SMITHFIELD, R.I. — As it reels from the pandemic’s economic devastation, Rhode Island faces the challenge of avoiding its past pattern of being the first state in and the last state out of recession.
But the state also faces the broader challenge of reshaping its economy in a way that not only creates a “new normal,” but also creates a more resilient economy that leaves fewer Rhode Islanders behind, members of a Bryant University and Rhode Island Foundation panel said Monday.
The panel discussion — part of a series titled "Pandemic Economics: What does it mean for Rhode Island?” — brought together (via Zoom conference) outgoing Bryant President Ronald K. Machtley, incoming Bryant President Ross Gittell, Rhode Island Foundation President and CEO Neil D. Steinberg,and Rhode Island Commerce Secretary Stefan Pryor. More than 330 people tuned in.
Panelists agreed that the first step is to address the health crisis driving the economic crisis.
“When I was in the Navy, we had an old saying: ‘When your ship is hit with a torpedo, fight the flooding first, then fight the battle,' ” Machtley said.
“The number one rule of virus economics is: Go stop the virus if you want to fix the economy,” Gittell said, quoting University of Chicago economics professor Austan Goolsbee.
But as it battles the virus, the state must also take steps to ensure that it is not, once again, the first to plunge into recession and the last to pull itself out, panelists said.
Pryor said Rhode Island followed the advice of public health experts in shutting down parts of the economy, and those steps have “substantially flattened the curve” to the point that new coronavirus cases and hospitalizations have stabilized.
But Rhode Island, unlike many other states, never shut down the manufacturing and construction sectors of its economy, and that will give the state a leg up as it begins to climb out of the economic hole that has engulfed the nation, he said.
“We were the birthplace of the industrial revolution here in Rhode Island,” Pryor noted. “The fact that we were able to keep manufacturing open and never had a significant pause is to the credit of the Rhode Islanders and manufacturers in our midst. That will give us a boost into the new era.”
Also, Pryor said Rhode Island is ahead of other states in the region in starting to reopen its broader economy. Governor Gina M. Raimondo lifted a “stay-at-home” order on Saturday, while allowing “noncritical” retailers, such as clothing and book stores, to open, and the state plans to allow restaurants to offer outdoor dining soon.
“Rhode Island — which has a history of being first in and last out of recessions — is aiming to be a leader in our region in betting back to business,” Pryor said.
But even if it moves faster than other states, the incremental reopening of the economy isn’t going to be enough to “advance our economy into the new era," he acknowledged.
To make progress, Rhode Island will need to capitalize on its strengths in areas such as bioscience and material science, Pryor said. “We in Rhode Island are blessed with remarkable assets in the area where the world is looking to advance,” he said.
For example, the state has bioscience programs linked to Brown University, the University of Rhode Island, Rhode Island College, and others, he said.
“The world is looking to remedies and looking to vaccines — for COVID-19, of course — but we are also looking ahead to future potential pandemic,” Pryor said. “So we need to double down on that, and I think we need to make major investments now, including the study of viruses and vaccines to be sure, but beyond.”
He also talked about the potential of material science as an outgrowth of the Ocean State’s boat building industry. He mentioned possibilities for developing new “touchless technologies” for entering doorways or making payments, and virus-resistant or easy-cleaning surfaces.
“I think we need to make major investments to ensure that we are ahead of the curve — investing in the places that the world is going to look for new consumer demand and new economic activity,” Pryor said.
Gittell said, “There is a real opportunity, given the current leadership and current position of the state, to not be the last out of the recession, and to, in fact, have a stronger economy going forward.”
But Machtley noted the US economy lost 20.5 million jobs in April — the biggest and most sudden decline since the government began tracking the data in 1939.
“It is a massive number of people displaced,” he said. “And 17 percent of people who have lost jobs nationwide are in the service industry, which is where Rhode Island is right now.”
Steinberg said Rhode Island finds itself in a situation similar to the Great Recession.
“On the economy, unfortunately, what the data tells us is we are back where we were in 2008-2009,” he said. “We have an economy that is overly dependent, compared to a lot of other states, on small businesses in tourism, hospitality, retail, gambling — a lot of low-wage jobs.”
As the economic pain spreads, he said some people are talking about the upside of spending more time at home with their children or taking long walks. But, he said, “That is a privileged group.”
“There are just as many, unfortunately, if not more, who are crowded into an apartment, they are not seeing adequate funding, they are going to high-risk jobs at lower wages,” Steinberg said. “They are still experiencing challenges, and in some cases, very tough situations.”
So over the next 16 months or so, Rhode Island will need to focus on rebounding from the economic downturn induced by the pandemic, he said. But he has concerns when he hears people talking about “the new normal” because that “old normal” wasn’t that great for everybody.
“We left too many people behind in the old normal,” Steinberg said. “When you look at the economy, whether it’s here or nationally, even in boom times, we left many people behind — the educational achievement gaps, the health disparities, the economic security gaps, being dependent on your zip code for your outcomes.”
Later this week, state legislators will begin crafting the state budget, and they will be facing difficult decisions now that state officials are expecting revenues to come up nearly $800 million short of previous projections between this fiscal year and next.
“When you have limited resources and you start to allocate dollars, underneath are going to be the values of the state of Rhode Island,” Steinberg said. “What are our values?”
He suggested those values should include quality education for everybody, access to affordable health care, and “economic security so we can help people get back to work and get good jobs.”
Rather than a “new normal,” Steinberg said, “What I really think we need is a better future.”