Sunday, March 11, 2012

Dates That Will Live in Infamy?

In the previous post, I showed the rebenchmarked payroll employment data since 2009. In order to show how dire things have now become in Rhode Island, I am including a graph of payroll employment going back to 1990, with specific dates of turning points highlighted (click to enlarge).

I hope that those who have been around Rhode Island for a while will be able to put events with the dates of turning points. What I find very striking, however, is how the current employment drop is not unlike that in 1990 and 1991, as the banking crisis unfolded. Clearly, the percentage differences are not the same today and they were during the 1990-91 period, but we had something going for us in 1990-91 that we don't today: back then, we were barely past the transformation to a post-manufacturing economy (that occurred in Q3 of 1987). In other words, we had a margin for error that has long since disappeared.

The final question: Will Rhode Island make a run like it did in the early 1990s until the peak in December of 2000? Back then, our state's goods-producing sector was much larger than it has become today, and along with that decline we have lost the large goods-producing multipliers and their ability to get recoveries going rather briskly. Recall also, there was a rather sizable tech boom in the 1990s, the likes of which we might not see until battery technology is truly advanced, or some other advances we are not yet aware of emerge into positions of prominence.

Do I think Rhode Island will now make a major move up in its payroll employment during the next few years? Sadly, my answer is an emphatic NO! We have lost the margin for error a manufacturing-based economy once afforded us and the way this state is run is not conducive to the requirement of highly proactive government in the post-manufacturing era. Add to this that overhead, primarily pension obligations, dominates virtually all decision making here, and the primary question is whether Rhode Island's payroll employment will be able to sustain itself above the recent trough, and its levels in May of 1998 and April of 1990.

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