Scott MacKay Commentary: On Economy, RI Should Take Cues From Massachusetts

Mar 25, 2016

Once again, Rhode Island has a mediocre jobs report. RIPR political analyst Scott MacKay ponders the state’s economic future.

The latest report from the Department of Labor and Training depicts the Ocean State’s sluggish economy. The unemployment rate was at 5.4 percent and job growth was anemic. The contrast with Massachusetts was stark, especially in terms of job creation.

Rhode Island struggles to regain jobs lost in the Great Recession that began with the Wall Street crash of 2008. Massachusetts unemployment rate is down to 4.5 percent and the state harvested 13,300 jobs in January compared to just 300 in Rhode Island.

All the experts point to long-term trends in Rhode Island, particularly the loss of manufacturing positions in such once-flourishing industries as textiles and jewelry. Another factor in the most recent dip was the wreckage in the housing market, where thousands of construction jobs were lost. Add the failure of state government to invest in infrastructure repairs that both attract business and put people to work.

While everyone agrees on the diagnosis, there isn’t a consensus on how to move forward. Republicans and some in the business community are upset with Democratic Gov. Gina Raimondo’s effort to raise truck tolls and put the money into improving roads and bridge. Yet it seems that the governor, and particularly, House Speaker Nick Mattiello deserve some credit for trying address this yawning need.

Some in the business community argue for a tax cut, but taxes are not the end all and be all for attracting 21st century knowledge industry jobs. Massachusetts isn’t a low-tax red state. And California has the highest taxes and strongest environmental regulations in the nation. Both of those states have flourishing technology hubs. Tax cuts in Rhode Island pushed by former Gov. Don Carcieri and General Assembly leaders did nothing to help the economy and  led to less investment in education and road fixes.

What’s different about Massachusetts? John Simmons of the Rhode Island Public Expenditure Council, a business-financed research group, points to education. Massachusetts has invested in improving and measuring public educational attainment for more than two decades and the results are paying off.

Anybody who drives through Fall River, New Bedford, Lowell or Lawrence can see that those old factory centers aren’t doing as well as many cities in Rhode Island. Yet, Simmons says a RIPEC study that is currently being conducted shows that even in parts of Massachusetts that are struggling, test scores are higher than in similar Rhode Island communities.

Boston has become one of the nation’s most vibrant cities. Its flourishing economy, based on its reputation as America’s premier college town, can’t be easily duplicated in our state.

What Rhode Island can do is to ratchet up investments in education. A first step would be to ensure that we measure student progress to make proper assessments of what needs to be done. This means standardized testing – not necessarily as a graduation requirement – to figure out where students are falling short.

Then, let’s put more money into higher education, which we know pays off. Do you really know many well-educated or highly skilled Rhode Islanders who are out of work?

The Assembly and governor ought to provide some incentives for the public education bureaucracy to raise money. Why not challenge Rhode Island College and the University of Rhode Island to match public financing with alumni and private sector contributions? Allocate an extra $5 or $10 million to RIC and URI for in-state scholarships with the requirement that they match the state money.

Raimondo and Assembly leaders have done a better job of late in pushing Rhode Island a place to do business. Some business taxes, such as the tax on energy, have been cut and regulations are being addressed. The state budget, always in precarious balance, has stabilized a bit since the 2011 pension overhaul.

Simmons says that tiny Rhode Island will always be dependent on growth spilling over from Massachusetts. And the regional and national economy will have an impact. The federal Bureau of Economic Analysis said last Friday that slow productivity growth is a drag on the country’s job expansion.

As well as learning from Massachusetts, Rhode Islanders need to be patient. That may sound harsh to a worker stuck with stagnant wages, but nothing difficult ever changes overnight.

Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:40 and 8:40 and on All Things Considered at 5:44. You can also follow his political reporting and analysis at our `On Politics’ blog at RIPR.org