Lackluster growth in health and education employment could spell trouble for the Ocean State, where job gains or losses in any segment of the economy can tip the scales of economic growth.
The U.S. Bureau of Labor Statistics on Sept. 27 released a report examining Rhode Island’s employment growth from 2009 to 2016.
The report found post-recession jobs grew at a much slower pace than the national rate, largely because of lackluster activity in education and health services. BOL bore down deeper and found anemic job growth at hospitals and colleges and universities.
Both higher education institutions and hospitals fall under a so-called super-sector called education and health services, which makes up the largest segment of the Rhode Island workforce. The report found the sector grew at a pace of 2.3 percent, compared to 17.7 percent nationally.
The overarching trend is worrying to Edward M. Mazze, distinguished professor of business administration at the University of Rhode Island.
“These are the areas where we are anticipating growth. They are the areas where – quite frankly – we have higher-paid positions,” he said.
The report ran some economic scenarios to test what type of impact the lackluster growth had on the overall workforce and how it contributed to slow bounce back from the recession.
For higher education, BOL substituted the 14.4 percent local rate of job loss with the 9 percent national growth rate and calculated Rhode Island would have gained 2,700 more jobs.
For hospitals, the 4.9 percent job loss resulted in an employment reduction of about 1,200 jobs. If the state had followed the national trend of 6.3 percent growth, there would have been a jobs gain of 1,500, according to the report.
So, why the discrepancies?
The BOL report doesn’t provide an analysis for why Rhode Island didn’t follow the rest of the country, but there’s evidence locally that helps explain. Colleges and universities, for instance, tend to spend more money on facilities than they do on new teachers compared to other states, especially in a time when adjunct professors have become a popular alternative to tenured professors, according to Mazze.
“The state is not a great supporter of [its] public institutions,” Mazze said. “When a university or college gets a 5 percent increase, whether it’s in tuition or state aid, it doesn’t go to faculty, it doesn’t go to staff, it goes to buying energy, equipment and maintenance.”
For hospitals, there have been significant employment reductions in recent years. Consolidations and ongoing operating losses have pushed large hospital networks, including Care New England, Prospect CharterCARE Health Partners and Southcoast Health, to lay off employees in recent years.
Patrick J. Quinn, executive vice president of SEIU 1199NE, says downward pressure is attributable in part to lackluster population growth and the state’s low uninsured rate.
The latter, he explained, was relatively low before the rollout of the Affordable Care Act, and subsequent expansion of Medicaid. That means Rhode Island didn’t benefit in the same way as other places when more people started getting insured. As for population growth, it’s a matter of shifting care.
“With a relatively stable population, the only thing that’s going to grow is long-term care services,” he said.
The hospitals are also trying to navigate challenging fiscal constraints.
“Our financial situation might be more dire than the rest of the country because our operating margins are lower and our reimbursement rates are lower,” said Amanda J. Barney, senior vice president at the Hospital Association of Rhode Island.
Regional data wasn’t immediately available to compare, but Mark Maggi, the BOL economist who prepared the report, made it clear the state was an outlier in New England, too.
“I ended up focusing on [Rhode Island] because it was so different,” Maggi said.
Not all hospitals are losing jobs overall, however, as Lifespan Inc., the state’s largest hospital system, says it grew its workforce 21.5 percent to 14,559 from 2009 to 2016.
Although the growth hasn’t been entirely organic, as the company acquired Gateway Healthcare in 2012, bringing in 850 jobs, the growth rate has nonetheless bucked statewide trends.
“We know what the market is doing, and we know we have to operate in a way that’s the most efficient and the most cost-effective way,” said Lisa Abbott, senior vice president of human resources and community affairs. “We look for processes improvements before we throw bodies at problems.”
Mazze said the larger implications are important, especially as the schools and hospitals are often sold as among the state’s best assets.
“We use these industries to attract other businesses,” Mazze said. “You hardly want to tell Amazon that if they moved 50,000 people to Rhode Island, ‘There will be no health care providers and no educators.’ ”
