More Rhode Islanders are working, but the state is losing jobs, according to the latest monthly report from the R.I. Department Labor and Training.
Wait, what?
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The seemingly contradictory relationship between the state’s July employment and jobs numbers could reflect changes to office culture. Or, maybe it’s a monthly aberration that means nothing at all. It depends which economic expert you ask.
Historically, the unemployment rate, labor force participation and job counts have all moved together, either up or down. But as DLT’s July data shows, the state has continued to lose jobs, down 1,700 positions month-over-month, and with 5,600 job losses compared with July 2022. Meanwhile, the number of employed residents is on the rise, up 1,500 compared with June, and up 700 over July 2022.
To Donna Murray, labor market information and operations manager for DLT, the trends can be explained in two words: remote work.
“If people were working in Massachusetts but they are now working at home in Rhode Island, that would be reflected in our resident employment, but not the job count,” she said.
The opposite is also true: People who live out-of-state but used to commute to a Rhode Island office and now work at home mean a loss for the state jobs numbers.
It’s hard to track how much remote work is behind the shifting employment data, since the state doesn’t know if a once in-person job became remote unless the company shares that, Murray said.
But Michael DiBiase, CEO and president of the R.I. Public Expenditure Council, agreed with her conclusion.
Not only has the pandemic changed culture around where people work, but the skyrocketing housing prices in places like Boston still make Rhode Island relatively more appealing, financially.
“We still don’t fully know the impact of remote work and the housing markets,” DiBiase said. “If Rhode Island is becoming a bedroom community, is that such a bad thing?”
What’s bad, according to DiBiase, is the state’s GDP, which flatlined in the first quarter of 2023, as detailed in an Aug. 10 report by RIPEC and Bryant University. Rhode Island’s annualized GDP grew .1% from the fourth quarter of 2022 to the first quarter of 2023, while New England reported a 1.6% rise in GDP in that same time frame. Nationwide, quarterly GDP growth was 2.0%, the report stated.
“Rhode Island’s economy does not seem to be performing well,” DiBiase said.
This, despite a favorable direction for the state unemployment rate, which continues to inch down, reaching 2.8% as of July, according to DLT’s report.
Len Lardaro, an economics professor at the University of Rhode Island, was quick to dismiss the unemployment rate as an economic indicator.
“There’s a long-term trend that the percentage of the working-age Rhode Island population in the labor force is on a well-defined downtrend since 2006,” Lardaro said. “That’s been Rhode Island’s secret sauce, so to speak, for favorable unemployment numbers.”
Lardaro was similarly unphased by the jump in employment numbers amid state job losses.
“It’s one month of data,” he said. “Let’s not get carried away.”
Murray, however, said the state data shows the trend lasted the last four months.
Another potential explanation: the rise of the gig economy. As workers increasingly opt to piece together independent jobs on their own, without a designated employer, it reduces the state job count while raising employment, Murray said.
Take, for example, the administrative and waste services sector, which reported 500 fewer jobs in July compared to June. Murray thought this was, at least in part, because companies were no longer relying on staffing agencies for temporary workers, instead opting to bring on independent contractors.
“Workers like it because they have more flexibility and for employers, they don’t have to pay benefits,” Murray said.
Other industries with job losses included the government sector, which reported 1,000 jobs lost from June to July. This likely reflects seasonal cuts in schools, Murray said. The hard-hit hospitality industry continues to suffer, reporting job losses for five consecutive months, now at its lowest level since January 2022, according to DLT’s report.
Meanwhile, the 700 jobs added to the health care and social assistance sector from June to July brought the industry to its highest employment level since March 2020, according to DLT.
Nancy Lavin is a staff writer for the Rhode Island Current.
