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Providence One of America’s Most Financially Unequal Cities

Monday, November 24, 2014


Mayor-Elect Jorge Elorza - calls for One Providence

The City of Providence is one of the most economically unequal cities in America. A GoLocalProv review of income data developed by The Providence Plan finds that the income difference between the affluent sections of the city are as much as 550% times higher than in the poorest sections of Providence.

An analysis of 300 cities by Bloomberg News earlier this year found that Providence was the 9th most income unequal city in the United States. Seven of the eight cities more unequal are from the South. Providence is now emerging as a tale of two cities. One part of the city is highly educated, very affluent and politically strong. The other Providence is poor, under educated and mostly Hispanic.

"Attacking income inequality requires a multi-pronged approach.  We need to put more money in people’s pockets through a reasonable minimum wage and a tax code that asks people to contribute based on their ability to pay,” said Kate Brewster, Executive Director of the RI Economic Progress Institute.  “As a state, we can help build a bridge to the middle class for more Rhode Islanders by helping low-wage workers pay for child care and health care until they can afford it on their own; and we need to raise adequate resources to invest in economic opportunity for everyone – which means quality, affordable education for our youngest residents to our oldest workers and everyone in between.  If we can find the will to lift up the education and skills of our workers’ in a meaningful way, we will have a chance at growing better paying jobs in the Ocean State,” said Brewster.

Much was made of the outcome of the Providence Mayor’s race, where Mayor-elect Jorge Elorza lost most of the lower income wards in the city, but racked up big numbers in the affluent East Side.

Both politically and economically, Providence is one of the most divided cities in America. Mayor-elect Elorza is presently in the midst of a “listening” strategy visiting different sections of the city to get input on how to create “One Providence.”

"There is a lack of income in the middle and lower-middle quintiles. The people in the income scale that spend the most money have the least and that makes it difficult for retail to thrive here," said policy analyst Tom Sgouros.  "Our focus should be on raising wages at the lower levels, and there are a lot of policies we can pursue: raise the minimum wage, establish and enforce living wage policies for government purchasing, crack down on wage theft and job misclassification (i.e. pretending that employees are contractors), raise the salary threshold for mandatory overtime, and so on."

Rich and Poor

One census track on the East Side of Providence in the Blackstone Boulevard section of the city along the Seekonk River, reports a median family income of $170,625. In contrast, median household income in many sections of the city are 80% lower. Moreover, for Hispanics' median household income for the entire city is just $27,000.

“We know that we have a depressed economy, and with that you'll see greater income inequalities," said Mike Stenhouse with the RI Center for Freedom and Prosperity, of Providence's ranking.  "The middle class will disappear.  It's consistent with what we know.  The big mistake we keep making is more taxes, more welfare, more handouts.  So the question is what do you want, a welfare check or a paycheck?  If you want to have a robust economy, we'll have to put a little more faith that people can find work to improve their status."

The Bloomberg analysis looked at income by quintiles and applied the Gini coefficient, which is calculated by the Census from household income share by quintiles, to measure distribution of wealth. It ranges from zero, which reflects absolute equality, to one, complete inequality. Bloomberg also found that just under 29% of Providence residence live in poverty.

Elorza during the campaign, PHOTO: Richard McCaffrey

A long way from One Providence

“Is a One Providence feasible?  It's not feasible if we can't get that income disparity closed.  So many of our children live in poverty.  I'm willing to have workshops, to have those discussions.  How do we help the people in poverty get out of poverty?” said Providence City Councilman Kevin Jackson (Ward 3-D).  “A lot of people don't want to have that conversation though because we know that we've failed.  But I'm willing to do that.  Those are the people don't have a voice, but that need one."

For Stenhouse, he sees the political fallout an outcome of one party rule.

“Who is really looking out for the poor?  Is it the party that wants to keep them dependent on government with little opportunity to rise?  Or is it someone who wants to free up the burdens we have, allow for educational opportunities, and provide people with the chance to rise up the income ladder?” asked Stenhouse.


Related Slideshow: 5 Ways Taveras Could Have Grown Jobs in Providence

During Angel Taveras' tenure as Mayor of Providence, the unemployment rate ballooned. According, to US Department of Labor statistics, Providence hit a 12.5% unemployment level in the spring on 2014. 

Hispanic unemployment is among the worst in the United States. GoLocal looked at tangible, revenue neutral ways Taveras' Administration could have grown jobs.

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Enforce First Source

1) Failure to Enforce First Source

DARE recently filed a lawsuit asking the court to appoint a moderator so that the Taveras administration would comply with the law that states that companies that get funding or special deals from the City of Providence make a best effort to employ people from the City.

A GoLocal investigation found the program is in chaos -- companies ignore the requirement (or claim that they they did not know about it). Worse yet, the City never enforced it. 

Jobs Lost: 1,100 estimated

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PEDP Reform

2) Providence Economic Development Partnership

All the problems with PEDP began before Taveras took office, but the "reforms" did little to improve the performance of the federally investigated and federally fined City agency. As GoLocal's Kate Nagle reported last October - three years into Taveras' administration:

"The Providence Economic Development Partnership (PEDP), which came under a federal investigation following a series of GoLocalProv reports, is still facing $2.8 million in loans past due according to documents secured by GoLocalProv through an access to public records request.

According to documents provided by the city to GoLocal, of 136 current loans with a total principle balance of $16.5 million, more than one-third -- 48 in total -- are more than 121 days past due.

The PEDP had voted to write off $2.1 million on loan debt in June 2012, but financial problems continue to persist as the city -- and its federal oversight agency -- determine how to proceed."

Jobs Lost: If the $2.8 million was collected and loaned, an estimated 80 to 120 additional jobs would have been created.

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Port of Providence

3) Port Financing Delayed

The Port of Providence/ProvPort received a $20 million federal grant to add cranes and barges to the Port.  The application was submitted by ProvPort in conjunction with the Cicilline Administration.  The U.S. DOT awarded the grant to the City at the end of the Cicilline administration, but the Taveras administration dragged their feet and delayed the project until the State had to step in and take over the project.  

The project was one year delayed and the barges are still not on site four years later.

Jobs Lost: 400 estimated

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Prov Police

4) Providence Police

May be one of the biggest mistakes of the Taveras administration was his devastating cuts to the Police Department  and the impact has not only been the number of police jobs, but the impact to police response and enforcement.

As GoLocal's Stephen Beale reported in 2012:

As of last week, the number of sworn officers stood at 428. A year and a half ago it was 494.

Joe Rodio, chief legal counsel for the police union, warns the city does not have enough officers. “The rank and file feel the strain because there’s not enough officers on the street,” Rodio said. “We’re feeling the hit from the number of people on the job.”

The numbers of sworn staff peaked at just over 500 during the Dean Esserman era. But during the 1990s the department functioned with a smaller complement, generally hovering around 440 officers. That makes the current force level the lowest it has been in two decades.
“It’s fair to say the numbers are the numbers. The staffing is at the lowest it has been in years,” said Chief Hugh Clements. “I would agree we need to start beefing up our numbers again.”

Jobs Lost: 80-95 Police Officers 
(note: Taveras finally started a police academy class in May of 2014)

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Downcity Vacancies

5) Businesses in Downcity

Providence now suffers from the 4th highest commercial real estate tax rate in the U.S. - a minimal improvement oover the last ranking. This is a fact not lost of businesses looking to locate in downtown. Providence is a long way from a city that was the HQ to Fleet Bank, Amica Insurance, Citizens Bank and hosts of others.

The Superman building is just one of the under-utilized office spaces downtown.  According to CBRE's New England Report, "Overall, there was 81,000 of square feet of negative absorption, but 59,000 square feet this came from the vacancy at One Weybosset (Superman)."

Jobs Missed: 89,000 square feet of leased office space would deliver 445 jobs. 

(Average manager position requires 150 office sq. ft., plus 50 feet common space)


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