Why are so many Rhode Islanders leaving the workforce in the midst of a big recovery?
The headline is, of course, that unemployment dropped to 5.8% in May, from 6.3% in April, which is nice (although it ought to be higher, given that we’re coming out of a pandemic-and-government-driven recession. But the state Department of Labor and Training’s press release paints a peculiar picture:
The number of employed Rhode Island residents was 507,000, up 1,200 from April. Last May there were 453,700 employed Rhode Island residents.
The Rhode Island labor force totaled 538,200 in May, down 1,400 from April but up 17,300 from May 2020 (520,900).
The labor force is the number of people either working or actively looking for work. When the economy is improving, that number typically grows, because people see opportunity and either move here or decide to stop treading water and work. That effect should be amplified by the fact that the state started requiring people collecting unemployment to start looking for work in May, which requirement had been waived previously. So, one would expect those people to provide a boost, if anything.
I see three possibilities, which all could factor in for a combined effect. It could be that people who had no intention of returning to work were just sitting back and collecting unemployment benefits while telling the employment survey takers that they were in the market, even though they weren’t. Or it could be that people have decided just to find some way to make ends meet without working. Or it could be that Rhode Island’s relatively sluggish recovery has led people who need work to look elsewhere.
That last point could coexist with the increase in job vacancies if there is a disconnect between the available jobs and the available workers. For example, if all the shut-down of restaurants drove Ocean State restaurant workers elsewhere, office workers might not fill the jobs that were left behind.