Rhode Island: Big Economic Troubles Plague Nation’s Smallest State

Studies
Rhode Island's economy

With the election for governor less than two weeks away, Rhode Island voters seem to have one thing on their mind: Their economy.

In a recent Providence Journal poll, 50.8% of likely voters in the primary said the economy was the single most important issue — and with good reason. While other New England states, such as Vermont and New Hampshire, are leading the nation as beacons of post-recession recovery, Rhode Island still lags severely. With unemployment at 7.7%, the state’s rate is the 49th worst in the nation (including Washington, D.C.) and trailed only by Georgia and Mississippi.

Rhode Island, which was once heralded as a strong manufacturing state, saw its exports — primarily jewelry and textiles —hit hard by overseas competition. The state’s manufacturing employment plummeted 24% from 2007 to 2012. In this environment, it is no surprise that 55% of likely voters believe Rhode Island is headed in the wrong direction.

To help voters bring the state’s economic picture into focus, NerdWallet analyzed U.S. Census Bureau data to find the places in the state that seem to be faring the best — and those that are at the other end.

Our look at recent growth rates among 34 cities and census-designated places shows a mixed picture as Rhode Island’s economy struggles to find the consistent gains in growth metrics measured elsewhere in the country.

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Most growth

Greene

Foster Center

Carolina

Weekapaug

Narragansett Pier

Least growth

Watch Hill

Melville

Clayville

Wyoming

Wakefield-Peacedale
Click here for the full data set.

Possible solutions

In the search for ways to boost the state’s growth, think tanks have explored the idea of increasing business competitiveness by lowering taxes. According to the nonpartisan Tax Foundation, Rhode Island is the 46th worst state in the U.S. for its business tax climate, with a corporate tax rate of 9% and a property tax of 3.4% — double the rate in neighboring Connecticut. The only tax rate where Rhode Island ranks well is its personal income tax of 4.75%.

Another possible solution: Investment in modern economic sectors. Proponents of Rhode Island’s high taxes argue that its highly skilled workforce and location between Boston and New York City justify the cost companies pay to do business there.

It’s not a ridiculous claim. Rhode Island has seen a gradual shift toward technology and finance jobs — among the top drivers of positive GDP growth in the past few years. The state’s location means that companies in and near Boston find it an attractive option. In particular, Aspen Aerogels, an insulation manufacturer in Northborough, Massachusetts, saw the benefit of expanding its facility in East Providence in favor of cheaper rents for employees.

Positive signs

In more positive news, the worst of the recession in Rhode Island seems to have passed. GDP, which decreased in 2008 and 2009, has been rebounding since 2010. Exports also increased 2% in 2013, to $2.2 billion.

Residents have seen their income grow. In larger places, such as Narragansett, Kingston and Tiverton, median incomes have increased over 10%, and smaller communities, such as Foster Center, are also seeing high gains in income. Our top spot for income growth, Weekapaug, saw residents’ income nearly double in two years to $40,300 in 2012.

If the economy is the biggest concern for those planning to vote in the upcoming election, perhaps the larger question is whether state leaders can keep the momentum going.

Are you voting in the upcoming election? Have family ties to Rhode Island? Let us know what you think about the state’s economy in the comments.

nerdwallet

 

City Working-age population in 2012 Working-age population growth 2010-2012 Employment in 2012 Employment growth 2010-2012  Median income in 2012 Median income growth 2010-2012 Overall growth score
1 Greene 847 10.00% 69.50 15.26% 53,955 16.18% 73.70
2 Foster Center 266 20.91% 43.20 -7.69% 30,000 35.75% 72.88
3 Carolina 1,178 12.08% 73.60 12.02% 33,994 6.55% 71.01
4 Weekapaug 320 -29.05% 58.10 20.79% 40,313 83.29% 66.67
5 Narragansett Pier 3,538 13.80% 54.70 -4.54% 62,692 14.40% 64.82
6 Cumberland Hill 6,520 4.59% 66.20 5.41% 53,175 -1.65% 60.38
7 Kingston 6,279 8.17% 46.90 -11.17% 47,625 23.84% 59.61
8 Tiverton 6,204 2.16% 56.60 -2.08% 54,181 17.12% 59.06
9 Harrisville 1,958 7.46% 76.10 -2.69% 37,043 -2.84% 57.52
10 Hope Valley 1,333 8.11% 69.30 -11.15% 48,403 13.89% 57.22
11 Valley Falls 9,347 -0.26% 64.50 2.87% 43,502 2.31% 56.68
12 Cranston 66,617 1.43% 57.20 0.53% 47,848 2.32% 56.50
13 Greenville 7,406 0.65% 59.20 0.51% 53,627 2.30% 55.97
14 Warwick 69,184 -0.23% 62.50 0.00% 48,586 3.58% 55.40
15 Providence 142,167 0.83% 54.70 -1.26% 36,751 3.29% 55.34
16 Westerly 14,226 0.86% 60.80 -0.65% 49,640 0.75% 55.10
17 Newport 21,107 -2.59% 60.70 -0.16% 47,028 8.17% 54.83
18 Woonsocket 31,938 -1.82% 55.00 -1.43% 39,323 6.96% 54.35
19 Pawtucket 56,904 0.18% 59.20 -3.90% 36,416 5.06% 53.86
20 Central Falls 14,491 0.95% 54.50 -2.68% 27,924 -0.07% 53.84
21 Bradford 1,245 -4.60% 71.20 0.99% 43,050 5.46% 53.49
22 Newport East 9,271 -2.93% 60.20 4.15% 46,945 -8.17% 53.12
23 East Providence 38,566 -2.27% 59.70 -3.40% 43,607 4.62% 52.40
24 Misquamicut 370 4.23% 41.40 14.68% 54,167 -56.99% 52.14
25 Harmony 950 -6.03% 64.60 -1.67% 54,318 7.40% 51.51
26 Chepachet 1,244 -5.61% 70.30 -9.99% 60,947 24.04% 51.13
27 Quonochontaug 392 -7.98% 34.40 -0.86% 75,670 5.31% 50.16
28 Ashaway 1,266 -10.21% 70.80 -7.69% 53,241 26.04% 49.81
29 Pascoag 3,092 -8.90% 52.50 -6.42% 44,107 10.48% 47.70
30 Wakefield-Peacedale 6,791 -3.55% 61.50 -9.16% 54,975 -4.06% 46.29
31 Wyoming 154 -8.88% 68.80 0.29% 29,300 -16.46% 45.04
32 Clayville 177 -6.35% 74.00 -4.88% 48,897 -16.08% 43.94
33 Melville 1,029 -12.50% 28.00 -24.12% 42,192 5.68% 34.32
34 Watch Hill 197 -20.88% 31.00 -39.22% 69,375 64.20% 34.24

 

Methodology

The overall score for each city was derived from these measures:
1. Population growth from 2010 to 2012 made up 33.3% of the total score. Data for the working-age population (16+) comes from the 2012 U.S. Census American Community Survey 5-year estimate for all places in the state, Table DP03.
2. Employment growth from 2010 to 2012 made up 33.3% of the total score. Data for the percent of employed residents comes from the 2012 U.S. Census American Community Survey 5-year estimate for all places in the state, Table DP03.
3. Income growth from 2010 to 2012 made up 33.3% of the total score. Data for the median earnings for workers comes from the 2012 U.S. Census American Community Survey 5-year estimate for all places in the state, Table DP03.

Our study examined all 34 Rhode Island communities listed in the 2012 American Community Survey.


Rhode Island welcome sign image via Shutterstock.