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September 2014 Unemployment: Down Some More

Rhode Island’s September employment story was one of “down.” The unemployment rate was down, but so were labor force and employment numbers.

The Expanding Nature of Government “Investments”

Here’s the latest word on the major public works program related to the land in Providence formerly occupied by Route 195:

It’s the kind of project the I-195 Redevelopment District Commission and state economic leaders have long said they hope to foster on nearly 20 acres of prime real estate. In the spring, [Lawyer Timothy H.] Ehrlich’s team submitted a bid to the commission to create [a biotechnology] incubator.

But after working all summer, Ehrlich is convinced the project needs financial help from the state, and that the help must be more than the life-sciences tax credits outlined in the state law that created the commission.

No doubt a variety of people would jump at the chance to tell me I just don’t understand how these things work.  Government must invest in economic development.  Biotech is a growth sector, and an incubator will attract all those “well-paying jobs” that we hear about.  Every other state is subsidizing this industry.  And yet, somehow Rhode Island will become a hub, even though small and late to the game.  Yadda yadda yadda.

Indeed, the article has Marcel Valois, the executive director of the Commerce Corporation (which was formerly the Economic Development Corporation that invested in 38 Studios), insisting that “the project would ‘absolutely’ help the economy.”

Still, I just can’t get past the plain-language description of this whole process.  The government invested in a project to move a highway because it would free up all sorts of “prime real estate” that could be sold to raise money and make economically productive use of the land.  Now we’re “investing” in the process of luring organizations to the property.  Next, those organizations will need massive subsidies to get off the ground.  And then the start-up companies that this particular project attracts as clients will need additional subsidies to afford its services.

I ain’t a biotech-investment guru by a long shot, but this has all of the common-sense markers of a bad way to go about economic development and all of the common-sense markers of a scheme for empowering government agents and enriching connected individuals.

Timothy H. Ehrlich is, according to Kate Bramson’s Providence Journal article, “very encouraged by gubernatorial candidate Gina Raimondo’s knowledge and background as a venture-capital investor.”  He’s so encouraged, it appears that he’s given Raimondo’s campaign $1,500 since May 2013, although the campaign refunded $250 of that two weeks ago.

The name on the campaign reports is “Tim Ehrlich,” but the address given belongs to this $1.4 million property in Concord, Massachusetts, which is owned by “Timothy H. Ehrlich,” matching the article.  The article also calls Ehrlich a “lawyer,” and the campaign finance reports list the donor as employed by Boston law firm Gunderson Dettmer, where partner Timothy H. Ehrlich “focuses on the representation of start-up, emerging growth and public companies in the information technology, biotech and medical device industries.”

Progressive Policies Hurting Minorities

Looking at the brief report that the RI Center for Freedom & Prosperity released, yesterday, showing some slices of employment data, something struck me about the numbers for labor force participation — that is, percentage of each demographic group that is either working or looking for work:

Notice that a larger percentage of black and Hispanic Rhode Islanders are either working or looking for work.  Inasmuch as the unemployment rate (i.e., those who are looking for jobs) is almost two times higher for blacks than the average and more than two times higher for Hispanics than the average, we can infer that the higher labor force participation rates for those groups result mainly from the unemployed.

That makes sense, of course, because the income levels for these minorities tend to be lower than the average, so their need for jobs is greater.  The gap between people’s need to work and their ability to find work is a humanitarian concern, but it’s also an indication of lost opportunity for our economy.

Here we see another indication of the harm that Rhode Island policies (and progressive policies more broadly) do to the productive class, no matter what race we’re talking about.  These Rhode Islanders want to exchange their productive effort and their talents for money.  Oppressive big-government policies make that exchange more difficult.  High tax rates remove money from the economy and reduce incentive to expand productive activity (both work and investment), and invasive regulations make it more difficult to engage in productive activity legally.

It’s not surprising that minority groups are most profoundly affected by a wrong-headed approach to government.  It is surprising, though, that the votes of different racial groups prove that they haven’t caught on to the abuse, yet.

Invested in Inequality

Writing in the Providence Journal, John Kostrzewa notes that Federal Reserve Chairwoman Janet Yellen has an expanded view of her organization’s concerns:

…Yellen has another, perhaps more immediate concern that is holding back growth: economic inequality.

In a recent speech to the Corporation for Enterprise Development, she said: “We have come far from the worst moments of the crisis, and the economy continues to improve. But the effects of the recession are still being felt by many families, particularly those that had very little in savings and other assets beforehand .”

That declaration seems… well… convenient, considering that the current economic “recovery” engineered by the policies of Yellen’s organization and the current administration of the federal government has benefited exclusively the top 10% of income earners (roughly above $120,136 per year) and mostly the top 1% (starting just shy of $400,000).

Indeed, the whole dance takes on a bit of a sinister tone when you consider a recent story that’s gotten a shockingly small amount of play:

It’s an extraordinary document. There is not space here to do it justice, but the gist is this: The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems.

Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.

I’d propose that it isn’t coincidental that the growth of big, nanny-state, central-planning government has coincided with a phasing out of average Americans’ benefit from economic expansion.  Most of that expansion, after all, has been fueled by government debt, increasingly relying on investment schemes to translate into the economy.  With the Obama Era, we saw the final switch flipped in ensuring that the losses of those schemes would be totally socialized, so that the investment class never lose in the deal.

The loop has closed, in other words, between the non-producing rich and the smooth-talking progressive politicians.  The next step (perhaps that to which Yellen is alluding) is for the money handlers to increase the use of government to spread more of that unused wealth directly to constituencies so that they’ll be less tempted to overthrow the whole regime.

“I Am the Conservative; I Speak for the People”

The cartoon version of The Lorax takes Seussian propaganda to the next level, most objectionably by vilifying poor and working class people who become upwardly mobile through enterprise.

Gina’s Quantum Position on Raising Taxes; Or, “Dual Nature” Doesn’t Just Describe Matter and Light

On Thursday, Gina Raimondo, democrat candidate for governor, held a press conference during which she accepted the endorsement of Planned Parenthood and expressed a desire to lift the ban in Rhode Island law on partial birth abortion. (Yes, to confirm, contrary to what she lied … er, broadly implied at the press conference, Allan Fung does not wish to change the parameters of Rhode Island’s abortion law, she does.)

This has created some controversy, as well it should, especially on the radio and social media.

On his radio show this morning on WPRO, John Loughlin took a bigger picture perspective to make the case that one of the mistakes candidate Raimondo made at her press conference Thursday was the strategic one of getting off message.

That’s probably true. But there are a couple of additional factors that come into play. Firstly, the General Treasurer is probably pleased to get her candidacy any kind of publicity, even if it doesn’t adhere to her campaign script. (Tomorrow’s episode: “Will She Take Communion???”, co-starring a vociferous cast of advocates, some in the ranks of the press, standing by to canonize her if the Catholic Church moves to bar her from communion.)

RI Income Tax Withholding Shows No Evidence of Employment Boom (But a Bigger Tax Take)

A comparison of income tax withholdings, in Rhode Island, with employment growth indicates that (1) employment statistics have probably been off, and (2) the state’s method of soaking taxpayers is not a wise strategy for economic growth.

August 2014 Unemployment: Turning Down from the Clouds

The employment figures for Rhode Island are on a downswing, although a shrinking labor force keeps the unemployment rate steady or “improving.” Meanwhile, a likely revision in January may darken the picture further.

Rhode Island Lags in Food Stamp Reductions

Neil Shah reports, in the Wall Street Journal, that food stamp usage (Supplemental Nutrition Assistance Program [SNAP]) is down in the United States.  Although “food-stamp use remains high, historically speaking”:

There were 46.2 million Americans on food stamps in May, the latest data available, down 1.6 million from a record 47.8 million in December 2012. Some 14.8% of the U.S. population is on the Supplemental Nutrition Assistance Program, or SNAP, down from 15.3% last August, U.S. Department of Agriculture data show.

According to the data, there were 3.0% fewer SNAP participants in May 2014 than in May 2013.  In Rhode Island, the reduction over that same period was 1.3%.

In Rhode Island in May, 178,110 people were participants in the SNAP program.  That’s 16.9% of the population, according to the latest estimate of the U.S. Census, That’s 2.1 percentage points higher than the number for the United States as a whole.  Rhode Island has the 14th highest SNAP usage in the country.  Only Maine is higher, in New England.  (New Hampshire’s at 8.4%, while Connecticut and Massachusetts are both between 12% and 13%.)

It’s interesting, though, that Rhode Island’s reduction of SNAP participants has been so much slower than the national average, given the employment boom shown in Bureau of Labor Statistics (BLS) data.  I’ve asked the U.S. Department of Agriculture if it provides previous monthly estimates of SNAP participation.  It’d be interesting to see how that’s changed month to month.

RI’s Bad Decisions and Burning Money Instead of Tobacco

My op-ed in today’s Providence Journal places the match of Rhode Island’s experience of the tobacco settlement money (a one-time-fix turned bad debt) on the pile of bad decisions that the state government has made in the past decade or so:

According to a review by ProPublica, Rhode Island has just refinanced some of the resulting debt, with the expectation that “the deal would shave $700 million off a $2.8 billion tab due on the bonds in 2052.” In that regard, it’s a bit like the state’s pension reform, which was marketed as salvation but merely shaved about $3 billion from $9 billion of unfunded liability.

The people who operate Rhode Island’s government are racking up quite a list of these liabilities.

RI’s Bad Decisions and Burning Money Instead of Tobacco

My op-ed in today’s Providence Journal places the match of Rhode Island’s experience of the tobacco settlement money (a one-time-fix turned bad debt) on the pile of bad decisions that the state government has made in the past decade or so:

According to a review by ProPublica, Rhode Island has just refinanced some of the resulting debt, with the expectation that “the deal would shave $700 million off a $2.8 billion tab due on the bonds in 2052.” In that regard, it’s a bit like the state’s pension reform, which was marketed as salvation but merely shaved about $3 billion from $9 billion of unfunded liability.

The people who operate Rhode Island’s government are racking up quite a list of these liabilities.

Becoming the Medicaid State

Yesterday, I noted that enrollment in health insurance plans through the state-government-operated HealthSource RI had dipped by August 2.  In contrast, Medicaid enrollments have continued to grow, by an average of 3,430 per month, or a five percent growth of the total Medicaid rolls from the end of March to the end of August, now up to 257,884.  That’s now more than one-quarter of the entire state population.

If we assume that all new Medicaid enrollments were through the exchange, it’s an increase of 21% since March.

 

Here’s a not-so-fun fact:  The number of new Medicaid enrollments in Rhode Island from March to August was more than five times greater than the number of seasonally adjusted new jobs based in Rhode Island.  If you want a barometer of the direction in which the state is headed, that’s a pretty good one.

When the Future Can Pay for Your Business Model

The federal government’s deus ex machina act with HealthSource RI is as good an example as any of how government shouldn’t (but inevitably will) behave.  There was a little bit less than the preferred 100% certainty that the state would allocate money for its experiment in health broker entreneurialism during the last session of the state General Assembly, and the administration of big brother Obama swooped in with the cash to keep the Web site going for another year.

It wasn’t supposed to do so, under the written word of the Affordable Care Act (ObamaCare), and the state wasn’t supposed to accept it, under the written word of Governor Lincoln Chafee’s executive order creating the health benefits exchange.  But what’s the rule of law and twenty-something million dollars compared with giving government agents the opportunity to experiment with a new business model?

If the U.S. Congress and the governor have to say one thing in order to get their big-government policies implemented and then ignore the specifics when they become inconvenient, and if more imaginary money has to be pushed to the resulting agencies, that’s just the price of trying to solve all of our problems via the political system.

The combined activities of Americas local, state, and federal governments now cost more per American household than the median American household brings home in income.  The federal debt is now higher than the national GDP.  In Rhode Island, the state government is suffering the consequences of its need to fill budget gap with one-time fixes and a ratcheting squeeze on residents, who are choosing to leave.

Last week, I checked in with HealthSource RI.  After the open enrollment period ended in March, the agency had 27,961 enrolled individuals, with 21,097 having paid.  By the end of April, 25,767 had paid.  As of August 2, HealthSource counted 26,686 enrollees and 25,892 people paid up.

The federal government, in other words, gave nearly $1,000 per enrollee just for the exchange’s operating costs.  That doesn’t include the subsidies that 85-90% of the enrollees are receiving.

It takes a little bit of education and imagination to see the consequences of this behavior.  All that money comes from somewhere, and by the looks of the recent trends, it isn’t the much-vilified One Percent.  Not being able to trust that the deal that politicians make actually means what they say it means when they first say it has consequences, too.

It may be the perfect crime, though.  As the machine works its destruction, those whom it kills and those from whom it steals can’t easily see who’s to blame.

July 2014 Employment: The Dream Is Over

Rhode Island’s statistical employment surge came to a screeching halt in July, but not before putting the Ocean State in company with the Deep South. (Of course, the numbers still look likely to be revised downward dramatically in January.)

Illegal Alien Juveniles: And Rhode Island’s Total Rises to 148

Breitbart’s Tony Lee has obtained updated numbers from the United States’ Office of Refugee Resettlement as to the number of illegal alien juveniles released by the federal government for the period of July 7 to July 31 – July 7 being the last date for which we had those figures. The state by state breakdown indicates that Rhode Island’s total has risen from 129 to 148.

Our elected officials – those who support illegal immigration – have been acting as though this has been a completely unforeseen, one time wave of children, such as might be due to an earthquake, flood or other natural disaster.

Nothing could be further from the truth.

These children are being drawn here – are being sent here, more accurately – by the willful actions and inaction of our national leaders: 1.) more generally, the United States has substantially reduced its enforcement of the immigration laws currently on the books and 2.) more specifically, the action of the President of the United States, who has effectively turned on a beacon by making it clear that his administration is extremely reluctant to deport any illegal children who come here. (You don’t suppose word will get out about the data that backs this up, do you? Naw!)

It probably doesn’t hurt that the federal government has rolled out the red carpet for at least some of the illegal alien juveniles.

Accordingly, as things stand, there is no reason for this stream of illegal arrivals, nor the strain on public budgets nor the erosion of our sovereignty, to end.

The question now, closer to home, is, what is Governor Chafee doing to stem the tide of illegal aliens into Rhode Island and the corresponding stream of money out of state and local tax coffers? Has he offered objection to the federal government to the arrival in Rhode Island of these and any additional illegal alien juveniles, an action that would also help to address the larger problem by discouraging illegal immigration? If not, has Governor Chafee identified what he would like to see cut from budgets, both local and state, none of which have much leeway in the expenditure column, to pay for the expenses – minimally, education and Medicaid – associated with these arrivals?

The People Are Leaving. Be Angry.

News that productive people seeking to build a life are leaving Rhode Island is not new, but Rhode Islanders have to start being angry about it.

About That Part-Time Job Theory

Whatever is generating the strange statistics in the labor market, a shift toward part-time work doesn’t appear to provide a satisfactory explanation.

Progressive Policies Hurt Working People

Kevin Williamson is on a roll, lately:

Progressives argue that we need deeper government involvement in the economy in order to assuage the ill effects of economic inequality. But, as Joel Kotkin points out, inequality is the most pronounced in places where progressives dominate: New York City, San Francisco, Los Angeles, Chicago. The more egalitarian cities are embedded in considerably more conservative metropolitan areas in conservative states. “Part of the difference,” Mr. Kotkin writes, “is the strong growth of higher-paid, blue-collar jobs in places like Houston, Oklahoma City, Salt Lake, and Dallas compared to rapidly de-industrializing locales such as New York, San Francisco, Chicago, and Los Angeles. Even Richard Florida, the guru of the ‘creative class,’ has admitted that the strongest growth in mid-income jobs has been concentrated in red-state metros such as Salt Lake City, Houston, Dallas, Austin, and Nashville. Some of this reflects a history of later industrialization but other policies — often mandated by the state — encourage mid-income growth, for example, by not imposing high energy prices with subsidies for renewables, or restricting housing growth in the periphery. Cities like Houston may seem blue in many ways but follow local policies largely indistinguishable from mainstream Republicans elsewhere.” In Detroit, Chicago, and Philadelphia, African Americans earn barely half of what whites earn —  and in San Francisco, African Americans earn less than half of what whites earn. Hispanics in Boston earn 50 percent of what whites make; but it is 84 percent in Riverside County, Calif., a traditional Republican stronghold (it holds the distinction of being one of only two West Coast counties to have gone for Hoover over FDR and is Duncan Hunter’s turf), and the figures are comparable in places such as Phoenix and Miami.

As in many other recent political arguments, Rhode Island offers an excellent test case.  As I’ve long been pointing out, the group that is struggling and leaving Rhode Island is the “productive class,” those people who are striving to transform their labor into money and comfort.  The rich are insulated and the disadvantaged are well served, relative to other places.  Meanwhile, the insider culture (which includes government unions) creates a path to the middle and upper-middle classes for people willing to play along, but at the expense of the working and lower-middle classes.

Profit as Theft from the Collective

Disdain for “for profit” companies is an indication that progressives believe all property actually belongs to the government, and taking extra is a type of theft.

June 2014 Employment: And the Happy Face Keeps Smiling

Based on the numbers, Rhode Island’s employment woes appear to be coming to an end. The numbers feel wrong, though, and some experts’ explanation doesn’t seem to fit.