Slow economy limiting R.I. jobs for grads

Tuesday, April 15, 2008

A month after Brown’s class of 2008 began its final semester of study and set its sights on life after College Hill, Rhode Island’s Department of Labor and Training reported a 5.7 percent unemployment rate for the state in January – a figure that not only surpassed the national average, but is also the highest the Ocean State has seen in more than a decade. In February, the rate climbed further, to 5.8 percent, limiting job opportunities for Brown graduates wanting to stay in the state.

Leonard Lardaro, a professor of economics at the University of Rhode Island who has offered forecasts of the state’s economy since 1991, said a high unemployment rate could make post-college job searches more difficult when students graduate this year.

“Obviously if they’re contemplating staying in Rhode Island, it’s not going to be very easy to get good jobs,” Lardaro said. “There are going to be some around, but it’s not going to be enough for the number of people graduating, and so (college graduates) are going to have to look at the national market.”

But Lardaro said the slowing of the national economy also translates to fewer opportunities for graduates who seek employment outside of Rhode Island. “Fiscal stimulus checks are going out (in a few months) and that’s going to take a while to work, so probably things will not improve for them in national job searches until probably the third quarter or the fourth quarter of the year,” he said, adding that with the country and the state currently in a recession, unemployment rates may still increase despite state and national stimulus efforts.

Kimberly Delgizzo, director of Brown’s career development, said some organizations, both in and outside of Rhode Island, have been “a bit more conservative” in the number of Brown graduates they hire.

Delgizzo said the financial services sector – including Wall Street firms, for example – has scaled back hiring on a national level in connection with high unemployment rates and the overall poor condition of the national economy. However, she added that the numbers have not changed dramatically for Brown students.

In general, a 5.7 percent state unemployment rate is not necessarily a cause for concern, Lardaro said, adding that he would begin to worry only if the rate were to reach 6.5 or 7 percent.

Lardaro said he would not be surprised to see rates as high as 6 percent this year, adding that unemployment could reach 6.5 percent “if things get ugly with what the Federal Reserve is doing.” The Fed recently has tried to spur economic growth by cutting interest rates and introducing a stimulus package to offer returns to taxpayers.

Lardaro said a combination of national and state-level factors has brought Rhode Island down from the peak-employment status of a 4.7 percent unemployment rate the stateachieved in January 2007.

Rhode Island’s ongoing housing crisis is the primary problem, Lardaro said. “The housing meltdown has hit Rhode Island particularly hard, and we really relied on it a great deal for our economic momentum.”

He added that the slowing of the national economy and Rhode Island’s current budget deficit have “just intensified the problem of housing.”

“In this past fiscal year that still has several months to run, (Rhode Island has) had to balance a $300 million deficit,” Lardaro said. “Clearly, balancing a deficit of that magnitude at a time when the national economy is slowing and when the housing market, which generated so much momentum, is weakening, will clearly slow you down.”

But graduates may not need to be immediately concerned with the rising unemployment in the state, as Laura Hart, communications manager for the Rhode Island Department of Labor and Training, said unemployment rates in general change every month and that national results released in March reported a 0.1 percent decrease in unemployment in February, during the same period R.I. unemployment increased by 0.1 percent.

The DLT will release data for March unemployment on April 18.

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