One hot summer day, a retiree, a construction worker and a government employee took a break from their journey and went skinny-dipping. As they finished their swim, they saw a bear lumbering toward them. The construction worker grabbed his clothes and boots and started to run, only to see the other two taking their time putting on their shoes.

“Hey, you gotta run or the bear will eat you!” cried the laborer. The other two looked calmly at him and said in unison, “We don’t have to outrun the bear, we just have to outrun you!”

Last week, the U.S. Bureau of Labor Statistics released its personal income data for the first quarter of 2010. In the last year, overall personal income rose 3.5 percent in Maine, compared with 1.9 percent for the entire United States. That statistic may make us feel that we’ve outrun our fellow U.S. citizens, but a closer look at the report suggests someone in Maine is getting gnawed on.

There are three broad categories of personal income to measure:

• Government workers.

• Private sector workers.

• Non-working citizens in Maine, generally retirees, who depend in part on government transfer payments for their personal income.

Digging into the numbers explains why Maine is doing better than the nation.

Government employees in Maine have done very well over the last year. Roughly 15,000 federal government employees in Maine saw their average personal income rise by 8.4 percent, to an average of about $68,200.

Maine’s 84,000 state and local government employees had an average 4.1 percent increase in personal income. State employees have an average income of about $45,000 and local government employees average about $35,000, according to the Maine Bureau of Labor Statistics. Their counterparts across the nation received less than a 1 percent increase.

The figures don’t include health or retirement benefits, which average about 25 percent in the private sector and closer to 40 percent of the annual wage in the public sector. Also important to note is that 17 percent of all workers in Maine are employed by government while only 7 percent of the nation’s work force is on the government payroll.

For retirees who did not work in the past year to earn their income, the value of those government transfer payments in Maine grew by 8.3 percent. Nationally, the figure was 9.2 percent.

Transfer payments are defined as: “Government payments to individuals (and) includes retirement and disability insurance benefits, medical payments (mainly Medicare and Medicaid), income maintenance benefits, unemployment insurance benefits, veterans’ benefits, and federal grants and loans to students.”

Even though retirees have paid into Social Security and Medicare, they are now getting far more value back from Social Security and health care benefits than they contributed.

Folks working in the private sector account for more than eight out of 10 jobs in Maine, yet they did the worst. Their overall personal income grew by just 1.8 percent in the past year. The biggest winners for personal income growth were those working in accommodation and food services (5.7 percent) as well as health care and social assistance (5.2 percent).

Incomes dropped by almost 1 percent for those working in the higher-paid professional, scientific and technical services segment, as well as those in the finance and insurance (minus 4.7 percent) and construction (minus 4.4 percent) sectors.

These most recent numbers bring to light some thorny issues about public policy, employment compensation and social benefits. Public sector employee unions have negotiated successfully and in good faith for wages and benefits that are generous by most standards. And non-working retirees expect to have their benefits paid as promised.

But times have changed. The laborer is hobbled and the bear is hungry.

The two fellas lacing up their shoes with no urgency have forgotten that if the bear eats their pal, their source of income disappears. That’s what’s happening in Maine’s economy.

The private sector is being gnawed by the bear without much assistance from the unionized public sector or from retirees whose growing sense of entitlement is a powerful political force.

In fact, the vast majority in the private sector sees government and expanded entitlement programs as impediments to staying ahead of the bear.

But if they’re going to confront the bear, then all three have to ensure they are on equal footing. If they work together, they can expect to enjoy other days of bear-free swimming along the road they travel together.

What do you think and what are you going to do about it?

 

Tony Payne is executive director of the Alliance for Maine’s Future, a nonprofit, nonpartisan organization that focuses on the effects of public policy on the state’s economy. He can be reached at: tpayne@midmaine.com

 

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