the investments we’ve made in education and job training have created a solid foundation that will allow Rhode Island’s labor force to weather future economic ups and downs,” she said.
In addition to trying to bring higher-paying jobs to Rhode Island by luring such blue-chip companies as General Electric Co. with incentives, Raimondo has also boosted job-training programs through Real Jobs Rhode Island. The incentive program gives money to companies that hire and train employees. Earlier this year,
Raimondo promised $3.6 million to General Dynamics Electric Boat if the submarine-maker hired and trained upward of 500 people through Community College of Rhode Island and New England Institute of Technology.
But Rhode Island’s economy has still grown more slowly since the second and third quarter of last year, according to the Rhode Island Economic Indicator, a joint index of Bryant University and the Rhode Island Public Expenditure Council.
Economists also warn the U.S. economy has grown past a typical eight-year expansion, meaning a national downturn likely isn’t far off.
Less economic growth largely translates into less money for the state. That leads to its own set of headaches for state leaders who want to spend new money on such programs as tuition-free college, or cut taxes on various assets such as cars.
The dynamic played out during this year’s budget process, as state leaders grappled to pass a balanced budget after tax revenue collection fell short of expectations, creating a $134 million deficit. The net result – among other things – was an eventual scaled-back version of a tuition-free initiative – dubbed Rhode Island Promise – proposed by the governor.
The state allocated $3.3 million to pay for qualifying Rhode Islanders to attend two years of school at CCRI, the state’s sole community college. The initiative is a far cry from what Raimondo envisioned, which would have paid for two years of college at all in-state institutions.
The narrowed scope – to some extent – came at the expense of a $26 million cut to the so-called car tax, an initiative backed by House Speaker Nicholas A. Mattiello. The tax relief, albeit popular among many Rhode Islanders, could further weaken the state’s ability to balance the budget in future years, especially if the economy softens.
[caption id="attachment_164388" align="alignright" width="210"]
PROBLEM SOLVER: Tim Hebert, chief client officer for Carousel Industries of North America Inc., in Exeter, which acquired his IT company Atrion last year, launched the Atrion Apprentice Program after being unable to find and hire qualified candidates nearly eight years ago. / PBN PHOTO/MICHAEL SALERNO[/caption]
The possibility of such an event was a noted concern of the state Senate, which voted to amend the fiscal 2018 budget so the state could freeze the car tax phaseout should the Rhode Island economy fall in coming years.
The disagreement between top lawmakers ultimately led to a budget impasse that spilled into early July and the new fiscal year.
Hebert lauds both Raimondo and former Gov. Lincoln D. Chafee for the time and money they have spent on workforce development, saying the effort was relatively nonexistent during the previous two decades.
But while Raimondo is adamant her economic-development strategy is working, Hebert says it could be several years before anyone can tell for sure.
“We need to understand that investing in the workforce is not a one-and-done effort,” Hebert said. “This is the long game, and some of the returns we won’t see for another decade. But the investments need to be made right now.”
Correction: An earlier version of this story misstated the month when the Rhode Island unemployment rate first fell below the national rate.
Eli Sherman is a PBN staff writer. Email him at Sherman@PBN.com, or follow him on Twitter @Eli_Sherman.
