Q&A: Rhode Island's commerce secretary on righting the economic ship in The Ocean State | Crain's Boston

Q&A: Rhode Island's commerce secretary on righting the economic ship in The Ocean State

The unemployment rate in Rhode Island was among the highest in the country in the summer of 2009. Now it's on par with most other states. Stefan Pryor, who has served as the Ocean State's first commerce secretary since the beginning of 2015, says that's largely thanks to his boss, Gov. Gina Raimondo.

The nation's smallest state has been one of the hardest hit by the loss of manufacturing jobs—something Raimondo and Pryor are trying to remedy with technology centers and new jobs in advanced manufacturing.

"For too many years, our state's leaders in government and business missed an opportunity to rebuild Rhode Island's manufacturing industry," Gov. Raimondo said in a recent statement. "While the jobs may have left and the factories have closed, Rhode Islander's grit and determination is stronger than ever and we need to tap into it."

Pryor spoke with Crain's Boston Editor Chris Bentley.

CB: Rhode Island’s unemployment rate in the summer of 2009 was 11.3 percent. Now it's just 5.3 percent, near the national average. How did that happen?

SP: Rhode Island has been making a lot of progress. Rhode Island employers believe there to be positive momentum in our economy, and that sense of confidence is inspiring employers to find ways to expand their employment. I would point to these areas: taxation, fiscal stability, targeted investments and infrastructure.

Our administration took office two years ago. Gov. Raimondo has been working with the General Assembly to eliminate the sales tax on energy for business. She has lowered the unemployment insurance burden upon employers by cutting unemployment insurance by $30 million dollars. She has together with the General Assembly lowered the corporate minimum tax. So the tax burden is decreasing. In addition we've seen the full implementation of the pension reform the governor began as the elected general treasurer of Rhode Island. And the state has undertaken an ambitious but responsible Medicaid reform.

As for targeted investments, we now have programs capable of incentivizing the creation of jobs. For example our signature Qualified Jobs Incentive Tax Credit, and a tool that helps us invest in real estate projects, contributing up to 20 percent of project costs to certain brick and mortar developments that are contributing to our economy.

CB: Rhode Island has replaced a lot of the manufacturing jobs it has lost with tech sector jobs. Is that sustainable?

SP: It hasn't been entirely tech sector jobs. We're proud of the fact that there's been an important emphasis on tech sector jobs, but one of the places that we're investing is in infrastructure, which will yield substantial numbers of construction jobs. We are investing in innovation-oriented jobs, to be sure. We're very proud of the fact that recently there have been a number of businesses choosing to locate in Rhode Island.

We're proud of the fact that there's been hit parade of companies announcing that they're creating new tech centers in Rhode Island. General Electric has already begun building a digital unit here in Rhode Island, with a goal of producing 100 digital jobs in Rhode Island. Virgin Pulse, part of Richard Branson's Virgin Group, is bringing 292 new jobs to Rhode Island. They acquired a Rhode Island company and they are expanding dramatically here under the Virgin brand. Johnson and Johnson, which has had no such presence in Rhode Island in the past, just announced that they're creating a health tech center in Rhode Island off I-195, also known as our Innovation and Design district. Finally Wexford Science & Technology is working with Cambridge Innovation Center to replicate CIC here in Rhode Island in combination with a new office space for Brown University.

CB: Rhode Island offered $5.65 million in incentives for GE Digital. Some have criticized the size of the incentives package offered to GE to move to Boston—and Rhode Island was bidding for that relocation, too. Why do incredibly profitable companies need these kinds of enticements, and how do you determine on taxpayers behalf that the state is getting a good deal?

SP: The workhorse job incentive program is structured in such a way that the incentive are powerful but responsible. Let me explain. Rhode Island is simply returning to the company producing such jobs the personal income tax revenue that we are newly receiving, so our investment is limited by the actual revenue that we are in receipt of as a result of the company's actions.

Of course the company will be paying business taxes, corporate income taxes, sales taxes on purchases. You get the idea. That said the personal income taxes across employees, those taxes add up. And it can be a potent program.

CB: How do you compete with Boston, which has such a draw for biotech companies and startups especially?

SP: We view it this way: Rhode Island has the best of both worlds. We're proximate to Boston, so we can draw upon the enormous assets of Boston and Cambridge. The Amtrak to Providence is just 35 minutes of travel. We are truly one region. And an employer located here can certainly draw upon the universities, the intellectual energy, the VC resources of Greater Boston. Having said that, we are also a lower-cost jurisdiction with a very high quality of life.

Let me add this: beyond those advantages, Rhode Island has remarkable university assets and other economic assets unto itself. Rhode Island is home to world-class R&D centers at Brown University, the Rhode Island School of Design, the University of Rhode Island, Bryant University, Johnson & Wales.

In USA Today's recent ranking of applied mathematics programs, Brown's program was number one in the nation. URI's ocean science department is widely viewed as one of the finest anywhere. I could go on.

CB: What's your strategy for convincing graduates of those universities to stay in Rhode Island instead of flocking to Boston or New York?

SP: Through a program called the Wavemaker FellowshipIt's a first of its kind for Rhode Island. It offers loan repayment to undergraduate and graduate level graduates of universities in STEM fields and design fields going to STEM jobs and design jobs. We offer up to $6,000 dollars per individual for up to four years. This type of payment can mitigate or even obliterate individual student debt. 

Already in our first round of awards we offered loan repayment to 215 individuals. The program gives our companies a competitive edge and helps to relieve our graduates of loan debt burden. It's aimed at reversing the brain drain and ensuring that we're keeping our best and brightest right here in Rhode Island.

CB: You were commissioner of education for the state of Connecticut prior to this role. What do you bring to your role as Rhode Island's commerce secretary from that experience? Set world-class universities aside for a second. How important is primary education to economic development in Rhode Island, and other states?

SP: It's essential. K-12 education and workforce training is an essential role of the public education system. Under Governor Raimondo we have aimed to stitch together these systems and provide new opportunities to our young people.

One example is the P-TECH program, which pairs a high school with our community college system, as well as partner employers. We've created three such consortia. I created some high school programs of this kind in Connecticut as well. Here in RhodIsland we are likely to seek funds for expansion in the future. The central notion is that young people ought to be able to opt into a program where they have a course of study that results in a free associate's degree and that is informed by the partner employers. These businesses describe the skills they're looking for in their workforce, and that description helps to inform the curriculum and the broader educational program, and young people experience and learn in a way that prepare them well for jobs with these employers.

CB: You've mentioned infrastructure, and that's something the new federal administration under President Donald Trump has talked about, too. What would you like to see from the federal government on infrastructure?

SP: Gov. Raimondo is truly leader within the nation on that subject. Our hope is that Rhode Island can continue to lead the way by providing a framework for infrastructure improvement in our state that can be emulated and replicated elsewhere in the country. 

There will always be changes in Washington. The global economy will ever be in flux. There are always variables beyond our control. We need to ensure Rhode Island's advances no matter what's happening on the national and the global scene. We need to control our own destiny. That's why we are investing in historic properties and industrial sites and in ground-up residential and office complexes, to ensure that Rhode Island has strong economic future.

Editor's Note: This story was updated on Feb. 8, 2016, to correct the amount that Raimondo has cut unemployment insurance and on Feb. 14, 2016, to correct the highway near which Johnson and Johnson is creating a health tech center.

February 6, 2017 - 7:05pm