At the present time, Rhode Island is consumed by two different issues. The first of these concerns our state’s approach to economic development. Do we rejigger the R.I. Economic Development Corporation into a Department of Commerce, or proceed with a marginally changed EDC but give the governor a more substantial hand? The second concerns the extension of Education Commissioner Deborah A. Gist’s contract.
The debates on these topics have been very contentious and separate. But what should be happening instead is a recognition that both of these issues are fundamentally related.
For as long as I can remember, Rhode Island has never included the primacy of education and the skills of its labor force among its economic-development tools. Instead, we have relied on tax deals or incentives, hoping these would overcome any deficiencies with our state’s labor force.
But Rhode Island’s most glaring economic-development deficiency is not its tax rates, although they are a problem. Rather it is the lack of skills of its labor force, which negatively impacts the cost of doing business here.
Thus the economic-development debate we should be engaged in is: What is the appropriate integration into economic development of the improvement of the skills of our state’s labor force? In addition, we need to change the way things here are done, most notably the incorporation of in-house due diligence as a fundamental element of our approach.
Unfortunately, our elected officials tend to think linearly and break these interrelated issues apart. During the manufacturing era that might not have been such a large problem. But it is today.
Absent this integration, the potential restructuring of the EDC and its replacement with a Department of Commerce is little more than a reshuffling of resources that currently exist, with the following three issues not addressed by the proposed changes.
First, there are no meaningful specifics about ways to improve Rhode Island’s noncompetitive tax and cost structure, which the whole world is well aware of.
Second, it is implicitly assumed that the skills of our state’s labor force are independent of the cost of doing business. Employers know all too well that the lack of skills of a state’s workforce raise both hiring and training costs.
Due diligence of cost/benfits here is the exception rather than the rule. I have yet to hear anything regarding any potential reorganization that would make in-house due diligence a central feature of our approach to economic development.
The passionately debated issue of whether or not the contract of Deborah Gist should be renewed has been settled for now, with a two-year extension. But the discussion should continue.
She is not perfect, and she inherited a very difficult job. Like Rhode Island’s physical infrastructure, its human-capital infrastructure has far too many potholes. Gist is in the process of phasing in the requirement that high school seniors successfully demonstrate partial proficiency on the New England Common Assessment Program exam as but one of several high school graduation requirements. Is this too difficult a requirement? If we abandon that, what is the alternative? Do we go back to what we have been doing? If so, how would that remedy the deficiencies with our state’s labor force skills that raise the cost of doing business here?
Rhode Island must meaningfully adapt its approach to economic development to the requirements of the information age. Modifying an organizational chart while failing to integrate education, skills and due diligence as primary elements will effectively condemn Rhode Island to continued economic mediocrity. •
Leonard Lardaro is a professor of economics at the University of Rhode Island and the author of the Current Conditions Index.
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