Study explores reasons for R.I.’s high unemployment rate

PROVIDENCE – A study on the “mismatch” between jobs in declining industries and jobs available today does not fully explain Rhode Island’s high unemployment rate, according to a new study released Monday by the College & University Research Collaborative.
One of 12 reports on varying topics undertaken by academic experts in Rhode Island, the report and others will be shared at a forum called “Public Policy Speaker Series: Research Into Action,” the first of a three-part series beginning on March 24 at 8:30 a.m. at the Rhode Island Foundation.
In this study, Neil Mehrotra, an assistant professor in the Department of Economics at Brown University, examined not only the issue of “mismatched” credentials from dying industries and jobs in the state, which currently has one of the highest unemployment rates in the nation at 6.5 percent, but also looked at educational attainment, household wealth and the length of unemployment benefits as potential causes of that high rate.
“A steady decline in manufacturing and comparatively low levels of educational attainment may account for some of the unemployment experienced by Rhode Island in the last 30 years,” he noted.
His findings caution against weighing any of these and other issues too heavily, however, and rather instead focusing on potential remedies within the business sector.
“Solutions must focus on the business environment in Rhode Island, informed by research to help identify the obstacles that prevent businesses, particularly new and young firms, from expansion and hiring,” he concluded.
Construction sector challenges due to the housing crisis were a contributor but not a driver to the high rate, his analysis of the relationship between the unemployment rate and the job openings rate found. Nor did trouble at fast-growing firms play a role, since Rhode Island has lower employment at new and young firms than does the nation.
With respect to a state labor force that is “markedly less educated” than its counterparts in New England, educational demographics are a more likely “substantial factor” regionally, but not necessarily nationally or recently, since educational attainment reflects longer-term trends, he said.
Also contributing substantially could be household wealth, negatively affected by the housing crisis, he said.
Publicly-funded education and workforce development programs are not always the “panacea for what ails Rhode Island,” he added. As a complement, “the government can try to shift the responsibility for training workers onto private firms,” he suggested. He also noted that these programs provide clear benefits to workers, but the workers don’t always stay within state borders.
Study research areas, which include workforce, manufacturing, regional competitiveness and infrastructure, were selected through consensus by a panel of policy directors from the governor’s office, the state House of Representatives and Senate.
The Collaborative, a statewide public/private partnership of Rhode Island’s 11 colleges and universities, connects public policy and non-partisan academic research. For more information, visit www.collaborativeri.org.

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