From early indications, 2007 will be a tough year for job growth. Nationally, the economy is predicted to grow at a rate of 2.4 percent to 3 percent with an estimated unemployment rate of 4.6 percent. The inflation rate is expected to be 2 percent instead of higher estimates predicted earlier because of energy costs. A slower growth rate generally produces lower inflation and a competitive labor market.

In Rhode Island, we will be entering 2007 with fewer jobs as a result of decisions made in late 2006 at a number of large Rhode Island employers due to consolidation or poor financial performance. There will also be declines in employment in the leisure and hospitality industry, jobs in the category called other services and jobs in construction due to the residential housing market. The state’s unemployment rate will continue to be higher than the national rate .It is anticipated that the job market will be flat for the first three months of the year.

Rhode Island’s employment situation may improve in the small business sector if the state is successful in implementing a health insurance program for small businesses, the price of housing continues to drop so the average worker can afford housing and business owners have confidence in the direction of the state economy. Up to now, businesses have been cautious in hiring new employees because of the high cost of fringe benefits and the slow growth in their revenue.

In 2007, Rhode Islanders face a tight state budget which may lead to the elimination of some health and welfare programs and less than adequately funded public education at all levels. At the same time, under funded public pension programs will need to be addressed as well as high property taxes. All these factors affect economic development and the state’s ability to retain and attract industry.

In the upcoming legislative session, the state’s legislators must continue to address the preparation of the work force of the future if the state is to be successful in creating jobs. We need to make sure that the community college system is affordable and prepared to train individuals for jobs in demand as well as students who go on for an undergraduate degree. We need to consider eliminating tuition at public community colleges for those who cannot afford college but need training to obtain jobs requiring skilled workers.

Although the outlook for jobs in manufacturing in Rhode Island and the other New England states is bleak, there are still sectors in manufacturing where there is growth. Small manufacturing companies serving specialized niches continue to grow and look for trained workers. Without these workers, these companies are stalled for growth and then outsource their manufacturing to companies located overseas or in other regions of the United States.

In estimating job growth, there is often conflicting information due to how and when job numbers are reported and who is reporting the numbers. In Rhode Island, we recognize that any company expansion decision and any company having financial problems can impact the job outlook for the coming months. But just as important, individuals looking for a job must invest in their education by completing high school and going on to a two or four year college. The jobs of the future require specialized education. Best wishes for the New Year.