• Home
  • :
  • :
  • Member Center
  • :
  • Make This Your Home Page

Business

Comments | Recommended

Number of jobless Rhode Islanders continues to grow

01:00 AM EDT on Friday, July 18, 2008

By Lynn Arditi

Journal Staff Writer

Rhode Island’s recession continues to deepen, as payrolls shrink and the ranks of residents unable to find work grows.

The state unemployment rate last month climbed to 7.5 percent, two percentage points above the national average, and payroll jobs fell for the sixth straight month, according to a report to be released today by the state Department of Labor and Training.

So far this year, Rhode Island has shed 8,600 payroll jobs and the ranks of unemployed residents have swelled to 42,600 — the largest in 15 years, the state reported.

Yet, just over the border, in Massachusetts, payroll jobs last month rose by 2,800 following a 1,900-job gain in May, according to a report yesterday by Massachusetts’ Office of Labor and Workforce Development.

Massachusetts’ unemployment rate rose from 4.9 percent in May to 5.2 percent in June, less than the national unemployment rate of 5.5 percent.

“Rhode Island makes Massachusetts look good by comparison,” said Andres Carbacho-Burgos, an economist at Moody’s Economy.com, a research and forecasting firm based in West Chester, Pa. “I wouldn’t say Massachusetts is doing great right now, but at least it’s growing.”

Fallout from the global mortgage market crisis has hit especially hard in Rhode Island, where 1 in 41 mortgages, on average, were in foreclosure at the end of last year, the seventh highest rate in the nation, according to a report released last month by Harvard University’s Joint Center for Housing Studies.

The real estate market meltdown, coupled with state budget cuts, has hobbled Rhode Island’s already weak labor market, experts say, which lacks Massachusetts’ high-growth industries, such as technology and pharmaceuticals, leaving the state uniquely vulnerable.

“This downturn hits you right in your portfolio,” said Jared Bernstein, labor economist at the Economic Policy Institute in Washington. “You see the fingerprints of the housing bubble and it spills over into financial markets, all of which are important sectors for Rhode Island.”

Rhode Island is among 11 states in the country — and the only one in New England — that economists say is officially in a recession. The only other New England states that are “at risk” of a recession are Connecticut and New Hampshire, according to Global Insight.

Connecticut yesterday reported it added 3,600 jobs last month and its unemployment rate remained unchanged at 5.4 percent.

In Rhode Island, the last major recession — during the 1990s — began with the collapse of the commercial real estate markets and dragged down just about every sector of the state’s economy. It lasted three years. (Rhode Island skirted the worst effects of the technology bubble bursting in 2001, which hit Massachusetts hard.)

In this latest economic downturn, Rhode Island, with its shrinking manufacturing base, low-wage service jobs and older cities, looks more like its Midwest peers.

Last month’s 500 job-loss was a fraction of May’s 2,000-job decline, but the cumulative effect remains severe. Rhode Island in May posted the second highest unemployment rate in the country, after Michigan — and that unflattering distinction may again prove true once all the state rates are tabulated. (Michigan reported its unemployment rate remained unchanged in June at 8.5 percent.)

“We have no new industries coming in,” said Edward M. Mazze, business administration professor at the University of Rhode Island. “We’re asleep at the wheel in creating jobs in this state. We’re talking about wonderful long-term initiatives and while we’re talking … we’re losing jobs in existing businesses.”

During the past 12 months, the number of unemployed residents has increased by 13,800, the state reported. (The government surveys only count people as unemployed if they report that they are available and actively seeking work.) Rhode Island’s 7.5-percent unemployment rate in June was up from 7.2 percent in May.

The actual job losses may, in fact, be more severe than the government data show, Mazze said, in part because immigrants who have been working illegally are being scared by the recent immigration raids and leaving their jobs. (On Wednesday night, federal agents raided six courthouses and picked up 31 maintenance workers suspected of being illegal immigrants.)

“There are probably lots of job losses that have not been reported,” Mazze said, “because of the immigration situation.”

Employment in accommodation and food services last month fell by 100, and is down 400 since June of last year, the state data show.

During the past 12 months, besides a 2,800-job loss in manufacturing, the state has shed thousands of jobs in the professional and businesses services (-2,300), retail trade (-1,900) and financial activities (-1,700), according to the state report. Employment in “other services” sector also declined (-1,200) during the same period, and smaller losses were reported in construction (-900), transportation and utilities (-500) and arts, entertainment and recreation (-400).

Last month, government payrolls fell by 200, though steeper declines are expected once the full effects of the state budget cuts are felt.

Of the three sectors that reported job gains over the last 12 months, only one of them, the information sector (500 more jobs), was enough to be considered statistically significant. The other two sectors — educational services (200 more jobs) and health care and social assistance (100 more jobs) — posted gains so small that economists consider them essentially flat.

larditi@projo.com

Advertisement

Projo Video

The best cup of coffee: It's all about the roast
Sweeping views and luxurious lifestyle at The Tower at Carnegie Abbey in Portsmouth
Riding the rails of the Providence and Worcester Railroad



More business stories

Most Viewed Yesterday

Most active surveys

Updated Sun 7.5.09

Most e-mailed in the last 24 hours

Reader Reaction