The economies of the states in this country rise or fall on what’s happening in our interconnected globe. So long as money freely crosses borders and corporations are free to travel the world seeking lower wages and taxes, politicians in American states have only so much economic clout.
Rhode Island is a New England state that was slow to make the switch from an economy yoked to manufacturing to one based on services. The work force is not so well-educated as in neighboring states, which contributed to a slower exit from the Great Recession.
While the unemployment rate is near historic lows, University of Rhode Island economist Leonard Lardaro points to a sobering statistic: The number of employed Rhode Island residents remains about 7,000 fewer than in 2007, just before the recession began taking its grim toll on the job market.
Lardaro says Rhode Island’s recent progress in reducing unemployment is largely due to a rebounding national economy and a grand accident of geography – living next door to booming Massachusetts, a national leader in innovation.
If you listen to Democratic Gov. Gina Raimondo, the state’s recent economic blush is due to her policies. She touts her job training and road and bridge repair programs as fulcrums of more jobs. She deserves credit for the road repairs. The governor pushed her truck-tolling measure through a somewhat reluctant General Assembly and has been aggressive in fixing long-neglected roads and bridges. Another Raimondo initiative –free tuition at the Community of College of Rhode Island – is the type of investment designed to build a better workforce.
On job training, Raimondo may have less influence. For example, some of the best blue-collar manufacturing jobs are at the submarine-maker Electric Boat in Quonset. Those jobs are in Rhode Island because they are financed by the federal government and depend more on Sen. Jack Reed, the ranking member of the Armed Services Committee, than on any state government policy.
There is a serious question as to how much state taxpayers ought to shell out to train workers for a huge defense contractor such as Electric Boat, which is the beneficiary of billions of federal tax dollars. As Richard McIntyre, chairman of the URI economics department, says, “We’re giving away government money to people who already have too much.”
Another dent in the Raimondo Administration’s economic policies is the lack of smart data about state medical benefits used by employees of large companies. State law requires the Department of Human Services to report every year on which firm’s employees are getting their health care from taxpayers through Medicaid. But state government doesn’t know who they are because the state hasn’t been collecting this information.
The last time such information was distributed was in 2009. The Raimondo Administration has been ignoring its own law.
This means the governor and lawmakers are making decisions based on anecdote, and what they hear from lobbyists, and perhaps, political donors. State Sen. Lou DiPalma, a Middletown Democrat, says it’s embarrassing that the studies required by law haven’t been completed. The state has handed out more than $350 million in tax breaks to companies since 2008. How much of this is corporate welfare to businesses that slough off their workers medical care to taxpayers? We just don’t know.
Another criticism levied by Lardaro, the URI economist who has studied the state’s economy for years, is how short-term policies that put small amounts of money in people’s wallets trump long-term investments . The car-tax phase-out is an example. Lardaro questions whether spending $220 million to get rid of the car tax is the best way to spend that money, compared to education and infrastructure investments in the state’s future.
Economic questions are complex. Former U.S. House Speaker Tip O’Neill said often that statistics don’t inform votes on the economy. Rather, these are kitchen table issues that voters decide depending on how their lives are going and whether they think their children have jobs and opportunities.
Gov. Raimondo wants to be judged on the economy. Now it’s up to voters to render a verdict.
Scott MacKay’s commentary can be heard every Monday on the Public’s Radio at 6:45 a.m. and 8:45 a.m. and at 5:44 p.m. You can also follow his political analysis at our web site ThePublic’sRadio.org.
