New Commons: Think, Link, Do - Is Atlantic City, RI Our Last, Best Hope?

Is Atlantic City, RI Our Last, Best Hope?

Written by John Speck

Thursday, 01 April 2010

With our 12.7% unemployment rate placing a close 3rd behind Nevada, it's obvious that the Rhode Island jobs market has a serious structural problem. It may seem glib to say, but the issues couldn't be more clear.

Businesses in Rhode Island are, in fact, creating good-paying jobs, and at a fairly good rate. That's not the problem. While increasing the rate of job creation would help indirectly, it would not get to the core problem which is this:

The overwhelming majority of Rhode Island's unemployed are not qualified even to apply for these technical, knowledge or skills based jobs. In short, we're only creating jobs, but for people who don't live here yet.

Who are these unemployed in Rhode Island? What jobs can they do? What does this have to do with Atlantic City?

More after the jump ==>

Strong Job Creation with Continuing High Unemployment

With this dynamic at work, we can expect state GDP rise without a substantial drop in unemployment. Newly created jobs will often go to out-of-staters who may or may not choose or even need to move in-state. We can create a hundred bio-med companies and still have unemployment over 10%.

There is an almost absurd amount of chicanery associated with unemployment statistics, but there's a general consensus that the goal is not zero unemployment but "full employment". Full employment means that pretty much anybody who wants a job can find a job, maybe not right away but before unemployment benefits run out.

Getting to full employment means creating substantial numbers of lower wage, lower skill jobs. And that is no small task. Perhaps the phrase 'substantial numbers' understates the case. Let's try staggeringly ginormous numbers.

By the Numbers

In round numbers, Rhode Island's current 'workforce' comprises about 520,000 workers, and about 66,400 of them are looking for a job. It is normal, even desirable, to have some level of churn or flow in the workforce*. Full employment is generally thought or as 4 - 5% unemployment. Let's go with 5% because it's simpler.

Thus a best case scenario would mean about 26,000 workers looking for a job, leaving a 'jobs deficit' of 40,400. Not a small number.

Consulting the Bureau of Labor Statistics list of the 30 occupations with the highest growth, 20 require less than an associates degree. Most of these jobs require only short or medium term on-the-job training. That's the good news.

The bad news is that the growth rate is nowhere near what we need. "Backing out" from these national projections to an RI projection, I come up with about 1,600 new jobs per year in these highest growth occupations. Even at five times the national rate, it would still take two years to bring unemployment under 10%.

The challenge is enormous: how can we drive "non-linear' growth in lower skill occupations?

There are some options, but no silver bullet.

The Options

Option #1: Tourism - Most people think of the tourism and hospitality sector as a good driver for lower skills jobs growth, and not fer nothin. Rhode Island has used its urban, rural and ocean-front assets to build some small level of regional attractiveness, and we certainly could do more. However, we have to ask ourselves how much tourism we can support.

A hotel employs roughly one employee for every 3 rooms. Let's add a restaurant or other non-hotel employee worker for every 3 hotel employees, and we get 4 employees for every 10 hotel rooms. Thus we would need to add 10,000 hotel rooms to add 4,000 jobs.

Does Rhode Island need another 10,000 hotel rooms?

Option #2: Atlantic City, RI - Don't be shocked. This idea has been a serious part of the serious conversation for some time. Granted, it's a big leap, but it's not "out of scope". The thinking goes as follows:

1 - Providence is already a regional center where people come to "get paid and get laid". We are known for our, shall we say, open attitude about the bawdier aspects of life. Many in the city were disappointed that the City Council banned indoor prostitution.

2 - Southeast New England is a generally prudish area. From the Puritan beginnings to the still-in-effect Blue Laws, our region generally frowns on people having too good of a time. This, of course, creates a market need for a place that encourages people to do just this sort of thing. In short, the region NEEDS a place like this.

To support the extra-robust tourist trade that could employ Rhode Islanders at the scale required, the state needs to go beyond it's existing assets to attract visitors. Casinos, well-regulate sex trade and the 24-hour nightlife associated with them could be those assets.

Other Potential Factors

Agriculture - The number of working farms in Rhode Island is growing much faster than any other sector. If memory serves, the number has quadrupled in a decade. Farm Fresh RI has done a great job of connecting farmers with consumers, and we are becoming a model for vibrancy. Again, Rhode Island can support substantial growth, but the number of jobs will vary widely by season. To create year-round jobs, Rhode Island would need to the regional center for urban farming, particularly vertical farming. But that is a very new field, so we can't expect serious jobs creation in the near term.

Low-end Green Jobs - At least 25% of current 'green economy' work centers not on new technology or construction but on retrofitting existing buildings to use less energy. Many expect this weatherization work to become a substantial sector (cottage industry) in the next few years. CCRI and Apeiron Institute have partnered to create a 4 - month program to train workers. Potentially, this could be several thousand jobs in a few years.

What am I missing? Where have I badly miscalculated? What other options do we have?

Those aren't rhetorical questions. Please comment.

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