Standard economic analysis misses the rising “government plantation” in RI.

Rhode Island Current, a newcomer to the Ocean State’s media landscape, recently published an article by Nancy Lavin asking the perennial question, “What’s with RI jobs data?”  Over the decades of my interest in the topic, this ambiguity has been a running theme.  The state has no (and cannot have any) economic confidence.

We’re like a sick person in the constant throes of self-evaluation looking for any sign that maybe… maybe… there’s hope he or she is on the upswing.  I feel a little less congested today.  My temperature is down a tenth of a degree.  There’s not quite as much edge to my cough this morning.

In this case, the specific mystery that captured Lavin’s interest is how the state can be losing jobs even as more Rhode Islanders report that they’re employed.  She asks a handful of the standard experts, and they provide a handful of the standard answers:  Most prominently, the employment numbers, which come from surveys asking if a person has worked at all recently, include those who work in other states (including remote work), whereas the jobs numbers, which come from the government reports of businesses located in the state, do not.

Department of Labor and Training information and operations manager Donna Murray comes close to a point that’s less often made when she mentions the “gig economy.”  The jobs number doesn’t include independent contractors, so to the extent businesses are using their services, rather than hiring employees, people will be employed without “jobs,” technically speaking.

This isn’t really new, though.  Independent contractors are essentially bosses of their own businesses, and they’re indistinguishable from one-person shops.  Your self-employed plumber, for instance, will be employed but not count as a job.  For decades, Rhode Island has done conspicuously well (from a certain perspective) when it comes to business starts, and analysis has led me to conclude that the reason is people can’t find suitable jobs.

They look for work and can’t find it (or they lose it). Then they start doing anything they can for money (gig economy). If their businesses begin to grow, Rhode Island regulations tend to put them out of business once they start to become more official “small businesses.”  So, then they lose hope and leave for a healthier state.

In other words, Lavin’s article may miss a key point.  In RI, the gig economy isn’t only another option.  Our terrible tax and regulatory policy discourages job creation, forcing them to piece together an income.

Increasingly, all that remains are government-centric service jobs (as evidenced by the industries Lavin notes are growing).  As government becomes the primary industry of the state, policy shifts to support the need to import “clients” for its services and to find money from somebody else (either taxing the productive or snagging gifts from the feds).  This — what I’ve called the “company state” or “government plantation” — in turn makes jobs more difficult, reinforcing the detrimental cycle.


Featured image by Shaojie on Unsplash.

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