| The
greatest downside risk to Rhode Island arising from this housing boom
is not the threat of rising mortgage rates, but the potential impact
this boom will ultimately have on the skills of our labor force. For
both March and April, as national employment rose sharply, Rhode
Island experienced a net job loss. This is probably the first step in
Rhode Island's resuming its historical job growth status - lagging the
nation. The combination of very expensive homes, continued healthy
home sales, and a lagging employment picture scares me. Why?
Skilled workers in Rhode Island who own homes
and have either lost their jobs here or view future job prospects
unfavorably can easily sell their Rhode Island home. With a very
sizable capital gain in their pocket, they can move to a part of the
country with better job prospects and substantially lower home prices.
The difference between home prices here and in the other state can
either be invested or, more likely, subsidize their job search in the
new location.
As this occurs, and it will, Rhode Island will
be losing skilled workers at a greater pace than it will be adding
them, since the inflow of skilled persons from other states can be
expected to be a trickle at best. So, whether we like it or not, the
housing boom here will ultimately erode the skill base of Rhode
Island’s workforce - not a very cheery prospect in a skill-based
economy! |
