Some things never change – Rhode Island economy edition

May 28th, 2014 at 10:08 am by under Nesi's Notes, On the Main Site

Rhode Island A History McLoughlin via BNIn 1978, the late Brown University historian William G. McLoughlin published “Rhode Island: A History,” a short book timed to the nation’s bicentennial that tracked the development of the Ocean State from its founding as a colonial refuge to what was then the present day.

The 1970s were a difficult economic time for Rhode Island. In addition to the national problem of stagflation, the state was reeling from President Nixon’s decision to pull the U.S. Navy out of Quonset, eliminating thousands of jobs. Some argue the state has never really recovered from the blow.

Writing in the wake of the Navy pullout, McLoughlin finished the book with an appropriately dreary take on the state’s economic condition and its prospects – one that still sounds surprisingly familiar in 2014:

In 1946 the state budget was only $20 million a year and the sales tax only 1%; today the state budget is well over $500 million, the sales tax is 6%, and on top of it, there is now a state income tax. Taxation of business and property taxes in the cities have virtually reached their feasible limits without business expansion. The state’s corporate income tax is 2% to 3% above the national average. The constant effort to find new sources of revenue recently has led to a state lottery, dog racing, jai alai, and other forms of gambling. …

Since 1929 Rhode Island has consistently had one of the highest unemployment rates in the country. In 1975 unemployment figures rose above 15%. Although the state’s population increased by 17% from 1950 to 1975, manufacturing jobs in that period declined from 125,000 to 109,000 and all jobs from 240,700 to 233,900. No new industry has arisen to take up the slack in textiles, though jewelry manufacturing is increasing slightly, and tourism is a major source of income during the summers. Service jobs, state and federal agencies, and education have provided most new employment since 1932. But since that data, the economy has been increasingly dependent on regular grants of assistance from the federal government. With long tenure common among its congressional delegation, as happens in any one-party state, Rhode Island has managed to get a goodly share of that federal income. One of the most important sources of federal aid has always been the United States Navy, whose bases in Newport, Middletown, Portsmouth, Quonset (where the Quonset hut was invented), and Davisville made the navy the state’s largest single employer from 1945 to 1973. But when President Richard M. Nixon closed the bases in 1973, except for training purposes, the state suffered its most severe economic blow since 1929. Every political leader since 1930 has campaigned on the promise of bringing new industries to the state and more jobs for the people; but despite earnest effort, none of them has succeeded.

A decade later, McLoughlin’s take would look too gloomy: Rhode Island’s unemployment rate fell to a record low of 3.8% during the late 1980s. But he only had to wait a few years to see the state struggling once again, thanks to the banking crisis of 1991. The first half of the 2000s also saw unemployment drop to a low level, only to soar and stay elevated during and after the Great Recession.

(book cover: Barnes & Noble)

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5 Responses to “Some things never change – Rhode Island economy edition”

  1. George says:

    What’s that about continuing to do the same thing but expecting different results?

  2. Tec Taxpayer says:

    George, those “doing the same thing” over and over, are getting EXACTLY the results they want, a perpetuation of a broken system where they can enrich their cronies and feather their own nest. As to the RI “voter”, they need to run good OUTSIDE people in primaries otherwise the choice is between two similarly flawed choices.

  3. Robin says:

    I was born in this state in 1959 and in almost 55 years we have decided to move away from RI. We are going to an area with a better cost of living. People just cannot afford to live in this state any longer. We rank 49th for cost of living and in the top 5 for one of the worst run states. My husband an I want to retire comfortably when the time comes and it just won’t happen here. Keep in mind my husband makes almost $100,000! If we can’t make it here I fear for those who make less will face a constant struggle until they too decide to make the move for a better way of life. Keep it up RI and the only people who will be living here will be the politicians!

  4. oreo says:

    one word. DEMOCRATES! enough said!

  5. [...] jobs?” Strain’s piece is a relevant read for Rhode Island. Since William McLoughlin chronicled the state’s economic woes back in 1978, Rhode Island has had low unemployment three times: in the second half of the 1980s, the late [...]