Fewer working-age Rhode Islanders had a job in 2016

PROVIDENCE, R.I. (WPRI) – Despite an ongoing drop in the official unemployment rate, a smaller share of working-age residents reported being gainfully employed in 2016 compared with the year before, U.S. Bureau of Labor Statistics data shows.

The employment rate for Rhode Islanders ages 25 to 54 was 77.8% in 2016, down from 78.9% in 2015, the bureau said. For that group of adults, classified as prime working age, the employment rate remains well below the levels reached during the previous two economic recoveries: 82.6% in 2007 and 83.3% in 1999.

Gov. Gina Raimondo often cites as a sign of Rhode Island’s economic momentum the sharp drop in the state’s unemployment rate, which has declined from a high of 11.3% in the summer of 2009 to just 4.3% last month. But the federal numbers also suggest the current recovery has not had the same effects as prior ones.

The last two times Rhode Island’s unemployment rate fell below 5%, the data shows, more than 80% of 25- to 54-year-old residents were employed, versus less than 78% last year. Another way to look at it: among prime working-age Rhode Islanders, an average of 323,000 were employed in 2016, compared with 374,000 in 2007 and 349,000 in 1999.

Economists often look at statistics on prime working-age residents to better understand employment trends. “Focusing on 25- to 54-year-olds reduces the distortion of employment trends resulting from demographic effects such as older and younger workers’ choices regarding retirement or full-time education,” researchers at the Pew Charitable Trusts noted recently.

In an interview on last week’s Executive Suite, Federal Reserve Bank of Boston President and CEO Eric Rosengren acknowledged working-age employment growth has been “a little bit softer than what we might expect” and the trend is “a little bit surprising” to economists.

“One of the advantages of running an economy a little bit hotter – and I would call 4.4% [unemployment] nationally a little bit hotter than normal – is that it does bring these people back into the labor force,” Rosengren said.

“And so that’s exactly what we’re hoping to see, is some of those people that have had a difficult time getting back into the workforce, after a long period of unemployment or other types of issues, able to take advantage of the strong economy right now,” he said.

Since 2007, only four of the 50 states – New Mexico, Nevada, South Dakota and Alabama – have experienced a larger drop in prime-age employment than Rhode Island, although nearly every state saw a decline, according to a Pew analysis. The national decrease was 2.4 percentage points, less than half as large as Rhode Island’s decrease.

The story is different across the border: Massachusetts is one of just four states where prime-age employment has actually increased since 2007.

The size of Rhode Island’s prime working-age population – employed or otherwise – is also about 10% smaller than it was a decade ago, declining from 462,000 in 2006 to 415,000 in 2016, according to the federal data. The number of residents ages 55 and older has jumped 31% over the same period, from 247,000 to 323,000.

The BLS figures exclude individuals who are institutionalized in prisons, mental facilities or nursing homes, as well as those who are on active duty in the military.

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 and Facebook