R.I. must do better matching worker skills and jobs

COURTESY NEW ENGLAND ECONOMIC PARTNERSHIP
MODEST GAINS are expected in the financial activities, construction and manufacturing workforces, with the largest gains coming in the financial-activities sector.
COURTESY NEW ENGLAND ECONOMIC PARTNERSHIP MODEST GAINS are expected in the financial activities, construction and manufacturing workforces, with the largest gains coming in the financial-activities sector.

Through April of this year, Rhode Island continued to have the second-highest unemployment rate in the United States, leaving the state with 62,178 people unemployed. The seasonally adjusted unemployment rate for April was 11.2 percent, a one-tenth of a percentage point increase from the March rate. In fact, a double-digit unemployment rate is forecast for Rhode Island through the end of 2013.
As high as that rate it, it does not include the underemployed or those who left the workforce because they could not find a job, numbers that are reflected in the size of the state’s labor force. The Rhode Island labor force totaled 556,259 in April, the lowest labor-force level since March 2005. Overall, the state has lost 33,100 jobs since 2006.
The challenges to turn the economy around are significant, including reducing the overall costs of doing business and changing the perception that Rhode Island is an unfriendly place to do business. In addition, the state also faces a mismatch of talent with job needs.
Employers are looking for skilled and semi-skilled workers, especially for jobs in information technology, health care, science and technology. Occupations that employ workers with post-secondary education are growing faster than other occupations. However, there also are job opportunities in the trades where baby boomers are now retiring.
Unfortunately, for industries that are disappearing, the skills of these workers may not be of use in other industries. One result of this reality is the oft-cited problem of jobs going begging for in-state applicants with the required skills, as well as the reality that many workers who lost their jobs at the beginning of the recession in 2007 may not be qualified to fill job openings in 2012.
In 2011, 40.8 percent of Rhode Island residents 25 years and older had an associate, bachelor’s or graduate degree, compared with just under 50 percent in Massachusetts, Connecticut and New Hampshire. This puts Rhode Island in a disadvantaged competitive position in the region in terms of labor-force qualifications.
In addition, more than 45 percent of the Rhode Island population 25 years and older holds only a high school degree. Workers with only a high school education are facing increasing difficulties finding and retaining jobs in a global and highly competitive economy.
The demand for high-skilled labor in Rhode Island will increase in most employment sectors over the next decade. More highly skilled health professionals will be needed because of an aging population. According to the U.S. Department of Labor, more than 50 percent of the fastest-growing occupations in the next five years will be related to health care. In Rhode Island, jobs such as medical records and health-information technicians and clinical laboratory technicians are expected to grow. Another occupation with strong growth potential for workers will be in so-called “clean” energy production and environmental protection. There is also a demand for semi-skilled workers that does not require a bachelor’s degree or graduate degree. However, these positions require strong vocational training that can be acquired on or off the job. Rhode Island currently has a below-average percentage of adults with associate degrees that focus on vocational training.
In 2011, 8.8 percent of the population 25 years and older had an associate degree compared with 11.5 percent in New Hampshire and 10 percent in the rest of the nation. Many Rhode Islanders need postsecondary education or job training to prepare for a 21st-century economy.
State-government agencies, educational institutions, employers and labor unions must work together to make sure there is a labor pool to fill local jobs. This labor pool must also be capable to compete in a regional labor market, otherwise job opportunities in neighboring markets will be missed or local jobs will be filled with workers from other states. There needs to be collaboration between these organizations to ensure that any curriculum is aligned with workforce needs. A greater investment in elementary and secondary education in Rhode Island would help students gain strong basic skills that will be needed in the job market.
Pieces of the puzzle
The state’s labor market is not expected to recover much in the next five years, with an annual growth rate from 2011 to 2016 expected to be 1.6 percent, which follows growth of 1.4 percent from 2006 to 2011. The resulting unemployment rate in 2012 is expected to be 10.8 percent and by 2016 it is projected to be 6.6 percent, above the average rates in New England and the nation.
In 2012, employment in information services, professional and business services, and high- tech will increase. Other employment sectors are showing a decrease in jobs. Manufacturing employment is holding constant at about 41,000 jobs through 2016. In 2013, employment in construction, information services, financial activities, professional and business services, education and health, leisure and hospitality, and high-tech are showing some growth.
Rhode Island’s Real Gross State Product is forecast to reach $45.8 billion in 2012, an increase of 1.8 percent compared to 2011’s real GSP, with most of the growth taking place in the third and fourth quarters of 2012. The annual growth rate of GSP is forecast as 2.5 percent from 2011 to 2016 as compared with no growth from 2006 to 2011.
Per capita personal income is expected to increase to $45,040 from $43,949 in 2011, an increase of 2.5 percent, with a 3.7 percent increase forecast for 2013.
The median price of a home was $203,600 in the 2012 first quarter and is expected to be $222,300 in 2013. By 2016, it is forecast that the median price of a home in Rhode Island will be $246,400, compared with $280,500 in 2006.
It is expected that there will be 955 housing permits issued in 2012 as compared with 685 in 2011. From 2011 to 2016, the annual growth rate in housing permits is expected to be 23 percent, as compared with negative 22 percent from 2006 to 2011. Bankruptcies are expected to decrease from 5,100 in 2011 to 4,300 in 2012 and to 3,900 in 2013.
While the overall population in Rhode Island is expected to grow 0.1 percent from 2011 to 2016, the 65 and older cohort is expected to grow 1.9 percent during the period.
Challenges ahead
Like many other states, Rhode Island transitioned to a service-based economy from a manufacturing economy in the 1990s. Nationally, one-quarter of today’s workers are in jobs not listed in the Census Bureau’s Occupation codes in 1967.
There is, however, some growth in specialized manufacturing, but not enough to absorb all the workers formerly employed in manufacturing. In addition, the skills required in manufacturing are different than those required in service industries. Thus, the state’s skills gap is not only in high-tech but also in jobs such as personal-care aides, home-health aides, and helpers in construction trades, electricians, plumbers, engineering technicians and medical technicians. The skills sought by employers also include technical writing, the ability to communicate with others, the ability to work independently and to be able to think critically and solve problems.
Rhode Island needs to improve its educational system and focus on vocational programs and retraining for displaced workers to provide them with the skills they need to compete in a changing labor market. The current approach to matching skills to jobs has not been successful because of low completion rates of individuals entering these programs, poor curriculum, little coordination among programs, no accountability and outdated restrictions. Improving skills is vital in matching Rhode Island workers with jobs. &#8226


Edward M. Mazze is the distinguished university professor of business administration at the University of Rhode Island. Edinaldo Tebaldi is an assistant professor of economics at Bryant University. This piece is adapted from a presentation they gave at the New England Economic Partnership’s May 2012 economic-outlook conference.

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