Rhode Island drops to last place in CNBC ranking of top states for business
PROVIDENCE — Rhode Island sunk back to the bottom of the CNBC ranking of “America’s Top States for Business” for 2019, marking the fifth time the state has held that unfortunate distinction in 13 years.
CNBC noted that in her State of the State address in January, Governor Gina M. Raimondo declared, “Together we have ignited a comeback of this great state and our economy.”
“So far, however, no comeback is showing up in the numbers,” CNBC’s Scott Cohn wrote in a story accompanying the rankings.
Rhode Island Commerce spokesman Matt Sheaff said the CNBC rankings “paint an inaccurate picture of the state’s economy” and failed to take into account improvements the state has made and its low unemployment rate.
In addition to Rhode Island’s spot in the rankings released Wednesday, Massachusetts led New England in 14th place nationally. New Hampshire was 25th, Connecticut 35th, Vermont 40th, and Maine 44th. In the two previous years, Rhode Island had been 45th.
The No. 1 state in the nation in the rankings was Virginia, which last year landed part of Amazon’s huge second headquarters.
The CNBC article gave Rhode Island credit for being “picturesque,” with a “rich history” and “a population so small that people tend to look out for another.” And it noted the state’s unemployment rate of 3.6 percent matches the national average, “which is no small achievement for the state.”
But, the article said, Rhode Island still has the nation’s worst infrastructure, with half of the state’s roads in less than acceptable condition and nearly a quarter of its bridges in poor condition. The state had the seventh highest cost of doing business last year, including the third-highest natural gas prices, and the cost of living was 10th-highest, according to the study.
“State finances have been in poor shape, sapping Rhode Island’s ability to tend to basic things like maintaining its aging infrastructure,” the article said. “The tax and regulatory climates have been rough, and economic growth has been sluggish.”
The CNBC rankings arrived on the same day the Wall Street Journal wrote about a blistering report on Providence’s public schools, and it comes as Raimondo is in Idaho trying to recruit new businesses at the annual Allen & Company Sun Valley Conference.
In defending Rhode Island, Sheaff, the Rhode Island Commerce spokesman, noted that WalletHub recently ranked Rhode Island 10th on its list of “Best and Worst States for Jobs.”
But WalletHub also recently ranked Rhode Island 50th on its list of “Best States to Start a Business.” When asked about that ranking, Sheaff said the state has done well in other rankings, and he said the point is that “these rankings can be erratic and volatile — and that they often contradict one another.”
“It’s clear the CNBC ranking failed to account for significant investments we have made in recent years in infrastructure, workforce development and business growth,” Sheaff said. Those investments helped bring about “the largest drop in unemployment in the nation, the first positive labor force growth in over a decade, wage growth that is outpacing the nation, and a record-high number of jobs,” he said.
In 2016, for example, Raimondo signed the RhodeWorks program into law, launching a 10-year plan to do $4.7 billion in bridge and roadwork. CNBC noted the program relies in part on tolls on large commercial trucks — which critics say will hurt the business climate.
House Speaker Nicholas A. Mattiello, a Cranston Democrat, said it’s disappointing — but not surprising — that Rhode Island fell in the latest CNBC rankings.
“Government needs to do a better job of letting new and established companies conduct their business here in a timely manner,” Mattiello said, calling for “regulatory relief” from state departments such as Environmental Management and Labor and Training.
Mattiello also underscored differences with Raimondo on economic development strategy. Last week, the governor signed the state budget while criticizing lawmakers for making “shortsighted changes” to existing programs and adding a controversial new “Small Business Development Fund.”
“The administration must look at the economy more comprehensively and not just pay for individual companies to locate here,” Mattiello said. “The Commerce Corporation has to focus more on helping home-grown businesses improve their economic conditions.”
Spokesman Greg Pare said the state Senate has addressed factors cited in national business rankings by, for example, cutting business taxes and regulations. The Senate also has removed “discouraging roadblocks such as those imposed upon a developer seeking to invest more than a quarter-billion dollars in Providence,” he said, referring to legislation aimed at overriding local opposition to a 46-story tower proposed for former Route 195 land.
“However, considerable work remains, particularly with regard to the challenge of fixing our worst-in-the-nation roads and bridges,” Pare said.
University of Rhode Island economics professor Leonard Lardaro called the last-place CNBC ranking “sad but not entirely unexpected.”
Lardaro, who issues a monthly Current Conditions Index, said the state economy has been essentially “stuck in neutral” since 2015 — growing by about 1.5 percent since then, or one-third of the New England average.
The state’s unemployment has dropped dramatically since the recession, but that’s “largely for all the wrong reasons,” Lardaro said. Some people have dropped out of the labor force, while others work in Massachusetts, he said.
Rhode Island’s economy is probably not quite as bad as the CNBC rankings indicate, Lardaro said. Fifty-state comparisons can be “arbitrary,” using various weighted factors, but he has found Rhode Island tends to end up where it falls in an alphabetical listing — 42nd.
“In Rhode Island, our mediocrity is very robust,” Lardaro said.