State of Working Rhode Island 2007

February 03, 2007

Rhode Island’s economy weathered the 2001-2002 recession well, adding new jobs as growth in the rest of the country stalled. Since 2004, however, the Rhode Island economy has fallen behind. Job growth is slowing, unemployment rising and the median wage fell by 0.6% since 2000, making Rhode Island the only state in New England to experience a declining median wage. Rhode Islanders are also contending with a widening gap between high and low earners and a continued deterioration in employer-sponsored health and pension benefits.

Since 1990, Rhode Island lost a greater proportion of manufacturing jobs than any other state in the nation. These jobs have been replaced by jobs in an expanding service sector. Labor market experts predict that the state will continue to see growth in services and expect that a number of high-wage, high skill jobs will be created over the next several years. Yet the bulk of annual job openings will continue to be concentrated in relatively low wage, low-skill service-sector occupations, like food service workers.

Rhode Island’s changing job market points to the need for greater investments in the state’s untapped asset – its immigrant workforce and the 41% of working age adults who have never attended college. Investments in education and training for these lower skilled Rhode Islanders is the best way to improve the state’s economic competitiveness by building a skilled workforce as well as increasing the state’s tax base.

At the same time, the decline in employment-based benefits and the persistence of a large number of poorly paid jobs highlight the need for continued investments in public work support programs for those low-wage workers struggling to support themselves and their families.

1. RHODE ISLAND WORKERS IN A CHANGING JOB MARKET

Rhode Island’s labor force of 578,000 is older, more diverse and better educated than it was twenty or even ten years ago. Rhode Island workers are more likely to have completed high school and college than they were two decades ago. Census data shows no evidence of a “brain drain” of young, college-educated adults from the state. Hispanic workers are by far the fastest growing segment of Rhode Island’s labor force, having increased their share of the workforce sixfold over the past two decades. The Rhode Island Department of Labor and

Training projects that the fastest growing jobs over the next decade will require a college degree or other specialized training, while the bulk of annual openings will be in lower-skill direct service jobs that require fluent English. An important challenge for policy-makers is to ensure that all Rhode Island’s workers are equipped with the language, job-training and education and critical thinking skills needed to secure available jobs.

2. WAGE DISPARITIES AND GROWING INEQUALITY

Since 2000, Rhode Island was the only state in New England to experience a decline in the median wage. Nearly one-fifth of all jobs in the state pay less than $20,000 per year, the federal poverty level for a family of four in 2006. Wage increases at the bottom of the wage scale have been modest, while wage increases for the top 10% of workers far exceeded national averages. The result is a broadening gap between the highest and lowest paid workers. From 1990-2006,

Rhode Island had the fifth highest rate of growth in wage inequality in the country.

3. UNEMPLOYMENT AND UNDEREMPLOYMENT

Since 2005, Rhode Island’s unemployment rate has exceeded the national average as well as the rates in Massachusetts and Connecticut. The underemployment rate, at 8.9% in 2006, was nearly double the official unemployment rate of 5.2%. Un- and under-employment rates in Rhode Island are especially severe for minorities, younger workers, and those without a high school diploma.

4. PROTECTING WORKERS

Rhode Island has a number of programs in place to protect workers from the hardships of unemployment, low wages and declining health benefits, including unemployment insurance and cash assistance, an earned income tax credit, a minimum wage above the federal level and subsidized child care and health insurance for low-wage workers with children. Yet in many of these programs, Rhode Island workers receive less generous protection and more stringent eligibility requirements than in neighboring states.

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