Major Correction, Governor: GE is Coming Here Due to Corporate Welfare, NOT an Improved Business Climate

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So you’ve probably heard – and if you haven’t yet, Commerce Corp, formerly the EDC, will be sure that you do – the mildly good news that General Electric will be creating one hundred new jobs in Rhode Island, and possibly more down the road.

But in announcing this, Governor Raimondo fibbed in a big way.

“This is real validation that the steps that we’ve taken to improve our business climate … are paying off,” Raimondo told reporters during a Statehouse news conference.

No, indeed. Just the opposite. General Electric is bringing those jobs here due to targeted taxpayer subsidies, a.k.a., corporate welfare. From the Governor’s own Commerce Secretary:

Commerce Secretary Stefan Pryor said the expected cost in state incentives for those initial 100 jobs is $5.65 million, over 10 years.

Look, I don’t agree with it, because it is unfair and bad policy. But the reality is that once in a rare while, tax incentives are needed to land a big fish.

Of course, the problem is that the Raimondo administration, with the unwise acquiescence of the General Assembly leadership, has substituted wholesale corporate welfare for the broad-based tax and regulatory cuts that the state’s business climate so badly needs. Worse, however, is that the Governor is attempting to mischaracterize the business-as-usual corporate welfare that she offered to G.E. as the broad-based improvement to the state’s business climate that she is strangely reluctant to undertake.

Rhode Island ranks forty eight out of fifty on the RI Center for Freedom and Prosperity’s JOI, Jobs & Opportunity Index. I’m not going to ask Justin Katz, the Center’s Research Director and chief architect of JOI, whether one hundred good paying jobs would improve Rhode Island’s JOI ranking, in part, because he has more than enough to do but mainly because it’s a good guess that the answer is: marginally if at all.

More important is the big take-away from the G.E. news, which WPRO’s Matt Allen nailed this afternoon: companies will respond to lower taxes by bringing jobs. Let’s throw open wide our doors by reducing taxes across the board, rather than on a case by case basis.



  • stuckinRI

    But this way they (those in power) can stay in control. By dolling out targeted (and usually temporary) tax relief they can stay in control and yet proclaim they are doing such a great job. If you just simply lower the overall tax burden then there’s no reason for Gov Gina to hobnob with the GE execs – will she get any campaign contributions from them?
    Also – how can we circle back in 2 or 3 years to determine if GE really has created “hundreds” of jobs here in RI? I am VERY skeptical.

  • Lance Wilson

    At approximately $5,600 a job/year, it really is hard to tell if this is a net gain at least from a tax gain (other than assuming GE stays after 10 years or more jobs added without additional subsidy).

    The Governor also noted about “putting people to work”; however, these jobs are skilled positions. What would be nice to know is if these are transfers (new people into RI from relocating GE employees) or new jobs (to be filled once GE establishes a presence). In the former, both jobs and labor force go up so it’s not putting “new” people to work, but it would be new spending/taxes to the state.

    In the latter, I would bet (but it would interesting to learn) those jobs would be filled with existing workers simply moving for better opportunity. I would doubt there would be much “new jobs” unless in the latter case it’s jobs that could be filled by new graduates. I doubt there are “structural/cyclical” unemployed software developers in this economy (maybe frictional, but skilled developers can find a job unless they are holding out for another reason. In that case, it’s hardly new spending/tax to the state, unless those jobs were in MA/CT.

  • Raymond Carter

    Corporate welfare is one of the pillars of the RI Democrat kleptocracy. To complete radio silence from the “progressive” robots-yes Conway that’s you!

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