The Saturday Morning Post: Quick hits on politics & more in RI

March 1st, 2014 at 5:00 am by under Nesi's Notes, On the Main Site, The Saturday Morning Post

Happy Saturday! Here’s another edition of my weekend column – as always, send your takes, tips and trial balloons to tnesi@wpri.com. For quick hits all week long, follow @tednesi.

1. Rhode Island has found a potent way to bring down its official unemployment rate: drive thousands of people out of the labor force. That’s one major takeaway from Thursday’s dismal revised jobs data, which showed the state’s jobless rate never actually fell below 9% in 2013 and was still the highest in the nation as of December. It reinforces the need to put the rate in context before celebrating its decline: believe it or not, nearly 7,000 more Rhode Islanders had a job when the unemployment rate hit its peak – 11.9% in March 2010 – than do today. So what’s really driving the rate down? A collapse in Rhode Islanders’ labor-force participation. About 27,000 workers left the labor force from 2007 through 2013, meaning they’re not employed and they’re not actively looking for work; that’s pushed the share of adult Rhode Islanders who have a job to the lowest level since the aftermath of the Volcker recession in 1983. It’s also coincided with a 16% decrease in Rhode Island’s 35- to 54-year-old population; if it weren’t for a huge jump in the number of senior citizens staying in the work force, the working population would be even smaller. Now, not all of this is unique to Rhode Island – there’s a heated debate happening among economists nationally about how much of the employment decline is demographic as opposed to recession-caused. But make no mistake: seven years after the jobs crisis started, Rhode Island’s labor market remains very weak. No wonder the state ranks 47th in The New York Times’ comparison of the 50 states’ recoveries.

2. Fun fact: Clay Pell donated $250 to Gina Raimondo’s campaign for treasurer in June 2010, making his future opponent one of only two state-level candidates he supported with a contribution before he began exploring a gubernatorial campaign late last year. The other was Lt. Gov. Elizabeth Roberts, who got $125 from Pell in 2005; Roberts is supporting Raimondo for governor.

3. Angel Taveras was first out of the gate in proposing to increase Rhode Island’s minimum wage to $10.10 by 2018. Not to be outdone, Gina Raimondo’s campaign quickly announced that she wants to do the same thing (after having been uncertain about it on that morning’s Newsmakers) – and to do it by 2015, a 26% hike in one year. Clay Pell has upped the ante further, suggesting the General Assembly should go to $10.10 during this year’s session. The Economic Policy Institute estimates such an increase would directly raise the wages of 65,000 Rhode Islanders. What the EPI study can’t quantify, of course, is how many low-wage jobs would disappear if such an increase was enacted. The Congressional Budget Office recently estimated 500,000 such jobs would be lost nationally with a $10.10 minimum – a significant number, though one that’s far outweighed by the roughly 16.5 million workers CBO said would make more money. (Read Keith Hennessey and Mike Konczal for competing views on the CBO report.) There will surely be a debate about the wisdom of the increase the three Democrats are proposing, which would put Rhode Island’s minimum wage $1.10 higher than Connecticut’s and $2.10 higher than Massachusetts’ if they don’t change theirs. Also watch to see whether local conservatives counter with a proposal to expand Rhode Island’s Earned Income Tax Credit, as some of their counterparts are doing nationally (or if they decide to support a much higher minimum wage, as conservative billionaire Ron Unz hopes they will).

4. Legendary venture-capitalist Marc Andreessen sees a coming boom in the news business. Here’s hoping!

5. Our weekly Saturday Morning Post dispatch from WPRI.com reporter Dan McGowan: “Of all the staffers Providence Mayor Angel Taveras has lost over the last 14 months, Director of Administration Michael D’Amico’s decision to depart might be the least surprising but the most stinging for the first-term Democrat as he now seeks the governor’s office. D’Amico took a massive pay cut to move back to Providence to effectively run City Hall, and has maintained all along that he would return to the private sector no matter Taveras’s future plans. But he’s also been the mayor’s closest City Hall advisor since day one, and Taveras has regularly sided with D’Amico over other top aides. (There’s a reason progressives Arianne Lynch and Matt Jerzyk are no longer employed by the city.) Now Taveras will have to spend the rest of 2014 doing everything he can to avoid raising taxes while running for governor without D’Amico, who is widely viewed as the person who helped close the $110-million structural deficit by negotiating a pension settlement and reaching payment-in-lieu-of-taxes agreements with the city’s nonprofit hospitals and universities. The good news for Taveras is D’Amico isn’t leaving Providence – he just bought a home on the East Side in 2012 – and will stay on as a consultant. (For what it’s worth: the city isn’t required to put professional services contracts up for bid.) Taveras was dealt another blow this week, though: Liz White, his deputy director of communications, is leaving to run City Council President Michael Solomon’s campaign for mayor.”

6. Rhode Island U.S. Attorney Peter Neronha lobbed a shot across the bow at Lincoln Chafee this week without ever saying the governor’s name. Chafee made headlines Monday when he suggested to HuffPost Live that legalizing marijuana could provide an infusion of tax revenue to pay for things like the repair of this winter’s ubiquitous potholes (“pot for potholes”), citing Colorado’s experience so far. The discussion in Rhode Island led Neronha to reach out this week to his Colorado counterpart, John Walsh, for insight, and Neronha is now pushing back at Chafee’s rationale. “I would suggest that anyone who takes that view might want to pay close attention to what the governor of Colorado said on that very point, which is that he thought that that was a really bad reason to pass legalization,” Neronha said on this week’s Newsmakers. Paraphrasing, he continued: “We know that marijuana doesn’t make our people smarter and it doesn’t make them healthier, and should government really be encouraging this behavior?” He added that “to go down this road for purposes of tax revenue and not take into account the human cost and a plan for that would really be a big mistake.”

7. A chilling bit of history from an old New England Monthly article: “Over two-thirds of all slaves brought to America came by way of Rhode Island-owned ships.”

8. Two prominent pundits with very different political profiles came to the defense of CVS Caremark’s fast-growing MinuteClinic division and its competitors this week after they were attacked by the American Academy of Pediatrics. New York Magazine’s pugnacious liberal columnist Jonathan Chait mocked the docs: “Trust them – they’re doctors! Not small-business owners trying to exclude the competition with hand-waving claims about complexity.” Similarly, the American Enterprise Institute’s Jim Pethokoukis suggested the docs are engaging in crony capitalism: “There is a big difference between being pro-business and pro-market. One does the bidding of incumbents, with the result being a static economy. The other promotes competition.” He added: “Safety nets are for people, not businesses.”

9. There was an error in Ken Block’s big speech this week. “The evidence of our peril is clear,” the now-Republican said in his prepared remarks, ticking off a number of problems and concluding with “jobs evaporating like Toray Plastics, who is adding new jobs – up to 500, but not here, in another state.” That’s incorrect, though his confusion is understandable. Toray Industries Inc. is a major Japanese conglomerate. The division based in Rhode Island is Toray Plastics (America) Inc.; that’s not the division adding jobs in South Carolina. And there’s a good reason why Toray is building the new plant down there: it’s where Boeing is building its 787 Dreamliners, which is what the new Toray plant will support. You could argue, perhaps, that Rhode Island is failing because it isn’t home to the Boeing plant and the new Toray support plant. But this isn’t a case of jobs moving out of the state to a different location the way, say, last year’s MetLife cuts were. In fact just a day after Block spoke, Toray pledged $2 million toward a new URI engineering school.

10. “The majority of office workers don’t actually get their work done in the office.” Here’s why.

11. Pando Daily’s David Sirota is taking aim at John Arnold once again, this time noting he and his wife funded the new Brookings Institution study that examined Gina Raimondo’s pension changes, and likening all their advocacy to “native advertising.” (Full disclosure: study author Patrick McGuinn of Drew University interviewed me, among many others, when he was researching his paper for Brookings.) Sirota’s critique got picked up by the Los Angeles’ Times Michael Hiltzik, suggesting this is a story with legs.

12. New feature – a roundup of the latest Campaign 2014 endorsements we’ve received: the Johnston Democratic Town Committee endorsed Clay Pell (following Mayor Polisena’s lead) … URI’s chapter of the American Association of University Professors PAC (700 faculty/lecturers) endorsed Angel Taveras … Rep. Doreen Costa endorsed Ken Block … North Providence Mayor Charlie Lombardi endorsed Dan McKee (whose opponent is Lombardi predecessor Ralph Mollis) for LG … and 17 Cranston electeds including Hanna GalloMike Marcello and Peter Palumbo endorsed Guillaume De Ramel for secretary of state.

13. If you missed them the first time around, now’s your chance to check out some of the other items we published this week: Angel Taveras and Gina Raimondo exchanged heavy fire over pensions … Ken Block called for big tax cuts … Plainville got the Massachusetts slot parlor license, jeopardizing $422 million in Rhode Island revenue … the pension settlement won support from Moody’s analysts and from the Democrats running for treasurer … but the pension trial is still set to start Sept. 15 … Rhode Island home prices have stopped dropping … Providence students say limited transportation is increasing absenteeism … and Providence Journal owner A.H. Belo’s shares jumped 30%.

14. Set your DVRs: This week on Newsmakers – U.S. Attorney Peter Neronha, plus state Sen. Ryan Pearson, D-Cumberland, on his pension legislation. Watch Sunday at 10 a.m. on Fox Providence. This week on Executive Suite – Swipely CEO Angus Davis. Watch Saturday at 10:30 p.m. or Sunday at 6 p.m. on myRITV (or Sunday at 6 a.m. on Fox). See you back here next Saturday morning.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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10 Responses to “The Saturday Morning Post: Quick hits on politics & more in RI”

  1. FactCheckRI says:

    Ted Nesi,, It is ridiculous to state that the city of Providence does not require competitive bidding for service contracts. This issue came up during Buddy Ciancis issues with tow operators. I found the law for you on the citys website.

    Home Rule Charter 1006(c) – All contracts for purchase of materials, supplies, services, equipment and property on behalf of the city, the price or consideration of which shall exceed five hundred dollars ($500.00) but amount to less than five thousand dollars ($5,000.00) shall be made by the director of public property on the basis of three (3) or more informal competitive bids, which may be solicited without advertising, but which must be submitted in writing.

    1. Ted Nesi says:

      Thanks. A city spokesman told Dan McGowan this isn’t the case; we’ll follow up.

  2. Snow says:

    #1 do these drop out numbers include all those who have retired, or were forced to retire due to layoffs? Nationally this is happening to many in their fifties who have not been able to find work and decided to retire instead. Many others deferred retirement due to the crash. It seems the employment exit of baby boomers could cause much of the drop out.

    1. Ted Nesi says:

      It would include those people, yes, though if you dig into the numbers we see a significant drop in labor force participation among people who are 35-44, far from the normal retirement age, so I don’t think that’s the whole story.

  3. Fruma says:

    What could Ted Nesi possibly contribute to any study by the Brookings Institution which was apparently already bought and paid for? Raimondo super star is his constant refrain. Pick up some rocks and really analyze things, there are a lot of snakes under there.

    1. Ted Nesi says:

      I strongly disagree, obviously, but you can read the study to see where I’m quoted. The first quotation suggests that the 2011 pension law probably never would have passed without the April vote to change actuarial assumptions, which increased the unfunded liability (on paper) by billions of dollars, creating an immediate short-term budget problem for the state and cities and towns. The second quotation suggests that the creation of Engage RI was key to how Raimondo got the law passed in 2011 because it gave her a political apparatus to run a campaign on its behalf.

      1. j m paras says:

        #7. Another RI historical fact: Roger Williams was probably the first abolitionist in what is now the US. He spoke out against slave trade when slave ships landed in Newport.

      2. Fruma says:

        She also changed the model for calculating the soundness of the system. The new model employed has significantly lower values whenever it is used. Further the model is not logically consistent as Raimondo used it. Why has no one followed the money — what has happened to the Engage RI organizers? The co-chair, and by your own statements, primary organizer gained tens of millions of dollars in new state contracts and a $100,000 personal annual increase in her salary. What about the rest of the members? I know you published a story about the altruism and philanthropy of John Arnold and his wife — that is like Alfred Nobel coming up with the Nobel prize after extending a war that killed thousands of people by selling ammunition to both sides.

  4. Rlewis says:

    So does Neronha think that the government “encourages” alcohol use because it no longer considers it illegal?

  5. anthony sionni says:

    Who cares if Damico took a massive pay cut, he also got paid an exorbitant amount of money as chief of staff, making more money than the president of the united states chief of staff! Then we had to pay his healthcare costs and free parking at the Biltmore! Meanwhile we had a category five financial crisis!

    Now Taveras has pledged to hire hire him back as a consultant, why cant the guy that replaced him do his job??? More corruption!