LOW WAGE, LOW SKILL LABEL STILL FITS IN RI
Providence Business News, February, 2000

The other day, I re-examined some data that I viewed in the past in a different light. Data on Rhode Island's "top ten" private sector industries are readily available from both the Department of Labor and Training (DLT) and the Economic Development Corporation (EDC). Thanks to the Internet, I was able to quickly download employment and income data for the most recent year available with sufficient detail (what are called "Three-Digit SIC Codes"), 1998, including the government sector that does not have an "SIC" code.

But, instead of merely re-affirming the DLT/EDC results, I decided derive what Rhode Island's "top ten" employment categories are when the public sector is included. I then visited the Labor Market Information web site for Massachusetts and downloaded their employment and income data that corresponds to Rhode Island's "top ten" and determined their rankings for Massachusetts. After this, I added one further step: I ranked Rhode Island's employment top ten according to their 1998 average annual income in both states.

I found the results for Rhode Island to be both highly informative and startling. As the table shows, both the #1 and #2 rankings in terms of income for Rhode Island occurred in the public sector: State Government, and Local Government, respectively. While State Government was also #1 is Massachusetts, Local Government there ranked #6. Average annual income for Rhode Island state employees was 13 percent lower than in Massachusetts while on average Local Government employees in Rhode Island earned 7.4 percent more.

Next comes Miscellaneous Manufacturing. This is the result I found to be startling since this category, which includes Jewelry, Silverware, and Toys, has always been used by national analysts as "the" example of how Rhode Island has an over-concentration of its employment base in low wage, low skill industries. The employment rankings are consistent with this: Miscellaneous Manufacturing is the sixth largest employment category for Rhode Island but forty-eighth in Massachusetts.

Are things that dire here that a low wage industry is the private sector industry with the highest annual income in Rhode Island? Not really. Apparently the national analysts insist on referring to Miscellaneous Manufacturing in Rhode Island as low-wage, low-skill without keeping up with events here. First, this classification does not consist solely of jewelry and silverware. Toys, which essentially consists of a single firm, Hasbro, is included as well. And all three of these industries have changed in the last few years. The jewelry and silverware firms that remain here have, for the most part, modernized their operations or better defined their product niches. This has eliminated much of the low tier wages for those industries. Hasbro no longer manufactures toys in Rhode Island. Their remaining operations here are managerial in nature. So, when a large number of below-average jobs in toys were eliminated, the average annual income for the remaining employees in that industry rose (note: the income rank of #3 for Miscellaneous Manufacturing in Massachusetts does not indicate that this is the third income category overall for Massachusetts. For the group that makes up Rhode Island's employment top ten, this classification had the third highest income in Massachusetts).    

The remaining income ranks for Rhode Island and Massachusetts are not all that different, except for Business Services, which is second for Massachusetts and sixth for Rhode Island. Note the stark difference in incomes for this classification. For Massachusetts, average annual income was $41,371, versus $25,097 for Rhode Island. Why were annual Business Services earnings in Massachusetts 65 percent higher than in Rhode Island?

It is in this classification that the low wage, low skill job concentration and the ongoing lack of an adequate information age niche for Rhode Island is apparent. The two sub-categories of Business Services with the most jobs for both Rhode Island and Massachusetts (over 60 percent of the total) were "Personnel Supply Services" (i.e., temps), and "Computer Programming, Data Processing, and Other Computer Services." For Massachusetts, about 30 percent of total Business Service employment occurred in each category, versus 45 percent in "temps" for Rhode Island and 21 percent in the computer programming/data processing category. This larger concentration in temps for Rhode Island has a great deal to do with its substantially lower Business Services earnings. Believe it or not, in 1998, temps in Rhode Island earned an average of only $13,733, versus $24,743 in Massachusetts This reflects a pronounced difference in the occupational distributions of temporary employees in these two states. Worse yet, while the computer programming/data processing category is the higher paying of these sub-categories, Rhode Island workers in this classification earned an average of $58,422 versus $72,427 in Massachusetts. Not only does Rhode Island have a substantially larger concentration in temps, the lower-earnings category, income in its "high tech" sub-category substantially lags that in Massachusetts as well.

So, the contribution of state and local government in terms of employment and income is more pronounced than those of us who live here care to admit. And, the stereotype of Rhode Island as a "low wage, low skill" state appears still to have some basis in fact, although for different reasons than the national analysts are aware of. The challenge to Rhode Island continues to be filling in the middle ground between these two extremes. Now that the present recovery is the longest in history, time is running out.

by Leonard Lardaro