Press Release: Public vs. Private Sector Compensation in RI

Press Release
Public vs Private Sector Compensation in RI

High-Pay Government Workers Supported by Low-Pay Private Workers

FOR IMMEDIATE RELEASE

November 28, 2012

Government workers in the Ocean State collect significantly higher compensation than their private sector counterparts – across the board – according to data recently compiled as part of national study for the RI Center for Freedom & Prosperity, a non-partisan local think tank.
Among the findings in the report published today by the Center, Ocean State public sector employees enjoy compensation levels that are 26.5% higher than their private sector counterparts; a rate 41% higher than the New England average and 78% higher than the national norm. These results were calculated via a statistical regression analysis after controlling for factors such as education and experience. On average RI government workers receive 58% more in ‘benefits’ than private workers in RI.

Further, within the New England region, RI public employees: are unique in collecting a higher “base” pay than private employees; work the fewest total hours; receive a higher paid time off value than in the private sector; and benefit from a 41% higher total compensation premium than the regional average.
“Rhode Islanders want a government that works for all citizens. But it may not be so much that state and municipal employees are grossly overpaid, but more that our state’s private sector has such shockingly low compensation levels,” said Mike Stenhouse, CEO for the Center. “This is yet another clear indication of how public policy in the Ocean State has favored certain groups while severely harming our economy and our business sector.”
According to the study conducted by economists William Even, of Miami University, and David Macpherson, of Trinity University, government workers in RI, on average, collect $100,217 in total compensation as compared with $83,419 for private employees. Respectively, base-pay breaks out to $61,046 vs $58,664, with benefits at $39,171 vs $24,755. A preliminary review of the effects of the state’s 2011 pension reform showed its effect to be negligible on these comparisons.
The data raises serious questions about the sustainability of a system where a low-pay private sector is supporting a high-pay public sector. “Are we heading towards a Central Falls type situation where pension benefits have to be cut dramatically, or even worse, a Scranton, PA situation where city worker pay was cut to minimum wage”, inquired Stenhouse. “It is evident that new policies that promote economic growth and increase our tax base are the best way to ensure that we can afford to maintain current public employee compensation levels”, concluded Stenhouse.
The full report, with additional data, tables, analysis, and methodology can be found at http://www.rifreedom.org/2012/11/ri-public-and-private-sector-compensation-comparison/.
The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

Media Contact:
Mike Stenhouse: 401.429.6115, info@rifreedom.org

Member of Center’s Task Force to be Panelist at Brown Univ “Pensions in Peril” Forum

Providence — A member of the RI Center for Freedom & Prosperity’s special pension task force will serve as a panelist at the “Pensions in Peril” forum today, October 25 (Thursday afternoon), sponsored by the Taubman Center for Public Policy at Brown University. The forum will feature national and local experts about how municipalities are dealing with the fiscal time bomb of unfunded pension liabilities.

Eileen Norcross, a senior research fellow with the Mercatus Center at George Mason University and lead researcher on the State and Local Policy Project, was the first national expert to raise alarms about public pension accounting in RI localities in 2011, arguing that municipalities are vastly under-estimating the true scope of their unfunded pension liabilities. Norcross co-authored a report that calculated municipal pension liabilities under various discount rate assumptions.

The Mercatus Center report, which received significant local and national attention, indirectly challenges the more rosy pension assumptions put forth by some local officials in RI, including co-panelist, Mayor Scott Avedisian of Warwick.

The forum, which will take place from 4:00 pm to 6:00 pm at the Salomon Center for Teaching 001 off the main green at Brown University, is free and open to the public and media.

For more information about the Center’s pension task force and Eileen Norcross, click here.

The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

Media Contact:

Taubman Center: 401.863.2201

Stenhouse Remarks – Press Conference 10/11/12

October 11, 2012 Press Conference: Mike Stenhouse, Revised & Extended Remarks

“Get Government Out of the Way” Solution

Good morning. Today, the RI Center for Freedom & Prosperity recommends a free-market, get-government-out-of-the-way approach to restore Rhode Island’s struggling economy.

Rhode Islanders want to be in control of their own lives. They want to know that if they educate themselves and work hard that they can be in charge of their own futures. They don’t want someone else telling what they need to do.

The Secretary of States publishes the RI Government Owner’s Manual, under the premise that we the people “own” our government. But who’s really in charge? Many Ocean Staters feel like the government is running THEIR lives, both personally and professionally.

Rhode Island has the worst business climate in the nation because we have one of the most burdensome tax and regulatory environments, leaving families with fewer opportunities and options to pursue a productive life of their own choosing.

More and more it seems that restrictive laws and government programs are running our lives and creating obstacles to prosperity.

Bad laws created this bad environment. So … it should not be all difficult to determine what approach we should take: If we want a good economy, bad laws must be repealed.

Our Center’s Report Card on RI Competitiveness documents dozens of areas where our state receives failing or poor grades because of laws that restrict opportunity or economic activity. Each of these poor grades represents a barrier to success. If we want a more competitive economy, we must tear down those intrusive barriers.

Our Center’s General Assembly Freedom Index for 2012 demonstrates how this past legislative session – only made matters worse. If we want an improving economy, we must roll back destructive legislation.

Our recent study on out-migration to bordering counties in MA and CT, are evidence that the onerous state and local tax burden in RI is driving taxpayers out of state.

Out Migration from RI

High Taxes in RI are forcing taxpayers to flee to MA and CT

The Chart above shows that Rhode Islanders who want to work and stay close to their families in Rhode Island, but who can’t afford to pay the taxes we impose on them, simply have to move a few miles over the border. And they are moving … in droves … taking their wealth and their kids with them. Taking our state’s future with them.

If we want an economy that attracts people to our state, we must stop over-taxing them.

Most Rhode Islanders want job security, more disposable income, and more quality time with their families.

I think of Marshall D’Ambrosio, owner of Legion Bowl and Billiards, our gracious host here today. Because of Rhode Island’s poor economy, and in order to survive, he has had to continually invest and risk his time and money in order re-invent his longtime family business here in Cranston.

How many ballgames and other family activities has he had to miss over the years, working into the wee hours because of the bad business climate in this state?

That bad business climate means other families and businesses have less disposable income … less income to go on a family vacation, to organize a business event, or even for a family outing at the local bowling alley.

It’s time to get real. It’s time to understand that the recent high-profile forums and reports, seeking solutions for our economy, are just window dressings that forestall action on the critical problems we must face head on as a state … that they seriously miss the mark.

The bad news is that no-one in the political class seems to want to address this problem. Think about what has transpired this year: the two most powerful officials in our state, the Governor and the Speaker of the House, have both indicated that there’s not much to do but to wait until the national economy picks up … this is not an economic strategy. And, unfortunately, they followed their own advice … they did nothing.

The General Assembly seems concerned only with balancing a budget … a budget is not economic policy.

More recently, highly publicized forums and special reports have generated much debate about how to boost the state’s failing economy: from commerce czars, to public-private partnerships, to what the private sector can do, to more creative marketing of the state, to reorganizing government departments, to grappling with questions like “who’s in charge”. Yet all of these approaches miss the critical mark. The political class does not get it.

But the good news is that citizens seem to get it … In fact, at one of those recent forums, 83% of the participants surveyed believe government to be the obstacle to economic development. Let me repeat … 83% believe government is the obstacle!

The solution must be to get government out of the way … to tear down the barriers to success … this solution is called the free-enterprise system. In the national debate last week, even President Obama call free-enterprise the ‘genius of America’; yet Rhode Island has severely departed from its principles.

Free-enterprise works, and has always worked; but Rhode Island’s economy is anything but free.

Free-markets are about individuals trying to better their own lives by working, innovating, and investing in business enterprises. Unlike the approaches currently under debate in our state, there should be no central authority dictating how or what workers and entrepreneurs need to do. There need be no over-arching strategy that restricts people’s choices. Laborers, investors, and business leaders should be largely free to work and prosper as they deem best.

This is what stimulates growth. This is what increases jobs. This is what creates wealth and grows the economic pie.

If we want a prosperous economy we must re-embrace the free-enterprise system.

Prosperity means that barriers to success must systematically be torn down.

Prosperity means that tax rates must be lowered.

Prosperity means that regulations on workers and businesses must be rolled back.

Prosperity means that we must trust more in each individual’s capacity to thrive and become self-sufficient.

Prosperity means that our state government must do less, and it must spend less.

Prosperity means that government must get out of the way. Adherence to a philosophy that seeks to subsidize politically sensitive constituencies – perceived to be in need – must be reversed.

If we want a productive economy we must build an opportunity environment that encourages people to be self-sufficient.

Similarly, revenue neutral approaches will not be enough to stimulate the rapid growth we need. Taxes and spending must be cut.

In fact, as we can see in the chart below, Rhode Island’s spending over the past 10 years has far outpaced inflation and its population growth … real spending cuts must be made, and can be made. Over this period, our state, in trying to be compassionate, has simply tried to help too many people … and it is slowly killing our economy.

RI spending has outpaced inflation and population rates

RI spending has outpaced inflation and population rates

If we want to create new wealth, we must abandon the redistribution of wealth approach.

If we survived at the spending levels of ten years ago, we can survive on them today.

Rhode Island can learn from the experiences of other states; some states richer, some states poorer; some polices working, some policies failing. It was also part of the genius of America that states would serve as laboratories of freedom, so that policy concepts of all kinds could be tried and tested.

Regarding economic policy, many state tests have been studied. We have ample data and evidence; and it is now well-known what approaches have been successful in other states.

If we want a bigger economic pie in RI … we need a new recipe.

We don’t need hundreds of pages of reports, or days upon days of public meetings to figure out what we need to do. In fact, our Get Gov’t Out of the Way public policy approach comprises 3 basic steps, that fits on a single page (in your packets).

In this regard, last month, our Center released a Prosperity Agenda for Rhode Island, a set of initial policy recommendations that will indeed roll back bad laws; an agenda that will tear down some of the significant barriers to success in our state; a pro-worker, pro-business agenda that can begin to restore freedom and prosperity for our citizens.

An example of one of the more compelling reforms is our Zero.Zero Sales Tax recommendation. Which of these two sets of numbers is better: [75-38-400] or [68-0-5000]?

Spending on a sales tax cut is better than 39-Studios spending

Well, let’s take a closer look … for less than the 75 million dollars the state thought was a good investment in 38 Studios chasing after just 400 jobs, Rhode Island could spend 68 million dollars in the first year of a phase out the sales tax towards 0.0%, which would create 5000 jobs each year for four years!

Yet, no one in the political class wants to debate this concept. Are we not in need of a game-changing solution?

We have evidence of a prosperous 0%-sales-tax state right up the road from us in New Hampshire; further, sales taxes reform is one of the handful of proven policies that states should consider, according to our guest speaker.

In fact, a national expert on state fiscal policy is here with us today, Jonathan Williams. In his book, Rich States, Poor States, he documents which states are doing well and which are not; which approaches to prosperity are succeeding and which approaches have failed.

To add his perspective is a man who has spoken to audiences across the country and has been quoted, seen or heard on numerous national media outlets. May I introduce to you the Director of the Center for State Fiscal Reform and the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council, Mr. Jonathan Williams …

October 11 Press Conference

Press Conference: October 11, 2012; 11:45 AM; Legion Bowl and Billiards; 661 Park Ave, Cranston, RI

“Get Government Out of the Way”

A Free-Market Approach to Improve RI’s Economy

Mike Stenhouse & Jonathan Williams at the Center's press conference

Media Information

The RI Center for Freedom & Prosperity will present a free-market public policy approach as the most effective approach to improve the Ocean State’s economy. A national expert from Washington, D.C. on state fiscal policy will also provide his perspective. Rhode Island has sharply deviated from free-enterprise principles … and is suffering the consequences. A rigorous public debate must ensue before the state embarks on any new path. In recent weeks, public forums and special reports have already generated much debate about commerce czars, public-private partnerships at institutions of higher education, what the private sector can do, and grappling with questions like “who’s in charge” of changing our Ocean State’s economy. However, none of these approaches directly address the most fundamental and obvious problem: what to do about the government created public policy barriers to success that have restricted economic and individual opportunity, resulting in the worst business climate in the country and the most dismal jobs outlook of any state in our Union. Rhode Island is losing the competition among states, both regionally and nationally, for the precious human and capital resources that are vital building blocks for a vibrant and growing economy that can produce good jobs for its citizens. In this regard, Rhode Island is failing, as evidenced by the Center’s Report Card on RI Competitiveness. Each sub-par grade on the report card represents one more government created barrier that businesses and individuals must overcome in order to succeed. Tearing down these barriers, one by one, with public policy reforms that free-up businesses and workers is the best path our state can take. Further studies and resources are not necessary in this regard: either we double-down on RI’s current high tax-and-spend and regulation approach, or, we reverse course and adhere to a free-market approach. Other states are already racing to establish their own competitive advantages; the Ocean State must keep pace and we do not have the luxury of time to delay action. To unleash our state’s great potential, we must develop a broadly attractive business climate, with a lower tax and regulatory burden for all businesses and individuals that will naturally foster renewed economic activity. It will be less productive to spend time and resources towards an approach that leads to a croynized or politicized strategy that favors certain business sectors, geographical regions, or specific business ventures. The lessons learned from other state laboratories, regarding which policy reforms will enhance economic growth and which will impede growth, have been extensively studied and are now plainly evident. The Center has itself already researched many of these issues within the Ocean State and has released specific policy recommendations via its Prosperity Agenda for Rhode Island, as part of its free-market approach: encapsulated in a 1-page, 3-step summary that will be presented at the press conference on October 11. To reinforce this concept, Jonathan Williams, author of Rich States, Poor States, has also conducted extensive research in this area and is a national expert on state fiscal policy. He will offer his analysis on Rhode Island and will discuss winning and losing public policy trends in other states. IF YOU PLAN ON ATTENDING The event is open to all members of the media and to friends of the Center. As the venue is a private business place, the event is not open to the general public. If you plan to attend, please email info@rifreedom.orgso that we can add your name to the participant list.

Speakers:

Jonathan Williams is a national expert on state budgets and economic policy and author of the book, Rich States, Poor States. Williams will provide detailed insight into how Rhode Island generally compares with other states in its approach to fiscal public policy. Jonathan Williams is the director of the Center for State Fiscal Reform and the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council (ALEC), where he works with state policymakers, congressional leaders, and members of the private sector to develop fiscal policy solutions for the states. Prior to joining ALEC, Williams served as staff economist at the nonpartisan Tax Foundation, authoring numerous tax policy studies. Williams’s work has appeared in many publications including The Wall Street Journal, Forbes, and Investor’s Business Daily. He has been a contributing author to the Reason Foundation’s Annual Privatization Report and has written for the Ash Center for Democratic Governance and Innovation at Harvard’s Kennedy School of Government. In addition, Williams was a contributing author of “In Defense of Capitalism” (Northwood University Press, 2010). Williams has testified before numerous legislative bodies and spoken to audiences across America. He is a frequent guest on talk radio shows and has appeared on numerous television outlets, including the PBS NewsHour with Jim Lehrer and Fox Business News. Williams was also the recipient of the prestigious Ludwig von Mises Award in Economics.

Mike Stenhouse is CEO for the RI Center for Freedom & Prosperity. A Harvard University graduate with a bachelor’s degree in Economics, he was previously the Executive Director of the Ocean State Policy Research Institute. Stenhouse is a frequent guest on many local talk-radio shows, has appeared on many cable mainstream news shows, and contributes frequently to the Providence Journal commentary pages. Prior to beginning his career in the public policy arena, Stenhouse, a former Vice President on the board of directors for RI Special Olympics, was a small business owner and also worked for a Fortune 500 company (Staples) and served as an executive for a $50+ million dot-com company (MyTeam.com). Upon his graduation from Harvard, Stenhouse had an eight-year professional baseball career, including time with the American League Champion Boston Red Sox in 1986, the Minnesota Twins, and the Montreal Expos.

RIVotes.org

RIVotes.com now live! Transparency to hold your Legislator Accountable

Go to RIVotes.com

October 2, 2012: The non-partisan Rhode Island Center for Freedom and Prosperity announced today the launch of RIVotes.com, an online transparency tool that allows the public easy access to the voting records of state legislators as well as the capacity to search for and track pieces of legislation in the most comprehensive manner available during the legislative session.

RIVotes.com is designed to help community leaders, businesspersons, newspersons, public officials, and members of the general public understand how their legislators voted on bills that affect their communities, businesses, schools, or families. This transparency and accountability website allows citizens take a more active part in the democratic process.

The Center recently added 2012 bills into RIVotes.com, which also includes legislation as far back as 2009. RIVotes.com features a host of user-friendly functions, including:

  • View the voting record of any legislator by all bills, by category, or by date range.
  • Easily create a “Missed Votes” or a “Voted Against Majority of own Party” report.
  • Find bills of specific interested, with searches by topic, keyword, date range, or bill number.
  • Build your own custom “scorecard”: choose the bills to include and the “correct” vote; RIVotes.com automatically creates a legislator-by-legislator scorecard.
  • Interactive discussion forums and social media integration to allow you to join with other citizens in posting comments and initiating viral distribution.
  • Sign up for automatic email notification when action is taken on bills that interest you.

“Combined with our recently released General Assembly Freedom Index, our Center is providing unprecedented transparency to citizens about the voting histories of their state Senators and Representatives,” said Mike Stenhouse, CEO for the Center. “In order to protect our free and democratic society, citizens must remain well informed about what their government is doing and must hold their legislators accountable for how they vote,” added Stenhouse.

The RI Center for Freedom & Prosperity also plans to utilize a new feature of RIVotes.com to automatically send out regular voting summaries to local media entities and to interested taxpayer groups during the 2013 legislative session.

RIVotes.com is the second transparency website launched by the Center: RIOpenGov.org was launched in 2011 to provide detailed pension payment data for state and municipal employees. RIVotes.com is a copyrighted product of the Mackinac Center for Public Policy.

The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

WATCH: Mike Stenhouse discusses “What’s a Citizen to Do?” on State of the State TV

Medial Release: First Annual General Assembly Freedom Index

A Legislative Scorecard for Rhode Islanders

View all information about the Freedom Index here …

FOR IMMEDIATE RELEASE: September 20, 2012

The non-partisan Rhode Island Center for Freedom and Prosperity published today its first annual General Assembly Freedom Index, which ranks Ocean State lawmakers on their level of support of principles of freedom during the 2012 legislative session.

“It is clear that the undesirable -25.4 Freedom Index for the entire General Assembly means that significantly more votes undermined freedom than preserved it and that, in our state, citizens have fewer liberties today than a year ago,” said Mike Stenhouse, CEO for the RI Center for Freedom & Prosperity. The House of Representatives scored -24.1, with House Democrats at -32.2 and Republicans at +28.8. The Senate scored -27.9, with Senate Democrats at -36.3, Republicans at +1.0, and the lone independent at -18.3.

“We believe freedom is necessary for prosperity. It’s all too common for legislators to trade the intent of a bill for an infringement on our liberties – and this practice must stop,” continued Stenhouse. “This index provides important transparency for citizens and raises some compelling questions: Will voters accept this continued loss of liberty and hold their elected officials accountable? How much will voting records become a campaign issue this fall?”

Per the index, the highest ranked lawmaker in the whole General Assembly in 2012 was Representative Doreen Costa, a Republican from District 31, who achieved a score of +59.2. The top-ranked Democrat was Representative Peter Palumbo, District 16, who scored at +0.5 and was the only member of his party above zero. Ninety-eight (98) of the one-hundred and thirteen (113) legislators earned a negative index score.

In total, 96 legislative bills that received a floor vote were selected for evaluation; bills that were deemed to have a positive or negative effect on individual or economic liberty. The bills were then weighted by their perceived impact from -3 to +3. Depending on how legislators actually voted on each bill, they received positive or negative scores for each vote in the amount of the weighting. Dividing his or her total the score for all of the bills evaluated by the ideal score for the relevant chamber determined each legislator’s Freedom Index score.

The bills evaluated were divided into five categories: Tax & Budget, Regulatory Environment, Constitutional Government, Public Sector Labor, and Education Reform.

Other findings include;

* Overall Democrat Index of -33.5

* Overall Republican Index of +16.5

* Overall Regulatory Environment Index of -49.0

* Overall Tax & Budget Index of -26.0

* Overall Public Sector Labor Index of +16.7

Additional information is available on the Center’s Web site, including multiple tables, charts, breakdowns by category, criteria, and a methodology description, as well as links to a PDF of the scorecard and a legislator-by-legislator breakdown of each bill evaluated in the 2012 index, including category rankings and bill descriptions.

The Freedom Index score generated for each legislator is a direct reflection of the perspective of the RI Center for Freedom & Prosperity when it comes to the weighting of each bill. The Freedom Index is not an absolute measure of a legislator’s merit and does not constitute any endorsement or criticism. The Freedom Index is a tool designed for general research and for accountability, helping voters make their own assessment of the body of work of their elected legislators.

The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

Employment Consequences of Kid-Brother Economics

Commentary: Rhode Island’s Follower Plan

Throughout the Great Recession, Rhode Island’s leadership has had the air of helpless wisdom about the predicament of their state’s economy.

“We’re traditionally first into a recession and last out,” Governor Lincoln Chafee (Ind.) told David Klepper of the Associated Press, in December 2011. A few weeks later, RI House Speaker Gordon Fox, arguably the most powerful politician in the state, told WPRI’s Newsmaker interviewers the same thing, almost verbatim.

Nobody in office would say so directly, but general acceptance of that trend has been evident in the priorities and areas of inaction in both the executive and the legislative branches. And when the economic plan is simply to wait for a national recovery to pull the state forward — call it “kid-brother economics” — all that remains is to gloss over the numbers in the meantime.

The Policy Brief

Click here for a PDF of the Policy Brief of RI’s employment trends or read below

See the Media Release at the bottom of this post

The Ocean State’s Unique Status

Rhode Island is suffering through an employment crisis and a jobs outlook more severe than any other state in the country. Residents, hoping to assume more control over their families’ future through some sense of job and wage security, unfortunately, face deteriorating prospects.

No other state in the nation ranks as poorly as Rhode Island in employment when viewed across so many angles. Among all U.S. states:

  1. RI has the second highest unemployment rate in the nation and is one of only three states with unemployment above 10% (NV, RI, and CA). Of them, only RI has a smaller total labor force as compared with prerecession levels.
  2. RI’s unemployment rate would be significantly higher if workers hadn’t given up hope. With its February 2010 labor force, RI’s rate would now be 13.4%; with its January 2007 labor force, it would be 14.2%. Applying the same calculations nationwide, the bottom three would be RI, NV, and AZ in the first case and MI, RI, and IN in the second.
  3. RI is one of only two states significantly below the national norm in measuring current employment versus prerecession peak employment (MI and RI). Of these two, only RI’s trend continues to worsen.
  4. RI is one of only three states that have continued to shed employment since the national employment loss trend ended in February 2010 (RI, AZ, and NY).

When viewed from each of these perspectives, Rhode Island ranks in the bottom two in all four categories. No other state appears more than twice.

Unemployment Is Relative

When it announced the state’s employment results for July, the RI Dept. of Labor and Training (DLT) emphasized the fact that the unemployment rate has been on a slow downward trend. The state’s…

… seasonally adjusted unemployment rate for July 2012 dropped to 10.8 percent, down one-tenth of a percentage point from the June 2012 rate and six-tenths of a percentage point from the previous July. This is the third consecutive monthly decrease in the unemployment rate, and represents the lowest unemployment rate in Rhode Island since May 2009.

While Rhode Islanders are surely in the mood for whatever good news they can get, this may not fill even that modest requirement. That 10.8% does look better than June’s 10.9% and May’s 11.0%, but it still leaves Rhode Island as the runner-up in high unemployment rates, second only to Nevada.

Worse, RI is now one of only three states with unemployment above ten percent, and the others have been exhibiting better trends overall (see Chart 1). Both California and Nevada passed the Ocean State in early 2009, but as 2013 approaches, they’re on pace to drift below, as CA already has.

CA, NV, and RI Monthly Unemployment Rates, 2007-2012

The federal Bureau of Labor Statistics (BLS) which compiles employment data for the nation and the states also tracks alternate measures of unemployment. In these cases, the trends are tracked quarterly (every three months), and the number represents the average over four quarters.

The BLS collects its data through a regular Current Population Survey (CPS), which asks respondents a number of questions related to their employment situations. All of the rates shown are percentages of different totals for the “civilian labor force.”

The most common (as represented in Chart 1) is the U-3 measure, which tracks people who are not working, but who want to do so and have looked for jobs within the past four weeks. The denominator for this rate (i.e., the labor force, or 100%) is the total number of people who say they are either employed or looking for work.

Chart 2 shows trends for the U-1 unemployment rate, which traces the number of people who have been unemployed for fifteen weeks or more.

CA, NV, and RI Long-Term Unemployment Rate (15+ Weeks), Rolling Four-Quarter Average, 4Q03-2Q12

Broadening the length of time that residents have been unemployed is one way to adjust the data. Broadening the definition of “unemployed” is another. The BLS digs deeper with survey respondents who are not looking for work by asking when they last did so and why they stopped.

Those who have looked for work within the past year, but stopped no less than four weeks before the survey because they had given up hope of ever finding jobs, are “discouraged.” Broader still is the category for “marginally attached workers,” who followed the same pattern as discouraged workers, but without regard to their reasons for stopping their searches (U-5).

Unemployment trends by this measure are shown in Chart 3. The denominator for the percentage is the labor force defined above plus all marginally attached workers. In this case, Rhode Island still — just barely — has the third worst rate.

CA, NV, and RI Unemployment Rate, Including Marginally Attached Workers, Rolling Four-Quarter Average, 4Q03-2Q12

The broadest measure of unemployment that the BLS tracks is the U-6, which adds people who are working part time because they cannot find full-time jobs. Comparing Chart 4 with the first three suggests that, when Rhode Islanders find work, it is more likely to be full-time work, in comparison with California and Nevada.

CA, NV, and RI Unemployment Rate, Including Marginally Attached and Forced Part-Time Workers, Rolling Four-Quarter Average, 4Q03-2Q12

Still, with a current rate of 18.9%, that silver lining does not offer much comfort, especially considering that RI’s stagnation remains incontrast with improvement in the other two states.

An Even Gloomier Picture

Unfortunately, even the dispiriting picture of the unemployment rate is overly sunny for Rhode Island. The multiple parts of the unemployment rate equation actually disguise just how badly the recession has hit in the Ocean State. Chart 5 shows what Rhode Island’s unemployment rate would be if its labor force had remained the size it was in January 2007 (at the start of the recession) and in February 2010 (when employment losses receded at the national level).

RI Unemployment Rate Under Different Labor Force Scenarios, January 2006 to July 2012

An analysis of total labor force statistics — the actual number of residents working or looking for work — shows that both California and Nevada have seen substantial increases since January 2007, while Rhode Island has seen a substantial decrease. In fact, under the January 2007 labor force scenario shown in Chart 5, both California and Nevada would have unemployment rates below 8%.

In both of those other states with official unemployment currently over 10%, more people wanted to work than before the recession, driving up the unemployment rate. Indeed, the big jump that Nevada experienced in July 2012 (refer back to Chart 1) was amplified by the fact that nearly 2,000 more people were looking for work.

In contrast, so many people stopped looking for work in RI that the unemployment rate could have stayed low even if the economy didn’t create a single job. Employment fell so rapidly that people couldn’t quit the job market fast enough to com-pensate. The two western states had the much more positive task of creating new jobs for new workers.

An Employment Spiral

The fact that the unemployment rate can be misleading, in this way, raises the question of what other measures might give a more accurate picture of the state’s employment trends. One excellent indicator is the number of people employed.

The same BLS survey estimates the number of residents of each state who say that they are working. Chart 6 shows the July 2012 employment number in all fifty states as a percentage of each state’s peak before the housing bust and financial crisis turned its employment growth negative.

United States July 2012 Employment Percentage of Pre-Crisis Peak by State

Eight states have already surpassed their peaks, and most of the rest are within five percentage points, including California and Nevada. At the bottom of the chart are two outliers that are still around ten percentage points away from their prior level of employment: Michigan and Rhode Island.

Another important question is whether a state’s employment picture is improving. RI’s is not.

Just as Rhode Island has the second worst unemployment rate, it also has the second worst deficit from its peak employment. And just as Nevada is gaining ground on Rhode Island by the first measure, Michigan is gaining ground by the second. That realization, in turn, leads to a final observation of the Ocean State’s condition.

Two years of disappearing jobs in the United States came to an end in February 2010, after which both the number of jobs available and the number of people working began to increase (albeit, slowly and unsteadily). Since then, only three states have continued to shed employment. As Chart 7 shows, not only is Rhode Island once again on that short, undesirable list, but it is dead last… by quite a bit.

United States Employment Growth by State, February 2010 to July 2012

One Discrepancy

Given the negative trends apparent in this data, it’s important to explain that the employment/unemployment measure is different from the jobs numbers that Governor Lincoln Chafee recently authorized the DLT to release. This brief addresses the number of Rhode Islanders who say that they are employed; the DLT data is based on surveys and tax information from employers regarding the number of employees that they have.

In the latter case, local analysts dispute the BLS’s employer-based statistics, which find a decrease in jobs over the past year. The RI DLT claims an increase of 4,800 jobs from March 2011 to March 2012, while the U.S. BLS claims a decrease of 2,200 over that period.

One potential explanation for at least some of that discrepancy has to do with seasonality. The BLS updates its official employer-based jobs count annually, benchmarking to tax forms. Small-scale surveys suffice for real-time trends.

The RI DLT has broken with this methodology mainly by reviewing unemployment insurance tax data as it becomes available and assuming that the prior year’s seasonal adjustments still apply. Those numbers may require a significant adjustment when the final data is collected if any months were notably different than the same month in the past.

Whichever employer-based jobs number is correct, the data in these seven charts need not be affected. If, for example, people who were already working took additional jobs, the official job growth would have less effect on employment.

Probably more significant is the possibility that Rhode Island employers hired people who do not live in the Ocean State, or that people working in Rhode Island emigrated across the border. In those cases, the number of jobs could go up even as the state’s employment goes down.

An analysis from the Center’s news division, the Ocean State Current, found that the number of people living in the counties right over the border in Connecticut and Massachusetts who are employed increased by almost 11,000 from May 2011 to May 2012, more than twice RI’s new jobs.

Summary Table
Percentage National Rank
Chart 1, U-3 unemployment, July 2012

California

10.7 48

Nevada

12.0 50

Rhode Island

10.8 49
Chart 2, U-1 unemployment 15+ weeks, 2Q12

California

6.7 48

Nevada

7.9 50

Rhode Island

7.0 49
Chart 3, U-5 unemployment incl. marginally attached, 2Q12

California

13.0 49

Nevada

14.9 50

Rhode Island

12.7 48
Chart 4, U-6 unemployment incl. marginally attached and involuntary part time, 2Q12

California

20.3 49

Nevada

22.1 50

Rhode Island

18.9 48
Chart 5, unemployment with January 2007 labor force, July 2012

Indiana

10.7 48

Michigan

16.4 50

Rhode Island

14.2 49
Chart 5, unemployment with February 2010 labor force, July 2012

Arizona

11.8 48

Nevada

12.9 49

Rhode Island

13.4 50
Chart 6, distance from prerecession employment peak, July 2012

Alabama

-6.7 48

Michigan

-10.5 50

Rhode Island

-9.8 49
Chart 7, employment growth since February 2010, July 2012

Arizona

-1.1 49

New York

-0.7 48

Rhode Island

-1.7 50

 

Time to Take Responsibility

Overall, Rhode Island’s picture is what one would expect when the officials who control the overly burdensome threads of government place the status quo above progress. The state’s economy has been stagnant and drifting downwards, as Rhode Islanders for whom stagnation is not good enough make other plans.

The kid brother who never takes responsibility or initiative for himself will tend to trail behind, much as Gov. Chafee and Speaker Fox passively describe their state’s economy. That should not be accepted; too many Rhode Islanders are being harmed and finding their aspirations put on hold.

***

Media Release

FOR IMMEDIATE RELEASE:  September 4, 2012

RI Uniquely Suffers Bleak Employment Outlook

Governor Chafee Should Consider Facts Before Speaking to National Audience from Charlotte

As Rhode Island Governor Chafee prepares to speak to a national audience from the DNC Convention one day after Labor Day, he should consider that his state suffers from the bleakest labor outlook of any state in the nation, according to a report issued today by the RI Center for Freedom & Prosperity. The state-based think tank also criticized the governor and other state leaders for their inaction and announced plans to release its own set of recommended policy reforms.

The report shows that Rhode Island is alone in ranking in the bottom two states in the nation with regard to its unemployment rate, its continuing workforce and employment degradation, and its overall employment loss since both the recession and the recovery. The state is unique in its poor standing across all of these important job measurement categories.

“As we have been saying for months, absolutely nothing is being done to improve our alarming jobs slump,” said Mike Stenhouse, CEO for the Center. “Why are we not having a special session of the General Assembly this fall?” he inquired.

“We’re traditionally first into a recession and last out,” Gov. Chafee told David Klepper of the Associated press, in December 2011.1 A few weeks later, RI House Speaker Gordon Fox, arguably the most powerful politician in the state, told WPRI’s Newsmaker interviewers the same thing, almost verbatim. This general attitude has translated into inaction in both the executive and the legislative branches. “It is not a viable economic plan to simply to wait for a national recovery to pull the state forward,” added Stenhouse.

Citing today’s report as irrefutable evidence of the need for immediate and bold reforms to provide Ocean State residents with renewed opportunities and long-term financial security for their families, the RI Center for Freedom & Prosperity also announced that it will offer its own solutions to address one of the biggest challenges in the state’s history.

“We have the second highest unemployment rate in the nation… and our General Assembly does nothing. We are one of only three states that has lost employment since February 2010… and this administration does nothing. We have the worst business climate in the nation… and our business and political leaders do nothing! Our jobs crisis has resulted in a decade-long loss of taxpayers to other states… and the political class does nothing,” continued Stenhouse. “The inaction of our do-nothing politicians has cost our state jobs because of their politics-as-usual approach. Our Center does not cave to special interests and we are not afraid to act. We will provide a positive vision for our state, along with a well-researched set of policy reforms to solve our dismal jobs problem.”

In filling part of the leadership void in the state, the Center plans to publish tomorrow its Prosperity Agenda for Rhode Island, which will recommend a dozen significant policy reforms. “Hopefully, our Center’s employment report today and our suggested policy reforms tomorrow will spur the debate that Rhode Island must have now! We encourage voters and candidates to reject the political class’s approach of doing nothing and, instead, to raise awareness of this vital problem and openly discuss all legitimate solutions during the upcoming campaign season,” concluded Stenhouse.

The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy think tank, is the state’s leading free-enterprise advocacy organization. With a credo that freedom is indispensable to citizens’ well-being and prosperity, the Center’s mission is to stimulate a rigorous exchange of ideas with the goal of restoring competitiveness to Rhode Island through the advancement of market-based reform solutions.

Nationally Recognized Investigative Reporter Joins The Ocean State Current

Kevin Mooney has appeared on Breitbart and Glenn Beck

FOR IMMEDIATE RELEASE: June 12, 2012

Providence, RI — The Ocean State Current, the news division of the Rhode Island Center for Freedom and Prosperity, announced today that Kevin Mooney will join its staff as Investigative Bureau Chief.

“Accountability and transparency are vital to our democracy,” said Mooney, an investigative journalist who reports on the public sector with an eye toward taxpayer interests. “Unfortunately, we see government at the local, state and national level operating at odds with long-standing American principles rooted in the idea of constitutional limited government.”

 Most recently,Mooney served as the Capitol Bureau Reporter for the Pelican Post, the news division of the Pelican Institute for Public Policy in Louisiana. Mooney’s work also appears in the Daily Caller, The American Spectator, The Washington Times, the Washington Examiner and Breitbart.com. A contributor to Fox News, Mooney previously appeared on the Glenn Beck program to discuss the connection between The Service Employees International Union (SEIU) and the Association of Community Organizers for Reform Now (ACORN). Mooney was also the first to report on the $53 million in federal funding ACORN has received since 1994.

Mooney will join Justin Katz, managing editor, on The Current’s staff.

“Our Center is thrilled to have Kevin partner with Justin in growing The Ocean State Current into a prominent news source for concerned citizens,” said Mike Stenhouse, CEO for the Center. “Kevin’s proven ability to follow the money and uncover instances of undue special interest influence and cronyism will add a new dimension to our news bureau.”

Crosstown E-Battle of Ideas Takes Stage in Providence

Ocean State Current joins Breitbart, Heritage, and Franklin in “Future Of Journalism Summit”

Click here to see national news stories about what people are saying about the Summit …

The Ocean State Current, the news wing of the Rhode Island Center for Freedom and Prosperity, will participate with the Heritage Foundation and the Franklin Center for Government & Public Integrity at this weekend’s events, which will include a tribute to the monumental journalistic achievements of Andrew Breitbart at the “Breitbart Awards Dinner” on Friday, June 8, at 7:00 p.m. The dinner is the main event of the “Future of Journalism Summit” – establishing a center-right beachhead north of the State House, opposite the left-wing Netroots Nation summit to its south – on Friday and Saturday.

Andrew Breitbart pioneered a new media revolution that transformed journalism and the political landscape. As his tragic passing is mourned, many seek to ensure that his legacy is honored and that the movement he spawned continues with the army of citizen activists that he cultivated and inspired to carry the torch for freedom and truth.

The spirit of that movement is represented locally by the RI Center for Freedom & Prosperity, which worked with the Franklin Center in the development of the Ocean State Current, its online news bureau. CEO Mike Stenhouse says, “In terms of both inspiration and practical example, the trail that Andrew Breitbart and these organizations have blazed – to uncover the truth and to provide greater government transparency – has been a guide as we’ve made our own way, here in the Ocean State.”

“Interacting with other journalists in the Franklin network around the country these past few months has been very encouraging,” says the Current’s managing editor, Justin Katz. “It’s easy to feel like the Netroots crowd controls the conversation in this state, so it’s great to have some friends from the other side mingling in the shadow of the Independent Man,” he says, referring to the statue on top of the State House dome.

The first annual Breitbart Awards Dinner will honor three individuals from the realms of 1) professional journalism; 2) blogging; and 3) citizen activism-whose efforts advance the spirit of Andrew Breitbart’s work, which was driven by an indomitable pursuit for truth and accountability that advances those causes on behalf of the public good.

The winners of the 2012 Breitbart Awards:

Professional Journalism: Phillip Klein, The Washington Examiner Blogger: Ace of Spades, Ace of Spades HQ Citizen: Andrew Marcus

Breitbart Awards Dinner Details:

Keynote Addresses by John Fund and Sonnie Johnson, Breitbart Award winners

Breitbart Awards Dinner

Friday, June 8th at 7:00 p.m. EST

Providence Marriott Downtown-1 Orms Street, Providence, Rhode Island

The Franklin Center for Government & Public Integrity supports transparency, accountability, and fiscal responsibility. It trains reporters, produces investigative news content, and holds government officials accountable.

The Heritage Foundation is the nation’s most broadly supported public policy research institute. Its mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

Stenhouse joins Scott Rasmussen at NYC Pension Symposium

Advancing Liberty, Creating Change

Mike Stenhouse, CEO for the RI Center for Freedom and Prosperity served as a panelist at a public employee pension symposium on May 18, 2102 at the Harvard Club of New York.

“Advancing Liberty, Creating Change” is a City Symposium co-sponsored by the Mercatus Center and the Institute for Humane Studies.

Stenhouse served on a panel, discussing the true scope of state and local pension plans, the politics involved, and the coalitions formed to promote the need for reform.

The keynote speaker was Scott Rasmussen, founder and president of Rasmussen Reports. He is a political analyst, author, speaker and, since 1994, an independent public opinion pollster.

Scott Rasmussen and Mike Stenhouse