The pace of job losses in both Rhode Island and the nation has accelerated in recent months, but these losses vary systematically by educational attainment. In addition, longer term labor market developments associated with rising returns to education have been found to have powerful impacts on the state’s fiscal health. That according to two new studies prepared by the Center for Labor Market Studies at Northeastern University and released this morning at the Greater Providence Chamber of Commerce’s Business Over Easy breakfast held at the Providence Marriott.

The first report, presented by Center Director Paul E. Harrington, entitled “The Labor Market Impacts of the National Economic Crisis in Rhode Island” noted that while the job losses are widespread, there are sizable differences in the negative labor market impacts of the economic crisis on key industries, occupations and demographic groups in Rhode Island. The state’s blue collar workforce, which is predominantly employed in the construction; manufacturing; and trade, transportation and utilities industries; suffered the biggest employment declines. Close to two-thirds or 65 percent of all the jobs lost in the state in the past two years were among blue-collar workers. According to Harrington, since blue-collar jobs require a lower occupational preparation and educational attainment, poorly educated workers in the state have borne the brunt of the economic crisis.

According to Harrington, workers with higher educational attainment were somewhat insulated from the worst effects of the recession. Poorly educated workers are more susceptible to employment and earnings losses and come with a high price tag for the local, state and federal governments.

In fact, Harrington found in his second study entitled “The Fiscal Consequences of Dropping Out of High School in Rhode Island,” that students who leave high school in Rhode Island prior to graduation impose a net lifetime cost of $72,000 on the local, state and federal government due to a lower earning potential that underlies their smaller tax payments and increased usage of governments programs. The study went on to show that a student who successfully completes high school in Rhode Island would make a net lifetime contribution of $317,000. Consequently, each successful high school graduation in the state is expected to yield net fiscal savings of $389,000.

“These reports clearly identify the need for us as a state to focus on reducing Rhode Island's dropout rate and developing strategies to address this issue,” said Janet Raymond, senior vice president of Operations and Economic Development at the Greater Providence Chamber of Commerce. “Such focus would clearly assist the state with its increasing budget deficits as well as providing students with the opportunity to increase their future earnings significantly by electing to stay in school and graduate from high school.”

“Taken together these studies suggest that both in the short term as well as the long run opportunities to reach a middle class standard of living in Rhode Island are closely related to higher levels of educational attainment,” Harrington said. “Efforts to retain students in the state's public and private secondary and post secondary system should be a cornerstone of both education and economic development efforts in the state.”
Key Findings:

The Labor Market Impacts of the National Economic Crisis in Rhode Island:

• The recession in Rhode Island has impacted particular sectors of the state, and job losses have had much different impacts on workers based on their level of educational attainment.
• Construction, manufacturing, trade transportation and utilities have suffered the greatest number of job losses resulting in a disproportionate impact of the recession on the blue-collar workforce that accounted for nearly two-thirds of all jobs lost in the state over the past two years.
• Employment among men in Rhode Island declined over 12 percent in the last two years – almost double their female counterparts.
• Employment levels among teens and young adults fell by 17 percent, while employment of workers between the ages of 25 and 54 declined by 11 percent.
• The only age group that saw an increase in employment was Rhode Island’s older workers.
• Those age 55 and older saw a 6 percent increase in employment.

The Fiscal Consequences of Dropping Out of High School in Rhode Island:

• The lifetime earnings of high school dropouts in the state are expected to be just $827,000.
• The lifetime earnings of high school graduates with no postsecondary education ($1.206 million) exceed the lifetime earnings of high school dropouts by 380,000 or 46 percent.
• College graduates in Rhode Island with a bachelor’s are expected to earn $2.150 million or 260 percent more over their working lives than high school dropouts, and state residents with a master’s or a higher academic degree are expected a lifetime earnings of $2.746 million or 332 percent more than that of high school dropouts.
• Students who leave high school in Rhode Island prior to graduation have a negative lifetime fiscal cost of $72,000 due to a lower lifetime earning potential that underlies their smaller tax payments and higher usage of governments transfer programs. Students who successfully complete high school in the state are estimated to contribute $317,000 over the course of their lifetime.
• The net fiscal savings from each successful high school graduation in Rhode Island is estimated at $389,000.