Rhode Island’s labor market deteriorated in the second quarter of 2026, with workforce participation falling sharply and the number of employed Rhode Islanders declining for the fourth consecutive quarter, according to a new quarterly briefing released Monday by Bryant University’s Center for Global and Regional Economic Studies and the Rhode Island Public Expenditure Council (RIPEC).
The state’s unemployment rate fell from 4.6% to 4.3% in Q2, matching both New England and the U.S. — but economists warn the improvement is misleading. The drop was driven not by job gains but by Rhode Islanders leaving the workforce altogether. Resident employment fell by 5,700 jobs in the quarter, reaching its lowest level in more than four years, while nonfarm employment shed 600 jobs.
Rhode Island’s labor force participation rate dropped sharply from 63.5% in Q1 to 62.6% in Q2 — the eighth consecutive quarterly decline since peaking at 64.7% in Q2 2024. Over that two-year stretch, Rhode Island’s participation rate has fallen 2.1 percentage points, outpacing declines in New England (1.2 points) and the U.S. (0.9 points).
“The falling unemployment rate is largely a symptom of individuals stepping out of the labor force rather than gaining employment,” said Edinaldo Tebaldi, Professor of Economics and Vice President of Strategy at Bryant University. “Until we see sustained growth in both total jobs and workforce participation, the underlying health of the state’s labor market remains under pressure.”
Not all the news was negative. Net sales tax receipts — a key measure of consumer demand — rose 4.3% year-over-year and 2.2% quarter-over-quarter. Rhode Island’s GDP also grew at an annualized rate of 1.5% in Q1 2026, though that trailed New England (2.0%) and the U.S. (2.1%).
Among major industry sectors, trade, transportation, and utilities posted the largest quarterly job gain at 900 jobs, while leisure and hospitality recorded the sharpest decline, losing 1,600 jobs.
“Resident employment and the number of in-state jobs both declined, and labor force participation fell for an eighth consecutive quarter,” said RIPEC President and CEO Michael DiBiase. “These negative trends point to the urgency for policymakers to address the underlying barriers to Rhode Island’s long-term economic growth, including efforts to build a more competitive business climate and a more highly skilled workforce.”
The Briefing is available here. The data set used to create the Briefing is available here.
