A new study shows Rhode Island’s job growth in the last four years has been accompanied by an erosion in wages, and disparities between the lowest-paid and the highest earners have risen sharply in the last 25 years as jobs shifted from manufacturing to the service industry.
The study, “The Study of Working Rhode Island” by the Poverty Institute at the Rhode Island College School of Social Work, uses federal and state data as well as analyses from major think tanks to paint a comprehensive picture of employment in Rhode Island and compare it to the nation and region.
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What economist Ellen Frank found is that like the United States as a whole, Rhode Island has seen better-paid jobs replaced by low-wage retail, hospitality and other service jobs, often without benefits.
And even though, in the last decade, the state’s job distribution by industry has come to almost mirror Massachusetts’ – Rhode Island still has slightly more manufacturing jobs, and fewer in professional and business services – the median wage here, $14.38 per hour in 2004, is 12 percent lower than in the Bay State and 17 percent lower than in Connecticut.
To some extent, Frank said, what’s happening is unavoidable.
“Rhode Island is a tiny state in a huge global economy,” she said, “and a lot of the stresses on the Rhode Island economy are global in nature.” The state also has a long history of serving as a “satellite of Boston,” she said, taking the lower-level jobs of Boston banks, for example.
“To a certain degree that’s still true: The headquarters, the executive offices, are in Boston, and the back offices are in Rhode Island, where the housing is cheaper and the costs are cheaper, and there’s a pool of labor to do that work,” she said.
“To a certain extent, that’s the thrust of the regional economy,” she added. “But that’s the thrust of the regional economy that public policy has to work against.”
That was the point that Frank and others tried to drive home at the study’s official unveiling, Sept. 8 at the State House. It’s good that Rhode Island is adding jobs, they argued, but it matters what kind of jobs. As Frank put it in an interview, “I don’t think governors and legislators should brag about the number of jobs, but the quality of jobs, and how they contribute to the quality of life in the state.”
Frank also argued for a higher minimum wage, to ensure the lowest-paid workers can still survive, and for continuing to provide a strong safety net. And she called for “significant and long-term investments” in adult education, especially English as a second language and in-job training, to help workers at the bottom of the job market to qualify for better-paid positions.
Public higher education must also be a priority, Frank told PBN: Tuitions at the state’s public colleges went up 6.9 percent (at the Community College of Rhode Island) to 8 percent (at the University of Rhode Island), and Gov. Donald L. Carcieri’s budget suggested even bigger hikes, of 8.5 to 8.9 percent.
“That’s making public higher education be out of reach for a lot of low-income Rhode Islanders,” Frank said. “We should be making education more affordable, not less.”
Speaking at the Statehouse event, Carcieri – whom Poverty Institute director Kate Brewster praised for making job creation “a focus of his administration” and for promoting adult education – said Frank’s study had nailed the state’s problems on the head.
“We’ve got a real serious issue that’s highlighted in this report,” Carcieri said.
Rhode Island is benefiting from “being discovered” as a great place to live, the governor said, but that is pushing up housing prices and the general cost of living, and “you’ve got a whole part of the state that’s not participating in what’s happening to us economically.”
Carcieri has just hired a new adult education director, Johan Uvin, who also spoke at the event, and all agreed that his work will be critical to helping more Rhode Islanders rise out of poverty. But on another point, Carcieri differed from Frank’s and others’ views.
The study shows female-headed families with children have more than four times the poverty rate of all Rhode Island families – 41.2 percent compared with 9.1 percent below the federal poverty line in 2004, and 67.8 percent compared with 24.1 percent at twice the poverty line.
Calling himself the “skunk at the lawn party,” Carcieri said while he agrees with most of Frank’s recommendations, “my fear is what we’re doing is treating the symptoms, and not getting at the root cause” of poverty in Rhode Island.
The key is “family structure,” Carcieri said. “We have a situation today where we have too many single-parent households.”
