OK, they didn’t put it quite that starkly, but Sunday’s Hartford Courant had a lengthy front-page story headlined LITTLE RHODY’S BIG WOE. The subhed: Connecticut’s Neighbor To The East, For Various Reasons, Has An Unemployment Rate One-Third Higher Than The Nutmeg State’s.
“As bad as the economy is in Connecticut, our little neighbor to the east has it far worse,” writes Courant business report Mara Lee. She focused on East Greenwich, where Stanley Bostitch is laying off 165 workers this year, and spoke with a number of gloomy Rhode Islanders, including URI’s oft-quoted business professor Ed Mazee.
As a dogged chronicler of the state’s economic woes myself, I don’t argue with the basic premise of The Courant’s story. But some of the details are off.
Lee writes that Rhode Island “didn’t have a housing bubble with a high number of construction workers.” That’s incorrect. The median price of a single-family home in Rhode Island soared from $127,750 in May 1999 to $295,000 in June 2006 – more than doubling in seven years.
Take a look at this chart (the weird spike last year is just before the homebuyer tax credit was originally supposed to expire):
And the state’s housing bubble most certainly did pump up the number of Rhode Islanders working in construction, thousands of whom are now jobless.
The state had 23,800 people employed in the construction sector in January 2007. By last month, that number was down to 16,000, meaning a third of those jobs have disappeared in three and a half years. Here’s construction employment in Rhode Island since 1990:
Lee also says Rhode Island “didn’t lose huge numbers of lending jobs.” That depends on your definition of “huge” – small numbers make a big difference in the Ocean State.
The number of people working in financial activities in Rhode Island peaked at 36,000 in December 2006 – notably, just one month before construction employment peaked and six months after home prices began to fall. That number was down to 30,300 by last month.
While the carnage in finance employment is not as heavy as in the construction industry, that’s a 16% drop over three and a half years. Combined, those two sectors alone have shed 13,500 jobs since the winter of 2007. That accounts for roughly 30% of the 44,700 jobs Rhode Island has lost since the start of 2007.
Still, there’s plenty of truth in Lee’s story. Rhode Island indeed “lacks powerful engines of wealth like Greater Hartford’s insurance industry and Fairfield County’s finance,” and while Brown and URI are making strides, Rhode Island “doesn’t have universities that are as economically significant as Harvard, MIT and Yale.” A less educated and less mobile work force plays a part, too.
There is also the question of whether this is a Rhode Island phenomenon or a Southeastern New England one, as I wrote about last week. Lee notes this too, writing that “economic hardship does not start and stop abruptly at the state line, of course. Some of Connecticut’s poorest towns, and some of the state’s highest unemployment, are in the eastern part of the state.”