Tiny Rhode Island has more than its share of unemployed

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Which state had the worst unemployment last year? No surprise -- Michigan with an 8.4% unemployment rate.

But what is a bit surprising from the recent figures from the federal Bureau of Labor Statistics is that Rhode Island was second behind Michigan and its out-of-work auto workers, with 7.8% unemployment. Rhode Island also had the highest jump among states in its jobless rate, up 2.6 percentage points in 2008.

Something bad is happening in the smallest state in the union that most Americans probably don't know about. With a bit more than 1 million people, Rhode Island had a higher unemployment rate last year than California's 7.2%.

Much of Rhode Island's economy is based on services such as health care, education and manufacturing, and maybe the recession hits smaller areas worse than other areas of the country.

Its Blackstone River Valley is known as the "Birthplace of the American Industrial Revolution," so you'd think it would at least have some historical sites to show off to touring capitalists. In fact, tourism is the state's second largest industry, behind health services.

It looks like a booming state. Its capital, Providence, is the headquarters of Citizens Financial Group, a banking corporation. Rhode Island also has its share of Fortune 500 and Fortune 1000 companies based there, such as CVS, Hasbro, and Amica Mutual Insurance.

One thing that is keeping businesses out of the state, and possibly keeping fewer workers from finding jobs, is that Rhode Island's taxes are appreciably higher than neighboring states. Its income tax is based on 25% of the payer's federal income tax payment.

The governor has claimed that the higher tax rate inhibits business growth, and he's calling for tax reductions to help attract businesses.

Whatever the reason, Rhode Island businesses should be working just as hard as Michigan's auto companies to get some federal bailout money and get people back to work.

Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.AaronCrowe.net

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