For a number of years, observers of the region’s economies have noted Rhode Island’s poorly performing labor force.
Following the Great Recession, the number of people working or actively looking for work declined. And even once the state’s labor force started to grow, it took only baby steps compared with the most robust labor markets.
The most recent U.S. Bureau of Labor Statistics data show in stark relief what the difference is between the Ocean State’s workforce and those performing better in New England.
For instance, New Hampshire has one of the lowest unemployment rates in the nation, at 2.8 percent in April (all figures are not seasonally adjusted by the BLS). Statewide, however, its labor force grew from March 2016 to April 2017 by 0.4 percent, the same percentage growth as that for Rhode Island, which posted an unemployment rate of 4.1 percent in April.
A deeper look, however, shows that the three metropolitan areas listed for New Hampshire – Dover-Durham, Manchester and Portsmouth – saw labor force growth of 2.5 percent, 1.5 percent and 1.6 percent, respectively, during the same period. And their jobless rates reflected their labor force growth, coming in at 2.3, 2.6 and 2.3 percent, respectively.
The trend is more obvious for metro areas doing particularly well. It’s not surprising that the Boston-Cambridge-Nashua metro saw labor force growth of 3 percent from March 2016 to April 2017, nor that it’s unemployment rate in April was 3.4 percent.
But Portland-South Portland, Maine registered a jobless rate of 2.5 percent in April, with labor force growth over the 13-month period of 3.9 percent.
Similarly, Burlington-South Burlington, Vt., had labor force growth of 1.6 percent and ended the period with a jobless rate of 2.3 percent.
It’s not a perfect pattern – New Bedford ended April with an unemployment rate of 5.5 percent despite labor force growth of 2.7 percent. And the correlation for all of New England’s metro areas between labor force growth and unemployment rate change is -0.24, meaning that there is a real, if weak, inverse relationship between the two numbers – when the labor force grows, the unemployment rate falls.
It is no secret that you can’t grow an economy if the number of people working doesn’t grow. The question for policymakers is this – which do you need to do first, attract more workers or create more jobs? The answer might help inform just what policy prescriptions the Rhode Island’s leaders put in place.