RI jobless rate at 10.8%; data suspect

PROVIDENCE, R.I. (WPRI) - More Rhode Islanders looked for work in December but failed to find it, boosting the unemployment rate as the state lost jobs for a fifth straight month.

Rhode Island's jobless rate rose to 10.8%, up from 10.5% in November, the Department of Labor and Training said Friday. Rhode Island has had a double-digit unemployment rate since March 2009, and December marked a grim milestone - five years since the state's job count peaked before the Great Recession.

The new job numbers for Rhode Island don't seem to match the encouraging signs nationally.

The U.S. jobless rate decreased from 8.7% to 8.5% in December, and new claims for jobless benefits dropped last week to the lowest level in nearly four years. Massachusetts' jobless rate declined to 6.8% in December, the lowest level in three years.

Zachary Sears, an economist who tracks Rhode Island for Moody's Economy.com, questioned the accuracy of the statistics that appear to show the state's recovery reversing. He said the volatility in monthly data for Rhode Island and other small states probably "overstates the deterioration" in recent months.

"That still makes for a relatively slow recovery [in Rhode Island], slower than the U.S. and slower than New England," Sears told WPRI.com. "But I don't think this falling off a cliff that you see in this data is real." All the statistics will be revised later this winter.

More looking for work now

In Rhode Island's case, a rising jobless rate could potentially be a sign of economic recovery, if it's going up because workers who'd previously given up on finding a job have started looking again, and therefore are now getting counted as officially "unemployed" in government statistics.

That seems to be what happened in December. The number of unemployed Rhode Islanders rose by 1,600 to 60,800 - the highest level since July - and the labor force rose by a nearly identical 1,500, the third straight monthly increase in the size of the state's worker pool.

The number of Rhode Islanders with a job didn't budge, however. The data showed employers cut positions for a fifth month, nearly wiping out all the progress made during the first half of the year. The total payroll statewide declined by 600 to 458,700 in December.

"What I think happened is you didn't really get the big uptick you saw in the middle of the year - that was probably not as strong as the data show - and the decline now was probably not as strong as the data show," he said. "Neither of those, I think, really happened. Probably somewhere in the middle is where Rhode Island actually is."

'A relatively slow recovery'

Sears noted new claims for unemployment benefits offer no evidence of a sudden round of job losses in Rhode Island. "That's real people going into the office saying, 'I lost my job,'" he said. "You don't see an uptick that would corroborate that kind of loss at the end of the year."

Details aside, the big picture points to a long slog for Rhode Island to rebuild, as a muted rebound early in 2011 slowed down further in the second half of the year. "This is what we expected for Rhode Island - a relatively slow recovery," Sears said.

Rhode Island employers eliminated 39,600 jobs between December 2006 and December 2009. Just 1,800 of those have been recovered in the two years since - if the official count is taken at face value.

At that pace, it would take a mind-boggling 41 years for Rhode Island to regain all 39,600 jobs lost in the recession. Sears said he expects revised estimates will show the state has added closer to 7,000 jobs since the depths of the downturn.

"If you take it for what it's worth [the data] says we are just about where we were at the very bottom of the recession, and that would essentially erase all the gains we have," Sears said. "And I don't believe that."

Local governments keep cutting

The initial numbers show Rhode Island ended the year with fewer employed and fewer unemployed residents as 13,100 people left the labor force. The number of jobs in the state inched up by 500.

Rhode Island's public sector - mainly local governments - cut 1,400 jobs in 2011, more than any other industry. Professional and business services added the most jobs, with a gain of 1,400. No other sector reported a change in its job count of more than 1,000.

Sears noted that most of the movement in the state's payrolls upward and then downward in 2011 was in the retail and leisure and hospitality industries, which are particularly susceptible to measurement errors.

Economy.com puts the risks of a double-dip recession in Rhode Island at a bit below 50%, somewhat higher than for the nation as a whole. "I still think that the recovery is in tact - it's just restrained," Sears said. "And that's still the forecast for 2012."

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi