Today's ProJo story by Kate Bramson quoted an economist from the BLS New England office in Boston, Timothy Consedine, as stating the reasons for these changes: " ... to improve cost efficiency and 'to reduce the potential for statistical bias in state and area estimates.' "
It's certainly hard to argue with either of these noble intentions. Now let's put these assertions to a test. Since March of 2011, the manufacturing wage data for Rhode Island has been calculated by the BLS. Assuming that Mr. Consedine's assertions are correct, manufacturing wage data here should have improved at least by a bit, if not by a great amount, since the BLS took over their estimation. There has indeed been an extremely visible difference since that time. I won't tell you what it is. Instead, I will provide two charts of Rhode Island's manufacturing wage behavior and let you see if you can figure out what this change has been. In both charts, RI and US wages are contrasted. The first chart (click to enlarge) shows US and RI manufacturing wage growth since January of 2008.
Click on Read more to see the charts.
Were you able to determine what the difference is? Apparently, unknown to persons in Rhode Island or our own DLT for that matter, hourly manufacturing wages here weren't less than $15, but actually much closer to $18-$20! As a result, Rhode Island's year-over-year wage growth for March of 2012 was 20.4 percent, versus a paltry 2.1 percent nationally. Think about that for a moment: if you take the square root of the March RI rate, 4.5 percent, this still exceeds twice the national rate of growth! Wow, Rhode Island manufacturing must really be on the move!
So much for my skepticism. Have you figured out the most likely implications of these upward data revisions on the other labor market indicators? Assuming that payroll employment here has been rising since late last year, not falling as the existing data now show:
- Our unemployment rate is currently lower than the reported rate (it is below 11.1%);
- The number of Rhode Island residents who are unemployment is less than the number now being reported;
- Resident employment for RI is higher than the level currently reported;
- Rhode Island has not by this point experienced eight consecutive declines in payroll employment as the existing data indicate. In fact, there might not have been any declines for some time now; therefore
- Rhode Island is apparently not on the edge of a possible double-dip recession.