In two reports, Boston Fed explores Rhode Island’s economic and labor market challenges
Recent research by senior economist Mary Burke examines the Ocean State's economy
Rhode Island experienced a more severe downturn during the Great Recession than any other New England state and for some time lagged other states in the region and the nation in some measures of labor market health.
In 2014, Boston Fed research explored factors contributing to Rhode Island’s experience. The report, "Rhode Island in the Great Recession," finds that two key factors can explain the Rhode Island's last-place rank in the region for employment growth between 2008 and 2009, a time when the bulk of job losses occurred both nationally and regionally: (1) the industrial composition of the state's manufacturing sector prior to the recession, which left it vulnerable to particularly steep labor demand shocks and (2) the severity of the state's prior-year house price declines.
The report's author, senior economist Mary Burke, also finds that Providence as a metropolitan area or NECTA had the most severe recession among a 10-NECTA comparison group, lending robustness to the state-level comparisons. Concerning the economic recovery, Burke observes that employment remains farther below its pre-recession peak in Rhode Island than in any other New England state because it fell farther during the recession, not because it grew more slowly than in the region's other states during the recovery.
While the Rhode Island economy has improved recently, some concerns about the health of the labor market remain. Last year, Boston Fed research explored whether the state's workforce lacks skills that are in demand among the state's employers and, if so, whether such a skills gap or labor market "mismatch" significantly restrains employment growth in the state.