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The Providence Business News, June, 2000

Soon after I first conceived of and began publishing a new unemployment rate indicator, the Jobless Improvement (JI) Index, Rhode Island was ranked #1 nationally in terms of that indicator for two consecutive months, something that certainly gave us a cause for celebration. The "dark" side of that ranking was how Rhode Island got there: a large out-of-state job gap. When resident employment grows much faster than payroll employment, it creates a "gap" in terms of increasing numbers of Rhode Island residents working in neighboring states. So, it is possible to make what appears to be major inroads into reducing unemployment while not having a great deal of internal job creation. Sounds like merely a theoretical possibility, doesn't it?

At times over the past few years, Rhode Island's out-of-state job gap has appeared to be very large, a potentially troubling trend. But, at least we were finally able to answer the question: "What would it take for Rhode Island to attain unemployment rates in this recovery as low as those it experienced in the last recovery?" The answer, which I found troubling, could be succinctly summarized with two words: Massachusetts and Connecticut.



Well, since this is Rhode Island, there is good news and bad news to report. First, the bad news. Remember those 3.0 and 3.1 percent unemployment rates last year that helped give the JI Index those best-in-nation values? Don't. They never really occurred. Data revisions have eliminated them. So, at the time we thought our unemployment rate had fallen all the way to 3 percent, it had yet to drop below 4%! In fact, Rhode Island's rate of unemployment didn't finally go below the 4 percent level until the fourth quarter of1999. At the present time, it has reached its recovery low of 3.7 percent.

What is the good news? Our unemployment rate failed to drop to the 3 percent level since those troubling out-of-state job gaps in 1999 never occurred. Data revisions eliminated those as well. And, happily, as of the time this is being written, Rhode Island has now been at full employment for fifteen consecutive months. So, true to form for Rhode Island, things are neither as bright as we would like them to be nor as bleak as they appear to be at times.

by Leonard Lardaro

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