Early indicators suggest the economic shutdown created by the new coronavirus may be hitting the labor force in Rhode Island harder than in most states.
The R.I. Department of Labor and Training has reported unprecedented levels in new unemployment filings – with daily increases quickly surpassing the previously recorded weekly high of 5,300 fillings during the 1992 banking crisis, according to DLT Director Scott R. Jensen. As of April 23, total filings excluding those for temporary disability insurance surpassed 180,000, representing about 32% of the labor force based on the 566,600 workers reported as of March 14.
While the crushing economic blow is felt by workers nationwide, reports published earlier this month by the U.S. Chamber of Commerce and Tax Foundation suggest Rhode Island’s unemployment burden is worse than its peers. The Chamber report ranked Rhode Island second, behind Michigan, in claims filed as a percentage of its labor force as of April 4. The Tax Foundation analysis, which is updated weekly, continued to show Rhode Island in the upper rankings.
But whether Rhode Island’s labor force is truly in worse shape than other states depends on who you ask, and how they interpret the data.
Jensen was quick to note that claims filed do not automatically translate to those approved, and in turn, those receiving benefits.
Nationwide, confusion surrounding eligibility, as well as the urgency felt by those filing claims, has increased the gap between applications and approvals, said Jared Walczak, the Tax Foundation’s director of state tax policy.
Jensen also pointed to how timing and transparency have affected Rhode Island claims data. Rhode Island was among the earlier states to shut down certain business sectors, sparking the increase in newly unemployed workers. It was also a leader in accepting claims from self-employed and gig-economy workers. And the DLT has offered updated information daily, while other states have not been as transparent.
While the Tax Foundation analysis acknowledged that “differentials across states may be questions of timing rather than effects of the economic contraction,” Rhode Island’s early onset of closures and accepting of new types of claims has only a modest effect on its ranking so far into the pandemic, Walczak said.
“Now that we have close to a month of significant job losses in the rearview mirror, those differences are much smaller,” Walczak said.
To him, the consistently high increase in Rhode Island’s weekly unemployment claims suggests the local labor force is indeed being affected more severely than in other places.
However, he cautioned that the number of people applying for benefits reflects the utilization of the unemployment compensation system, not the unemployment rate itself.
Rhode Island’s monthly unemployment rate of 4.6% reflects information as of March 14 – before the impact of COVID-19 set in – though that percentage outranks other regional states.
One metric where Rhode Island fares slightly better is the status of the state’s unemployment trust fund. The state ranked No. 34 in the solvency of its trust fund, with enough money to pay out current claims for about 14 weeks, according to the Tax Foundation analysis.
“No state prepared for a crisis like this ... but some states did enter more prepared than others,” Walczak said.
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
