public policy

Report: Minimum wage bump will cost 200 jobs

BY RAISING the state minimum wage from $7.40 to $7.75, the General Assembly will make it even more difficult for teenagers to find jobs, according to a new report from the Rhode Island Center for Freedom and Prosperity.
Posted 6/18/12

PROVIDENCE – By raising the state minimum wage from $7.40 to $7.75, the General Assembly will make it even more difficult for teenagers to find jobs, according to a new report from the Rhode Island Center for Freedom and Prosperity.

Rhode Island teens are expected to see 200 fewer jobs this year – a loss of 1 percent from 2011 numbers – as a result of the minimum wage hike.

“This loss … will hit especially hard on those who do not have high school degrees. This group is expected to suffer 75 percent of the anticipated loss,” said the advocacy group’s report.

In 2008, Rhode Island’s teen jobless rate was 28.3 percent, 3.4 percentage points higher than the national 24.9 percent average.

“The minimum wage increase will make this discrepancy even worse,” according to the report.

The data, which will be part of a more comprehensive report slated for a July release is “yet another example of the death-by-a-thousand-cuts syndrome that is depressing our state’s growth,” Mike Stenhouse, CEO of the Rhode Island Center for Freedom of Prosperity, said in a release announcing the data.

The think tank also had a negative view on the state’s recently approved 2013 fiscal year budget, saying that it failed to address the state’s most pressing issue: jobs.

“Since February, almost 2,000 more Rhode Islanders are out of work, and even more than that gave up and left the labor force,” the center said in a separate release.

“Perhaps the worst news, though, is that the legislature and its enacted budget did nothing to improve the economic climate of the state and arguably made things worse,” said the center’s report, adding that the last time Rhode Island’s unemployment rate was below 11 percent was in June 2009.

In February, the center released the “Report Card on Competitiveness,” which ranked Rhode Island nationally and regionally in 10 categories: tax burden, business climate, spending and debt, employment and income, energy, K-12 education, infrastructure, public sector, health care, and living and retirement.

For half of these, Rhode Island received a failing grade, and in no category did it earn higher than a D+.

According to the center, Rhode Island could make improvements in one category at the expense of another, but “with its scores so consistently low … Rhode Island has no areas of strength to compromise for the sake of improving weaknesses.”

The think tank pointed to the authorization of tolls on the Sakonnet River and Jamestown Verrazano bridges, calling it “the most notable example of infrastructure improvement at the expense of other areas of competitive weakness” and adding that the tolls will place an “exorbitant burden” on a region in Rhode Island that is already facing economic hardships.

“The imposition of regional tolls is not the only area in which the General Assembly constricted Rhode Island’s private sector,” said the report. “Under the guise of cleaning up licensing laws, the budget added an estimated $1.8 million to the direct cost of doing business in the state.”

While the General Assembly’s fiscal 2013 budget represents a small decrease from its revised 2012 budget - $8.10 billion versus 2012’s $8.12 billion – “new revenue and debt is translating directly into government expenditures with a two-year jump of approximately $400 million” from 2011’s $7.72 billion budget, according to the Center.

House Minority Leader Rep. Brian C. Newberry, R-North Smithfield, referred to the budget as “status quo,” according to the center, “But the status quo for the state of Rhode Island is characterized by economic decline, and continuing on that path is a choice.”

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