Study: Providence area sees biggest shift away from manufacturing jobs in US

Fed economist warns fewer finish high school in places where degrees are in demand

Workers on factory floor at New England Shirt Company, Fall River, Mass., August 26, 2016. (Julianne Peixoto, WPRI-TV)

PROVIDENCE, R.I. (WPRI) – A new study illustrates just how drastically employment has plunged in Rhode Island’s historic industrial base over recent decades.

Since 1980, the Providence metropolitan area has experienced the largest shift in the country away from manufacturing jobs and into work requiring college degrees, according to a paper by Stephan Whitaker, a research economist at the Federal Reserve Bank of Cleveland. The metro area is defined as including all of Rhode Island as well as Bristol County, Massachusetts.

“In 1980, 40% of workers in the Providence metro area worked in manufacturing and 25% worked in degree-intensive fields,” Whitaker writes. “By 2014, manufacturing had dropped to just 11%, and degree-intensive jobs had risen to 47%.”

Whitaker defines degree-intensive industries as those “in which an above-average share of the employees hold college degrees,” such as health care, education, finance, insurance and real estate. He focused his comparison on manufacturing, he writes, because “it has historically paid high wages to workers without college degrees.”

In his paper, Whitaker notes concerns “that the growing industries do not provide enough work opportunities or middle-class incomes for people without college degrees.” That echoes frequent comments by Rhode Island leaders including Gov. Gina Raimondo who say the state needs to do more to encourage the creation of jobs for workers who don’t attend college.

The Cleveland Fed paper is just the latest research to confirm the massive impact deindustrialization has had on Rhode Island since the 1980s, reinforcing what many residents have experienced themselves as factories closed and manufacturing employment plunged over recent decades.

A seminal 2011 study co-authored by MIT economist David Autor, for example, showed the Providence metro area ranked No. 2 out of 722 regions nationwide in a ranking of how much of a threat their industrial bases faced as of 1990 from the looming surge of Chinese imports, topped only by San Jose, California. That’s because the types of products most likely to be manufactured in Rhode Island a quarter-century ago, such as toys and jewelry, could be more easily and cheaply made overseas than more complex goods.

A study earlier this year by Boston Fed economist Mary Burke reported manufacturing employment in Rhode Island plunged by 57% between 1990 and 2015, and found a growing number of the state’s skilled jobs requiring college degrees were going to out-of-state workers.

In his paper, Whitaker compares Providence with the two extremes of Washington, D.C., where degree-intensive industries now account for 68% of jobs, and Detroit, where manufacturing still makes up 17% of jobs.

“Do the children of parents without a college degree have more advantages supporting their educational attainment in the Providence of today than in the Providence of 1980?” he asks. “Are these children better off today in Washington, D.C., or in Detroit?”

Whitaker goes on to show a correlation between regions with significant manufacturing employment and the share of students who finish high school, as opposed to regions with significant degree-intensive employment – a potentially worrying finding for Rhode Island considering the shift in jobs here.

“If raising high school attainment is a priority, local leaders may need to direct more resources toward manufacturing,” he writes.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram