Tiny State, Huge Pain

Rhode Island is the smallest state and the birthplace of the Industrial Revolution in America. And now it shares another distinction: the second highest unemployment rate in the country. At 9.3 percent, the state's unemployment rate is only three tenths of one percent behind Michigan.
By Keith B. Richburg
Washington Post Staff Writer
Sunday, December 21, 2008

PROVIDENCE, R.I. -- Tiny Rhode Island, America's geographically smallest state and the first of the original colonies to declare independence from British rule, recently added another, less favorable distinction: It has the second-highest unemployment rate in the country.

Eleven straight months of job losses -- another 4,000 jobs disappeared between October and November -- have put Rhode Island's unemployment rate at 9.3 percent, higher than the national average and second only to recession-hit Michigan. While most of the country began to feel the economic downturn in recent months, this state has been in recession far longer, and the pain is deeper, according to Rhode Island economists, government officials and some of those struggling to find work.

"The company I worked for is moving to China," said Lois Dionne, a 53-year-old widow who in February lost her job as a receptionist at a rubber company. "It cost too much here. It's cheaper over there," she said.

Since she was laid off, she has been working "a few nights at J.C. Penney's" as a cashier, and spends her days on the computer, searching for jobs, filling out applications and occasionally interviewing. "You keep going," she said. "You don't give up."

Dionne was standing outside with hundreds of other job-seekers on a chilly afternoon, waiting to submit her application at a job fair for Pentair Electronic Packaging, in the town of Warwick, not far from Providence. Pentair announced an expansion and plans to hire 80 skilled workers -- welders, press operators, painters, assemblers and maintenance technicians, among others -- and 500 people showed up.

So how did little, picturesque Rhode Island become one of the most economically depressed parts of the country?

The answers are many and complex, and the slide has been long in coming, part of the general collapse of the old manufacturing towns of New England and Upstate New York. Rhode Island was the birthplace of the Industrial Revolution and was a major center for textile mills that long ago relocated to the South, as well as small factories making tools, silverware and fashion jewelry.

"Rhode Island and some of the other Northeastern states were really the cradle of the Industrial Revolution," said Edward M. Mazze, a professor of business administration at the University of Rhode Island. "This is where manufacturing began. . . . That worked well up until the 1960s."

For a long time, those factories provided good jobs for the state's blue-collar population. But today, many of those factories are no longer here, having either relocated south or gone overseas.

"Part of what's going on is like Michigan -- the hollowing out of the manufacturing industry," said Sen. Jack Reed (D-R.I.), who was in Providence with the governor to announce new federal aid to neighborhoods hit hard by foreclosures.

In previous years, Rhode Island was a main beneficiary of the nationwide housing bubble. Home prices shot up dramatically, in part because residents of Massachusetts and New York bought second homes here. "Rhode Island had one of the biggest housing booms," said Gov. Donald Carcieri (R) in an interview. "When the bubble burst, we went like that," he said with a snap of his fingers.

On Dec. 1, the National Bureau of Economic Research reported that the U.S. economy was officially in recession and had been since December 2007. Carcieri said that was not news here. "We were kind of the canary in the coal mine -- we felt it two years before," he said.

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