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The Providence Journal, Sunday Money & Business Page, June, 1998

Where did Rhode Island’s primary job growth occur in what I have recently referred to as its "bizarre" top five? In a recent article, "The Real Picture in the Bay State," (The Providence Journal, October 6, 1998), Robert A. Jordan lamented that: " … jobs created in the last decade tend to be more temporary, lower-paying, and with fewer benefits than most jobs that left Massachusetts over that time." He cites an average annual salary of $21,000 for jobs created between 1993 and 1996, noting that these jobs: " … come largely from temporary employment services and job placement agencies." He also cites the latter two employment categories as the most rapidly growing areas of employment for Massachusetts and the nation. Cheer up, Mr. Jordan, it could be worse.

For Rhode Island, the greatest "top five" job growth by far in 1997 occurred in Business Services, an industry that I would argue belongs in any state’s "top five." This accounted for 81.4 percent of Rhode Island’s "top five" job gains (note that two of our "top five" had declining employment). The average annual income in Business Services for Rhode Island in 1997, $23,830, exceeds the 1993-1996 figure for Massachusetts that Mr. Jordan was so concerned about. So far, so good.

The next obvious area to explore is the set of sub-industries (Standard Industrial Classifications, or SIC's) that make up Business Services. SIC 736, "Personnel Supply Services" (i.e., "temps") grew at a double-digit rate (of 11.4% in 1997), constituting 73 percent of the total Business Service gain for Rhode Island. The average annual income of workers in this SIC was $13,249! Suddenly Mr. Jordan’s $21,000 income figure doesn’t seem all that bad.

Anyone focusing on the proportion of payroll employment accounted for by Business Services would probably say: "The business service proportion of total employment in Rhode Island is third highest in New England. So What? To answer this, permit me to contrast the proportions of workers in various Business Service categories for Rhode Island and Massachusetts (its data for 1997 were not released at writing time). One figure jumps out at me: Massachusetts had 30 percent of its total in Personnel Supply Services for 1996, versus a whopping 43 percent for Rhode Island! That proportion rose to 45 percent in 1997.

Comparison of Business Services: Rhode Island and Massachusetts for 1996

In 1996, the average annual wage in Personnel Supply Services for Massachusetts was $21,101, a value almost identical to the average income figure that Mr. Jordan lamented. As I stated earlier, it could be worse, Mr. Jordan. The average annual income in this SIC for Rhode Island was $12,956, barely more than 60 percent of the Massachusetts value. Average income for this SIC grew to only $13,249 in 1997, which continues to seriously lag even the 1996 value for Massachusetts. Must be differences in the cost of living, right? Get serious! The occupational and industrial composition of these jobs, along with tighter labor markets in Massachusetts, accounts for much, if not all, of this difference. This is what happens when a state like Rhode Island that is well into being a service and information-based economy (this is our 12th year) fails to define itself for this era.

As we move to a period of slower economic activity, Rhode Island finds itself with too large a concentration (almost half) and the most rapid growth of Business Services in relatively low paying temp jobs. I would much rather see 30 percent of the total in SIC 737 (Computer Programming) with a smaller concentration in Personnel Supply Services, as per Massachusetts.

by Leonard Lardaro


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