Economy RSS feed for this section
engaged-citizen-avatar

Government and Media Focus Too Much on Unemployment Rate

justin-katz-avatar-smiling

To Lift All Boats, the Tide Has to Come In

What’s your first thought upon reading the following, from a Linda Borg article in the Providence Journal?

The rising tide of economic recovery has not lifted Rhode Island’s poor, the 2017 Report on Hunger in Rhode Island found.

Rhode Island, at 12.8 percent, has the highest rate of poverty in New England, with 130,000 people living in households with incomes below the poverty line. One-third of the jobs created in Rhode Island last year have an annual wage of $26,529, the study says.

Unless you believe the politicians’ rhetoric that our state’s economy is strong — in which case, you’ll see these 130,000 as inexplicably slipping through the cracks — you’ll probably conclude that Rhode Island’s economy needs to improve so the tide actually is rising.  As the RI Center for Freedom and Prosperity’s Jobs & Opportunity Index (JOI) shows, it’s not.

But Borg’s article, which is essentially promotion of a Rhode Island Community Food Bank report, never challenges our state’s approach to economic development.  Rather, it advocates against Republican policy proposals in Washington and spares a word to chide the state government for the UHIP debacle.

Charity is an important part of the equation when it comes to helping our fellow human beings, but the higher goal — mentioned whenever the topic comes up — should always be to get folks on their own feet and in a condition to be charitable toward others.  That is how the rising tide works, and too much reliance on government suppresses it.

monique-chartier-avatar

… By the Way, RIDOT’s New Tolling Study Has Major Problems, Too

At about the same time they issued a not-ready-for-primetime Environmental Assessment of the first two proposed toll gantry locations in southern Rhode Island, the Rhode Island Department of Transportation (RIDOT) also issued an “investment grade tolling study” of the entire RhodeWorks toll plan – a study, we should note, which cost the taxpayers of Rhode Island a cool million dollars.

During their show, “Changing Gears”, yesterday on WPRO, Mike Collins and Chris Maxwell broadly hinted at major problems with this tolling study. Maxwell remarked that the state “would have been wise to put it through the shredder because it is very favorable” to the truckers’ anti-toll position.

Stay tuned on this – or drop by RIDOT’s hearing on Tuesday to hear about it first hand. That’s when the Rhode Island Trucking Association (represented by Maxwell) and the American Trucking Association (represented by Collins) will point out chapter and verse how RIDOT’s own toll study apparently torpedoes Governor Raimondo’s highly destructive, wasteful and unnecessary RhodeWorks toll plan.

Remember, Governor Raimondo and the General Assembly are only going to toll trucks! *snort*

justin-katz-avatar-smiling

The Advantage of the Blue States

Providence Journal columnist Mark Patinkin continues his series of essays learning about the United States by way of his old college buddies with a review of what one of them learned by biking across the country.  The short version:  The fly-over states are filled with nice people whom our economy is bypassing, which explains why they were willing to look past Donald Trump, the man, and see him as a challenge to the establishment.

Of more interest, to me, is this bit of parochial chauvinism in the comments to Patinkin’s article, from Douglas Maiko:

people in blue states are much wealthier than midwest red states. It comes down to blue state economic policies and great opportuites to create wealth for one self here in blue land. Red State people tend to be cynical about the american dream, watch too much fox news, obsess with cultural issues. The numbers speak for themselves, move to a Blue state if you want the american dream

Even to the extent that there’s truth to his assessment of economic balance, Maiko’s attitude exhibits the dangerous arrogance seen in successful civilizations whose people believe their condition is permanent.  The likelihood is that the coasts are thriving based on a legacy of lucky geography and historical accident.

After all, the East Coast is the oldest region in the country, and both coasts have access to the world’s waterways, which is of decreasing value.  The coasts’ living generations, in other words, started from an advantaged place that had nothing to do with “blue state economic policies.”  Rather, the natural and cultural advantages of the areas allowed advocates of those economic policies to impose them without people’s feeling it as acutely as they would in regions requiring harder work and more sacrifice.

We should fear that our advantages won’t last if we keep driving out our productive class — those who want to cash in their drive and abilities for income, forcing established players to compete.  The crisis point may take time, or it might come all at once, when some fly-over city comes up with the next big thing that makes our legacy institutions and industries unnecessary.

Perhaps they’ll maintain the generosity that Patinkin’s friend observed in their roadside diners even when the coasts become dependent on the fly-overs.  Counting on that probably wouldn’t be a wise plan, however.

monique-chartier-avatar

Hearing Tuesday on First Toll Gantries With Acute Case of UHIP-itis

RIDOT has identified the locations of the first two proposed toll gantry locations in southern Rhode Island. This Tuesday, they will be holding a workshop and taking public comment on their newly-released (not to say rushed out the door) Environmental Assessment of the locations. The problem is that the assessment suffers from exactly the same serious flaw as the ill-fated UHIP system: it was released before it was ready. “Continue Reading” to learn why – and for deets about attending the hearing.

justin-katz-avatar-smiling

A.T. Cross Out the Incentive Programs

Not long after hitting up the Rhode Island taxpayer for incentives to move from one municipality to another within the state, pen company A.T. Cross has sold itself to a California private-equity company, according to WPRI’s Ted Nesi.  The silver lining:

A.T. Cross was awarded $1.9 million in state subsidies to help pay for the move to Providence, but R.I. Commerce Corporation spokesman Matt Sheaff said Thursday the company has not received any of that money at this point because the incentives are tied to job benchmarks it has not yet achieved.

Not to quibble, but Kate Bramson reported last year in the Providence Journal that the company had already received $200,000, which would presumably be in addition to the thousands of dollars it receives every year through various government programs and directly from the governor’s office.

More to the point, the company now confirms that it will be shedding jobs, rather than adding them, which raises the question of whether it really needed the promise of millions in order move.

carroll-andrew-morse-avatar

Can Worcester Really Support the PawSox?

justin-katz-avatar-smiling

Making Meaning a Real Part of Economic Discussions

Alexia Elejalde-Ruiz is right to point out that we don’t put enough emphasis on an important aspect of our working lives:

A job’s meaningfulness — a sense that the work has a broader purpose — is consistently and overwhelmingly ranked by employees as one of the most important factors driving job satisfaction. It’s the linchpin of qualities that make a valuable employee: motivation, job performance and a desire to show up and stay.

About the closest one gets to this conversation comes when, as part of political debates about living wages and mandatory benefits, some religious leader adds the phrase “meaningful work” to the list of workers’ rights.

Although she didn’t go so far as to raise the prospect of government action, Elejalde-Ruiz’s article does emphasize that employers are doing something they shouldn’t when they don’t give meaning to their employees’ jobs, not unlike the presumptuous statements that RI employers are cheating themselves by not offering sick time.  Perhaps she backs away because talk of meaning begins to illustrate how little ground one can actually cover when insisting on assigning people to categories (boss versus worker) and trying to resolve perceived problems categorically.

Blanket rules won’t help employers make employees’ jobs more meaningful, just as one can’t force the employees to take a deliberate approach to seeking meaning.  These questions are bound up with individual worldview and personal interactions.

What we can do is to stop oversimplifying our lives for the sake of political tugs-of-war.  Consider how easily the notion of meaningful work can flip:  Human beings will be attracted to work that is meaningful, which means they’ll tend to work for less pay.  Conversely, employers have to pay more to attract employees when the work isn’t attractive in its own right.  Put that way, it’s simply inappropriate to make declarations about, say, low pay for teachers without also commenting on how much they’re paid in meaning, so to speak.

Indeed, an interesting study could probably be made of gender gaps in these terms.  What if the longstanding cultural expectation that men would provide for their families left them with a meaningfulness deficit?  That could certainly play into suicide rates.

justin-katz-avatar-smiling

The Unadulterated Projection of Relative Decline for Rhode Island

The word “mixed” in the headline for a Ted Nesi report on WPRI.com seems misplaced.  Michael Lynch’s report for the state government, by way of consultant IHS Markit, seems pretty negative to me:

Through 2022, Lynch predicts Rhode Island payrolls will grow by just 0.4% a year on average, a rate that would rank near the bottom among the 50 states, at 48th. …

Overall, IHS expects Rhode Island’s population and labor force to grow about 0.1% a year on average of the next 10 years. “This will rank among the lowest in the country,” Lynch noted, and is “reflected in our forecasts for lackluster employment growth.” …

“This would provide a useful crop of young and well-educated workers ready to enter the labor force and fill vacancies left behind by the aforementioned retirees,” he wrote. “Our forecasts indicate that the state will fail in this area – its 20- to 29-year-old cohort will contract over the next decade.”

Nesi touts a “silver lining” in the “booming” housing market, but in context, that’s a negative.  Regulations and taxes are keeping the housing inventory in Rhode Island from growing (which means construction jobs are restrained, too).  In context, the more-accurate characterization would be that, however pitiful Rhode Island’s economy may be, the government is keeping our housing market even more suppressed.

This isn’t a mixed picture.  It’s an unadulterated portrait of how an overbearing government can drag down a state.

mike-stenhouse-avatar

RI at the Bottom of the Licensing Scale, Too

justin-katz-avatar-smiling

Tax Foundation on What Senate Tax Reform Would Mean to RI

The Tax Foundation, specifically Nicole Kaeding and Morgan Scarboro, has estimated the effects of the U.S. Senate’s version of tax reform:

The TAG model estimates that the plan would result in the creation of roughly 925,000 new full-time equivalent (FTE) jobs, while increasing the after-tax incomes by 4.4 percent in the long run, meaning families would see an after-tax income boost of 4.4 percent by the end of the decade. The increase in family incomes is due in part from individual income tax reductions and the broader rise in productivity and wages due to economic growth.  These estimates take into account all aspects of the Senate version of the Tax Cuts and Jobs Act, including changes to the individual and corporate tax codes.

The results are provided by state, and Rhode Island stands to gain 3,135 jobs, with the typical middle-income family seeing another $2,707 in income.

Keep in mind that this is the outcome of improving the tax climate nationally.  Imagine what would be possible if the State of Rhode Island were sufficiently forward thinking to improve its own tax and regulatory climate relative to other states.

justin-katz-avatar-smiling

RI Is 42nd for Personal Income Adjusted for Cost of Living

Byron Schlomach of the 1889 Institute has ranked the states not only according to their residents’ personal income, but also adjusting that personal income for cost of living:

When states’ average personal incomes are adjusted for their cost of living, it radically changes the picture of which states are the most prosperous. Apparently prosperous California sinks below Mississippi. Oklahoma, middling in official statistics, rises to actually outrank Massachusetts. Texas ends up in the top 10. Apparently prosperous states that have high costs of living are shown not to be so prosperous after all, once you account for how little that can be purchased with those high incomes. And as it turns out, high-cost states tend to be “blue” in their voting patterns while low-cost states tend to be “red,” politically.

By Scholmach’s calculation, Rhode Island starts out in the middle of the pack, at 18th for personal income, which is 4th of the 6 New England states.  Adjust for the cost of living, and Rhode Island falls to 42nd in the country,

High taxes, a government that likes to impose itself on the people, and low personal income in light of the cost of living are, let’s say, likely to explain a good deal of wave of Rhode Islanders who’ve left the state in recent decades.

Quantcast