A
bit more on Rhode Island’s ostriches
In my last post, I
suggested that instead of dealing with actual problems, Rhode Island
“leadership” prefers to either focus on distractions or bury their heads in the
sand. One of the examples of issues I used was the long-term unemployment rate;
which is usually defined as being out of work six-months or more. WPRI’s Ted
Nesi yesterday pointed out the chart below, released by the U.S.
Senate’s Joint Economic Committee (JEC)
Democratic staff in
support of Senate Dems’ push to extend unemployment insurance:
As
Nesi points out, RI proportionally has more long-term unemployed than any other
state. If you drill down into the JEC Democratic staff’s numbers, what they
show is that of our 9% unemployment rate (which is called the “U-3 unemployment
rate” – that’ll be important later), 44% of those workers are long-term
unemployed.
Unlike previous recessions, where when job vacancies
rose both short-term and long-term unemployment fell the Great Recession has
been different. An increase in job vacancies isn’t causing a decrease in
long-term unemployment. So even when employers have openings, they aren’t
filling them, despite the existence of candidates who are currently long-term
unemployed.
Now,
this might be the point where people start saying “well, there’s a skills gap,
and we need more workforce development.” But March 2013 research from the University of
Wisconsin Milwaukee demonstrates
that, consistent with 40 years of jobs and training research, “workforce
development” has little to no impact on workers and the “skills gap” is a
mythological creature on par with Pegasus and the Questing Beast.
The study quotes Anthony Carnevale of Georgetown University Center on Education
and Workforce Development:
Training
doesn’t create jobs. Jobs create training. And people get that backwards all
the time. In the real world, down at the ground level, if there’s no demand for
magic, there’s no demand for magicians.
As
Matthew O’Brien of The Atlantic points
out in the article linked above, the discrimination against the long-term
unemployed is a vicious cycle which has the ability to permanently impoverish
the country. Eventually, those 4.1% are going to burn their way through every
family member, friend, and place of goodwill available. And they’ll end up
homeless.
Combine that with the structural deficit in the state budget, a
likely loss in revenue from gambling once Massachusetts casinos start up, and a
likely future economic crash due to failure on the part of the national
government to reform our economy to prevent the abuses that caused the Great
Recession… well, that means we’ll have a state even less capable of dealing
with the crisis at hand.
Before
I move on to our state’s “response” to this slow-motion crisis, I want to make
a final point about the unemployment rate. If we really want to imagine what a
healthy RI economy looks like, we have to look past the U-3 or “official”
unemployment rate.
According to the Bureau of Labor Statistics, Rhode Island’s
U-6 unemployment rate for Q4 2012 through Q3 2013, which includes the total
unemployed plus marginally attached worker (people who have given up looking
for work in the past four weeks) plus people employed part time for economic
reasons Rhode Island has a 15.8% unemployment/underemployment rate.
While this means we are no longer the worst in the nation (5 states are equal
to or above ours), it’s nowhere near the 8.3% we had just before the Great Recession hit.
So
given that this is perhaps the greatest threat to our state’s economic
well-being, what was the major economic package to come out of General Assembly
and be signed by Governor Chafee?
“Moving the Needle”
which states the problem it intends to address in its first sentence: “In its
annual ‘Top States for Business’ rankings, published on July 10, 2012, CNBC
ranked Rhode Island 50th of 50 states on how appealing the state is to start or
grow a business.”
Distractions.
State leadership is more concerned with the subjective rankings given to it by
a television station (which has as part of its goal, to entertain and make a
profit) than the reality in front of it. That’s the reality where 4.1% of our
labor force has been searching for work for six months or more. Where 9% of it
is unemployed. Where 15.8% is either looking for work, discouraged or gave up
looking for work, or taking a part time job until economic conditions improve.
Let’s jump back to that Prof. Carnevale quote: “if there’s no demand for magic, there’s no demand for magicians.”
That’s
the problem in a nutshell. There is a demand problem in the state. If you’re
unemployed or on a really tight budget, you can’t buy what business is selling.
So it doesn’t matter too much what businesses Rhode Island can’t attract,
because even if it can attract them (“competitiveness” between states is
usually nothing more generous cash giveaways),
there’s a weak customer base that can’t support them. Moving the Needle is just
about getting us more magicians… or illusionists, I think is the synonym.
It’s
that mindset that produced 38 Studios, a pie-in-the-sky dream of beaucoup bucks
while kick-starting a tech industrial boom and hiring a bunch of Rhode
Islanders. It’s utterly backwards. We need a Rhode Islanders First jobs
program, that puts our actually existing (and struggling) citizens ahead of all
the fantasies of start-ups and imaginary migrating businesses.
We know we can’t
rely on the federal government to provide one, so we’ll have to do this
ourselves. If that’s a Rhode Island-style WPA/CCC type effort, so be it. If it
means we pay people to fix our infrastructure, assist our nonprofits and even
work in support of our businesses, that’s fine with me.
You
can say that’s government picking winners and losers. I will too. I say it’s
definitely government picking a winner. Rhode Island.