Projo Biz Blog

By Alex Kuffner

Journal Staff Writer

PROVIDENCE -- Although economists say the worst of the recession may be over, the number of jobless workers in Rhode Island continues to grow.

The state's unemployment rate ticked up to 12.8 percent in August from what was a record high of 12.7 percent in July, according to a report issued Friday. The latest number is now the highest in Rhode Island since the federal government began keeping track of unemployed workers in 1976.

Rhode Island's jobless rate, the second-highest in the country in July, has been steadily climbing for 2½ years and it doesn't appear to be slowing down.

"The likelihood of the labor market recovering quickly is not good," said labor economist Paul Harrington, associate director of the Center for Labor Market Studies at Northeastern University.

The August jobs report, released by the Rhode Island Department of Labor and Training, comes after Federal Reserve Chairman Ben Bernanke said Tuesday that the national recession had ended, though he warned that it could be months before jobless rates across the country decline.

Indeed, the nation's unemployment rate rose from 9.5 percent in July to 9.7 percent in August. In Massachusetts, the rate took a larger step up from 8.8 percent to 9.1 percent. Michigan saw its rate, already the highest in the nation by a large margin, move up from 15 percent to 15.2 percent.

Experts predict the number in Rhode Island to creep up as much as a full percentage point by next spring. In its economic forecast for the state, Moody's Economy.com expects it to peak at 13.7 percent in the next six months.

"That doesn't, I think, cloud over the fact that Rhode Island is starting to pull out of the recession," said Andres Carbachos-Burgos, an economist with Moody's, the Pennsylvania-based research firm. "Because the unemployment rate is a lagging indicator, it should go up for several months."

Overall, the number of unemployed Rhode Islanders rose by 500 to 73,300 people in August, a nearly 60-percent increase compared with a year ago. The state's labor force, which includes employed and unemployed workers, reached 573,700 people, its highest level since June 2007.

Leonard Lardaro, professor of economics at the University of Rhode Island, said he believes the continued growth in the labor force is a good sign for the economy. He also said that the unemployment percentage is rising because so-called discouraged workers who had dropped out of the job search are now looking again and, as a result, being counted in the rate. He advised people not to panic if the rate keeps going up for a while.

"It's not because everything is falling apart," he said.

In one respect, the August jobs report seemed to offer a rebuke to a somewhat rosier picture painted by the July report. Figures in July showed that the state had gained 900 jobs over the previous month, mainly in the manufacturing and construction sectors of the economy. It was the first such increase in 16 months.

At the time, state labor officials cautioned that a single month-on-month increase could be just an anomaly. They were right to be careful. In August, Rhode Island lost 2,400 jobs, more than wiping out the growth in July. The job losses came primarily in manufacturing and construction.

"Any month doesn't represent a full trend," Sandra Powell, director of the Department of Labor and Training, said in explanation. "Even a period of recovery has ups and downs. It's not a straight trajectory upward. While we wish these numbers were a repetition of last month, we hope they will show improvement over a long period."

Harrington, the labor economist from Northeastern, said the discrepancy in the two months' figures could be explained by seasonal flux. Long term, he does not expect dramatic job growth for many months, if not years. Employers may start bumping up hours for part-time workers again before they start hiring anew.

"When you have uncertainty, people will be very slow to make job commitments," he said.

There were some positive signs in the jobs report. The state gained positions in the accommodation and food services sector. The increase was small -- only 100 jobs from July to August -- but it buttressed growth in the sector over the last year of 700 jobs.

And Powell pointed to an increase of 500 in the number of jobs in what the report calls "employment services," which are typically temporary office positions that businesses shed very early in the recession. If employers are hiring in those positions again, it could signal better things to come, she said.

After the release of the July jobs report, Moody's Economy.com saw enough encouraging signs to upgrade Rhode Island's status from "full recession" to "moderate recession."

"Of course, that's cold comfort to the people who will lose jobs in the next six months," Carbachos-Burgos said, "but Rhode Island is not in the same tailspin that it was in over the last year."

akuffner@projo.com

 Tags  unemployment

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