December 27, 2007

The Old In-and-Out in Rhode Island

Justin Katz

Subbing for Dan Yorke on WPRO 630AM, Matt Allen has been talking about Rhode Island's first place ranking among states for lost population, which Marc investigated this morning.

I called in to the radio during my commute to mention my finding back in September (and my related Providence Journal op-ed) that, on top of the state's losing citizens, thousands of people in Rhode Island fell below the twice-poverty line. As it turns out, my day raising and sheathing a roof by the water in the cold misty drizzle affected my memory, because I guessed (from the road) that the high-end drop was actually about the same as the total leaving the state, but the actual number was 21,637 fewer people earning more than twice the poverty level.

There is almost an exact match between the 30,577 increase of those making 1–1.99 times the poverty rate plus the 3,144 fewer people in the state with the 12,084 decrease in people under the poverty level plus the 21,637 decrease in people earning over two times the poverty rate. The last chart of my September post shows that the biggest drop was actually the roughly 25,000 fewer people making over five times poverty level, followed by the nearly 15,000 fewer people making between three and four times poverty. The bottom line is that the productive are being dragged down and driven out in order to achieve a much less significant improvement at the bottom of the scale.


As I pulled into my driveway, Matt had shifted the topic slightly and asked listeners what one law would change their mind about leaving. My response is that my daily urges to leave Rhode Island might be dispelled were the RI government to pass a law requiring members of the General Assembly to pay for any deficits at the end of the year out of their own pockets.

I think that, at the very least, would give our elected officials a sense of the magnitude of the problem

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It appears RI has been loosing population for the last 4 years. I and my wife are 2 of the numbers that left RI for greener pastures after over 55 years living in RI. Both of our jobs were professional requiring college education with combined income of over $120K. It’s just that it got too expensive to live in RI even with mortgage and both cars fully paid.

Your proposal for state government to pay for the deficits out of their own pockets should be spread across all three powers as each contributes to the deficit.

There is a new breed of decision maker in the state driving state policy that just does not have a clue.

Census a “wake-up call” on economy
01:00 AM EST on Friday, December 28, 2007
By Jennifer D. Jordan

Journal Staff Writer
“Rhode Island’s fourth consecutive dip in population in as many years is another sign of the state’s stagnating economy, say experts who track demographic and business trends.
In estimates by the U.S. Census Bureau, the state lost about 3,800 people between July 2006 and July 2007, after accounting for births, deaths, and people moving in and out of the state. The drop represents 0.4 percent of the state’s 1,057,832 population.”

“Leonard Lardaro, an economist at the University of Rhode Island, says the state’s population decline was not surprising. Housing costs remain high. Job growth has slowed. Manufacturing has lost 1,800 jobs statewide since the start of the year. Unemployment in the state rose to 5.2 percent last month, up from 4.9 percent in October. The national unemployment rate in November was 4.7 percent.“

“This is a continuing negative trend, of losing our working-age population, ages 16 to 65,” Lardaro said.“

An economy like Rhode Island that has been lagging will tend to lose population due to the bad combination of slow job growth and a lot of home equity.”

“We are coming to a point in Rhode Island where a lot of our positives are being offset by negatives,” Lardaro said. “We are creating some jobs, but we are losing even more than we are adding.”

“And as the national economy slows, it will be harder for Rhode Island to reverse the downward trend, Lardaro said.”

“Lardaro blames the state tax structure, which he calls “punitive,” discouraging highly paid, highly skilled workers from moving here, and high-tech companies from expanding here. Someone in Rhode Island making $200,000 a year or more is taxed at a high state income-tax rate — over 9 percent — compared with 5 percent in Massachusetts, Lardaro said.”

“Kate Brewster, executive director of the Poverty Institute, an advocacy and research organization based at Rhode Island College, disputes that the state is unfriendly to business or that it is losing college-educated professionals.”
“From 1997 to 2004, the number of Rhode Islanders reporting incomes over $200,000 rose by 87 percent, a faster rate than in neighboring Connecticut and Massachusetts,”

"Brewster said. “Detailed IRS data show no evidence of the rich fleeing Rhode Island.”

“Brewster also said that because Rhode Island offers tax cuts and deductions to the wealthy, the actual percentage of income tax they pay is closer to 5.7 percent. “So there’s no reason to think that high taxes are driving the wealthy out,” she said.“

"Brewster blamed high housing costs and the lack of new construction, as well as slowing job creation, for the loss in population.”

Posted by: Ken at December 28, 2007 1:06 AM

Kate Brewster's comments only provide further indication that she has an agenda and is unwilling to let the facts get in the way.

Anyone who has been in business knows that RI is anything but business-friendly. RI's business climate is downright oppressive, unless you're one of a handful of companies with the ability to cut special deals for yourself such as Blue Cross, CVS, Lottomatica/GTech. It's not a surprise that such companies keep close ties with prominent Democrats.

But it's the small businesses with under 500 employees that provide most of they jobs in RI and they are also the companies that bear the brunt of anti-business climate.

Brewster can say what she wants, but the stats prove her wrong.

I don't know if Brewster is right or wrong about the number of $200K+ workers in RI. But the census report makes it obvious that alot of people with above average incomes are leaving the state.

Personally, I think RI is facing an even bigger problem if the reduction in average income is caused by middle class earner leaving than high-income earners.

Many high-income earners can choose to live whereever they want. The middle class tends to move to locations where there are jobs and economic opportunity.

If Brewster is correct and high wage earners aren't leaving yet, they will probably do so after the General Assembly listens to people like Brewster and repeals the tax cut given to high-wage earners.

RI has yet to find its place in the globalized economy. The workforce is more mobile than ever before and unlike 20 years ago, the state can't just raise taxes and expect that people will stay around.

Living in RI is a choice and it's a choice that fewer and fewer people are making.

Posted by: Anthony at December 28, 2007 8:39 AM

And while currently the Democrat "leadership" is saying it's opposed to increases in the income tax rate etc., don't be surprised when that representation go out the window. They're just waiting for political cover.

Once the new revenue estimates come in they'll be shocked! shocked! to learn that the deficit has now jumped from $450 million to $650 million - $1 billion. At that point they'll say "Gee, this changes everything. We didn't see this coming; and we didn't want to raise income tax rates, but now we're forced to! Oh, and by the way, we're also now forced to extend the sales tax to services ..."

Michigan - the other state that is losing population, just enacted widespread tax increases a few months ago (rather than cut spending). It's controlled by Democrats too - because they support unions and "working families." [Insert ironic snicker here.]

Detroit. Cleveland. Buffalo. Rochester. Bridgeport. Hartford. Rhode Island. Democrat Rust Never Sleeps, and the "Rust Belt" is spreading East.

Posted by: Tom W at December 28, 2007 9:23 AM

i heard you on matt's show and your phone was going in and out,but you made very good points-i followed you shortly after and spoke about matt jerzyk's multifaceted infiltration of various aspects of rhode island's political/social both by himself and surrogates like rachel miller,david segal,etc-greens(socialists)masquerading as democrats-people need to know who he is and how he is trying to change things for the worse by becoming part of the system he really seems to despise-it's too easy to be diverted by the useful idiots in the iso and iww and not see the real face of socialism

Posted by: joe at December 28, 2007 9:33 AM

My wife and I also left 5 years after relocating to RI from the West Coast. The final nail for me was the birth of my kid - I didn't want him growing up somewhere that seems to value "having an in" over everything else.

Every day I lived in RI, I woke up and felt like I was getting completely screwed. It's not just that taxes are high, but you don't seem to get anything for your taxes. The schools are terrible, the services are a joke, and it seemed like every state or town agency I dealt with was incompetent and arrogant about it.

Honestly, I don't mind paying for something providing I'm getting something in return. In RI, you don't get anything for your money.

So, we left. Life is too short.

Posted by: Goggles Paisano at December 28, 2007 9:43 AM

RE: Brewster's arguments. Her railing against the lack of job creation and apparent lack of curiosity about the underlying root causes of that symptom speak volumes.

The more interesting point, however, is how to explain the data she cites about the rate of growth of 200k plus earners being higher in RI than in CT or MA. The first observation is that RI started from a much lower base (pct of 200k plus returns in total tax returns). The second is that her data has to be reconciled with the falling median income the Poverty Institute recently cited. One possible explanation, noted above, is a loss of middle class tax returns -- people reporting AGI of less than 200k -- offset by a rising number of poor people (via births and in-migration). Another is that the data everybody is using is out of date -- as evidenced by the falling personal income cited at the November Revenue Estimating Conference. A third explanation is that many of the 200k returns that Brewster cites are, in fact, living in RI (say because housing is cheaper here than in Boston) but working in CT and MA (where they continue to pay the bulk of their state personal income tax).

While I give Brewster, Katz and the rest of the brain trust over at the PI credit for making the best arguments they can, at the end of the day, they are holding a very weak hand. Whether the GA will fold in the face of their bluff remains to be seen. And even if they do, the larger economic forces at work will eventually trump the impassioned emotional arguments emanating from Mount Pleasant...

Posted by: John at December 28, 2007 10:26 AM

The Poverty Pimp Institute is notorious for cherry-picking data, citing data out of context, omitting relevant pieces of data, etc.

Thus is the way of zealots ...

Unfortunately intentionally credulous reporters merely regurgitate what the PPI propagandizes, so the pimps have been getting away with it for years.

Indeed, beyond the PPI's lies, damn lies and statistics, have you EVER heard a reporter ask Ms. Brewster why, after 40 years of a War on Poverty / Great Society that the Poverty Pimp Institute even exists ... or why, after 40 years of demonstrable inability to reduce poverty we should lend any credence to the "solutions" offered by the PPI?

Posted by: Tom W at December 28, 2007 10:38 AM

I'm trying to figure out how...

  1. A decline in median income, and
  2. A decline in population
...supposedly translates into more service sector jobs.

Doesn't fewer people with less money directly imply a reduction service sector opportunities?

Posted by: Andrew at December 28, 2007 10:49 AM


The ProJo story - "Census a 'wake up' call on Economy" has an "Extra" link with voting on whether people are considering leaving RI and reader comments. The bitterness of the comments is amazing - though not at all surprising:

Posted by: Tom W at December 28, 2007 1:42 PM

A decline in population may mean a decline in countable (read: legal, working, tax paying) population. Just my theory. But what do I know? I left RI already due to a lack of real job opportunities & super high cost of living!

Posted by: Siva at December 28, 2007 6:21 PM
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