7 Reasons Why RI’s Economy is on the Upswing, and 7 Reasons Why It Is Not
GoLocalProv Business Team
7 Reasons Why RI’s Economy is on the Upswing, and 7 Reasons Why It Is Not
Unemployment is at a ten-plus year low, but there are weaknesses in that number tied to the types of jobs being created.
The biggest worry for the longer-term Rhode Island economy is that the population of the state is stagnant and getting older.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTSome indicators paint a disturbing picture. The old adage is that Rhode Island is last into a national recovery and first into a recession.
SEE BELOW: 7 REASONS WHY RI IS ON THE UPSWING AND THE REASONS WHY IT IS NOT
As one of Rhode Island's leading economists told GoLocal recently, not enough is being done to change Rhode Island's flawed business cycle.
"In spite of the seemingly strong statistics that always end up being cited, the sad fact is that many of our residents continue to be left behind. Worse yet, Rhode Island has done absolutely nothing to end its status of being FILO – first in, last out of national economic weakness," said URI Economist Len Lardaro.
"The clock is ticking: Rhode Island has twelve to eighteen months less than the national economy before it falls into its next recession. Instead of continually celebrating the same misleading statistics, our elected officials should have been focusing on an accurate picture of our entire economy, making it stronger, increasing our competitiveness and making us more resistant to national economic weakness," Lardaro adds.
7 Reasons Why RI’s Economy is on the Upswing, and 7 Reasons Why It Is Not - May, 2018
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GE, Infosys, Johnson & Johnson, and Virgin Pulse
There are a few top-tier companies that have decided to open outposts or have chosen to make major investments in Rhode Island. All are receiving substantial incentives to do so.
When the next downturn hits, will they still be in RI?
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Building Hotels and Apartments in Providence
Providence is seeing a bit of a building boom — there are apartment projects like the $55 million project at the base of Smith Hill named the Commons at Providence Station. And, there is the Homewood Suites Extended Stay Hotel as you enter downtown from College Hill.
Those and a number of other projects now in development have created construction jobs, but as Gary Sasse reminds viewers each week on GoLocal LIVE’s Business Monday — these projects do not create many full-time, long-term jobs.
Sasse is the former director of administration for the State of Rhode Island.
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State Revenues — Now on the Upswing
Improving revenue numbers are taking the pressure off State House decision-makers, but there are more and more indications that the improving revenue is, in part, as a result of President Donald Trump’s federal tax cuts.
Speaker Nick Mattiello told GoLocal last week that RI may realize $40 million in new revenue.
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Unemployment Rate
The unemployment rate in the lowest in more than a decade and performing near the national average.
There are criticisms, however, that nearly a third of the new jobs pay under $35,000 a year.
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Highway and Infrastructure
For decades Rhode Island has ranked #50 or close to it for the condition of roads and bridges. Now, in part, due to the RhodeWorks program, Rhode Island's roads and bridges are being rebuilt.
There are more than 150 structurally deficient bridges in Rhode Island.
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Education Improvements
"Chipping away" might be the best way to describe RI's effort to improve education. The effort to bring more technology into classrooms is ongoing. The effort to make the buildings safe and dry is much overdue. But are Rhode Island's efforts moving fast enough?
With Massachusetts ranked consistently as providing the best K-12 education in the country, Rhode Island needs to get bolder to compete.
Is RI thinking bold enough?
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Perception
New York developer Jason Fane has come to Rhode Island and is looking to build a $250 to $300 million residential tower. The largest private development play in Providence in two decades.
Is it a sign that you can do business in Rhode Island? Or, will we chase him away further enhancing the reputation that RI is a bad place to try and do business (unless you are an insider developer/preservationist).
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We Are Old
Rhode Island is the 42nd oldest state in America — the average age is 40.1 years.
Utah, generally ranked as one of the best performing business states, has an average age of 30.7 years of age.
The oldest state — Maine at 44.5 years old.
SOURCE: American Community Survey
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College Graduate Retention
According to City Lab, the Providence-Fall River-Warwick, RI-MA metro area is the second worst in the country for retaining talent.
The region educates the best and the brightest, but retains just 36.5% of grads.
The worst performing region is the Phoenix-Mesa-Glendale, AZ region.
The best retention metro area — Detroit-Warren-Livonia, MI at 77.7%.
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Latinos' Economic Opportunities
While Rhode Island's population is older and stagnant, the fastest growing segment of the population -- the Latino community -- is not realizing the same business opportunities as their peers in other cities.
Providence is the worst city in the country for Hispanic entrepreneurs. According to a 2017 study, Providence ranks 150th out of 150 ranked cities when it comes to Hispanic entrepreneurs.
This is the second straight year in which Providence ranks last.
“Expect the Hispanic and Latino community’s contributions to the U.S. economy to be nothing short of monumental in the coming decades. Not only is this demographic expected to make up a third of the U.S. population by 2050 — translating into immense buying power — this group is also creating businesses at 15 times the national rate, according to one report,” said WalletHub.
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Employment Rate
Each month, the Department of Labor announces the unemployment rate, but URI Economist Len Lardaro says the employment number is what is critical for RI is the employment rate.
“What persons here should be focusing on is our employment rate - the percentage of our working-age population that is employed. This remains well below where it was at our last peak (as does our labor force participation rate). Furthermore, it took Rhode Island over eleven years to finally reach its prior employment peak, and much of that feat is attributable to the fact that part-time jobs have played a major role in defining our job gains over the past decade. Nobody in their right mind can ever accuse Rhode Island of being a job creation machine!,” said Lardaro.
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Declining Number of Children in RI
According to Census data, the number of children in RI has dropped from 247,822 to 223,956 from 2000 to 2010 data -- a loss of 23,866. The loss is -9.6%.
The loss is expected to show a similar loss in 2010 to 2020 data.
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Venture Capital in RI
Nationally, the venture capital numbers in the first quarter were solid in the U.S., but in RI the numbers were again disappointing.
The U.S. recorded a second consecutive quarter with over 30 rounds of $100M+. New England funding increased for the third-straight quarter, as $2.7B was invested across 125 deals, but Rhode Island only saw one deal in the first quarter.
Source: PwC | CB Insights MoneyTree™ Report Q1 2018
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Retail Disruption
Retail continues to crater and RI is dependent on retail jobs as a base of its economy. While disruptors, like Amazon, continue to grow, Rhode Island is not realizing those windfalls. Boston just added another 2,000 top-level Amazon jobs.
