Tiny State, Huge Pain

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Tiny State, Big Unemployment

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.

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Compounding this state's problems are its size: just more than a million people living in an area 37 miles wide and 48 miles long.

"This is essentially a large metropolitan area," Reed said. Many residents work in neighboring Massachusetts and Connecticut, which also have been feeling the effects of the downturn. One of the largest employers, the Foxwood Resort Casino and MGM Grand in Connecticut, just laid off 700 employees, citing a decline in revenue with fewer gamblers showing up. Many of the employees who lost their jobs live in Rhode Island.

A big issue here is the state's tax rates. Many Rhode Islanders said the high tax burden has discouraged businesses from locating here and pushed others to leave. The most recent state-by-state comparison of business tax climate by the Tax Foundation put Rhode Island at 46 out of 50th, with only four states -- Ohio, California, New York and New Jersey -- having a less favorable business tax environment.

While other areas that have lost manufacturing jobs have worked to reinvent themselves -- Massachusetts, for example, has been trying to become a leader in biomedical research -- Rhode Island has been slower to make the shift. Critics say government has failed to invest enough in education to begin training workers to be competitive in more technically advanced fields.

"Connecticut and Massachusetts invested a tremendous amount in education, particularly higher education," said Mazze, the business professor. "Rhode Island has not been able to do that."

This state is broke. Rhode Island is facing a budget deficit of $357 million, which is the largest in the country when measured against the total spending. The bulk of that gap -- about $233 million -- is in lost revenue, with tax receipts falling as the unemployment rate has worsened. Education is facing huge cuts.

At the job fair last Tuesday in Warwick, many of those who showed up were not qualified for the specific skilled positions advertised; they simply needed work. Many others were overqualified; they wanted any work they could find.

"I've got a bachelor's degree in mechanical engineering," said Frederick Fagundes, 33, who was standing in line clutching a folder with his résumé and still in the dark suit and tie he wore to an earlier job interview. "I'm not an assembly or manufacturing person."

Fagundes works for an automotive supplier, and his job was supposed to end in a few days. He will get a few weeks' severance pay and was at the Pentair job fair "to be proactive," he said. He has two children, ages 5 and 6, and his wife was not working because of the high cost of day care.

Mason Briggs, 56, just lost his job as a field engineering technician for a wireless company. He spends his days on the Internet searching for jobs. Not planning on unemployment, he said he had little saved up.

"There isn't going to be much of a Christmas, I'll tell you that," Briggs said. "Maybe a dinner or a lunch. Stocking stuffers, that's about it." He said his wife, a school custodian, could get a small pine tree and they would top it with a $10 star he found at an electronics store. "We call it our Charlie Brown Christmas," he said.

Asked if he was worried, Briggs, who helps support his 17-year-old stepson, replied: "Worried? I'm just plain scared. I have no idea which way to turn."

The pain has started to appear in tangible ways besides job lines. More people are applying for food stamps. Homelessness is on the rise.

At the nonprofit organization Crossroads, which deals with the homeless, marketing vice president Karen Santilli said the group's headquarters building, at an old YMCA building, was never meant to be a homeless shelter. But about a year ago, she said, people began showing up with nowhere else to go.

In April, the group saw a surge in women, and it opened up a downstairs section as a dorm for 41 homeless women. Now 60 women sleep there every night, most in bunk beds but also in the area that was supposed to be the common living area.

"We see eight to 10 people new to homelessness every day," Santilli said. Some have been the victims of home foreclosures, she said. Some are immigrants. There are a few new mothers. The oldest woman is 89.

Santilli, summing up the view of many here, said: "The state is in a crisis."