PROVIDENCE – The Rhode Island economy has lost ground over the past decade due to an over-reliance on low-productivity industry sectors and government spending, the Rhode Island Public Expenditure Council concluded in its economic prosperity scorecard released Wednesday.
In its analysis, RIPEC utilized six measures based on federal economic data and reveals that Rhode Island's economic growth significantly lagged behind the nation from 2014 to 2024. During that 10-year span, Rhode Island's rank decreased in every metric except median household income, with the most significant declines in labor force productivity, which dropped 14 spots, RIPEC said.
The only component of Rhode Island's GDP per capita exceeding the U.S. average in 2023 was government expenditures.
Indeed, in 2024, 20% of residents’ personal income came from government transfers such as Social Security, unemployment compensation, and Medicare and Medicaid benefits – exceeding the rates in Connecticut, Massachusetts and New Hampshire.
Labor productivity increased at less than half the national rate.
And while Rhode Island ranks 17th among states in median household income, it falls to 23rd in personal income per capita – a broader indicator of the economic resources available to residents, according to RIPEC.
This ranking declines even further when considering the state's relatively high cost of living and taxes. Measuring “real disposable personal income per capita,” Rhode Island's rank drops to 36th among states.
Rhode Island’s cost of living was 3% higher than the national average, ranking 14th among states, with residents facing significantly higher expenses for utilities, housing and healthcare.
Rather than relying on less-prosperous sectors like healthcare and services, the state must boost growth sectors such as the blue economy and manufacturing, RIPEC said.
“While there are some positive indicators compared to other states, Rhode Island is challenged by modest incomes relative to our neighbors and a relatively high cost of living,” said RIPEC CEO and President Michael DiBiase. “Our economic output is weak, with an over-reliance on lower-productivity industry sectors and on government spending.”
Gov. Daniel J. McKee's office took issue with the suggestion the state's economy has not been growing, at least since he took office in 2021.
"By prioritizing job creation, Gov. McKee has overseen an increase of more than 37,000 private-sector jobs since he took office," said McKee spokesperson Laura Hart. "Put another way, from Feb. 2021 to Feb. 2026, Rhode Island has seen a 10% increase in private sector jobs, nearly double the 5.5% growth Rhode Island experienced during the pre-pandemic period of Feb. 2014 to Feb. 2019 referenced in the latest RIPEC report."
Asked about the current debate over so-called ‘millionaires tax’ proposals during a briefing Wednesday, DiBiase acknowledged any state’s “tax climate is just one factor,” but said any tax policy that targets higher income earners “is not directed toward growth.”
Rhode Island takes the top spot nationally in terms of GDP reliance on education services, healthcare, and social services, according to the report. Policymakers should pursue strategies that stimulate economic growth, raise incomes and lower costs, DiBiase added.
“There needs to be more priority and urgency growing the economy,” he said. “At the state and municipal level, it’s not always necessarily about growth. That needs to be higher priority.”
Rhode Island’s real GDP per capita grew by 6% from 2014 to 2024, compared to 20% for the U.S.
DiBiase said RIPEC is exploring the possibility of updating this scorecard annually to get a better sense of the state’s current “trajectory,” which he finds most concerning.
“We are losing ground in nearly every measure,” he said.
(INSERTS paragraphs 11-12 with comment from McKee spokesperson.)
Christopher Allen is a PBN staff writer. You can contact him at Allen@PBN.com.
The article states: “Rhode Island takes the top spot nationally in terms of GDP reliance on education services, healthcare, and social services, according to the report.”
I’m very surprised to not see Tourism (& Hospitality) in this statement. According to an internet search on state Tourism comparisons: “Rhode Island’s overall state ranking has seen a steady rise, with the state’s economy ranking climbing 12 places to #16 between 2021 and 2025.
According to a recent RI State press release, the Tourism industry generated:
29.4 million visitors (+3.5%)
$6 billion in visitor spending (+7%)
$8.8 billion in total economic impact
88,509 jobs supported (+2.1%) representing 13% of all jobs in Rhode Island
$992 million in state and local tax revenue (+5.8%)
And yes, many of these jobs are entry level positions (and wages) though the upper level management and associated supply chain level jobs and salaries are substantial. (And thankfully, the entry level positions are easily attainable by those who may need them the most.)
It is my contention that the maker industry, which often leads directly to the general manufacturing industry, can greatly benefit from cross promotion with the Tourism and Hospitality industries, which further solidifies its importance. Specifically by creating a greater quality of life in our state which attracts wealthy residents and the companies they run.
Do not underestimate the importance of the impact of Tourism and Hospitality in our economy. Yes, of course, we want to increase the trajectory of the Blue industry and major manufacturing in our state, though until such time, we have the means to generate revenue rapidly and consistently within our “service” sector. And this sector can help bring that trajectory about. Steve Maciel