In the effort to decide whether the glass is half full or half empty, it is interesting to compare the patterns of change since 2008 of the overall economy – total employment and earnings – with that of the sole proprietor sector of the economy. For Maine as a whole, total earnings are up about 5 percent since 2008, while total employment is down by 3 percent.
Over the same period, the income of Maine sole proprietors has grown by 24 percent, from nearly $3.3 billion to just over $4 billion. Total employment by the state’s proprietors however has remained basically stagnant at just over 187,000. As a result, the average income per proprietor rose from about $16,900 in 2008 to $20,900 in 2012 – hardly an obvious road to riches, but a movement in the right direction.
In this arena, the most significant difference between Maine and the nation as a whole is – no surprise here – the absence of job growth. For the U.S. as a whole, proprietors’ income over the period grew by 19 percent (slightly less than Maine’s rate), but proprietors’ employment increased by 10 percent.
In short, the challenge for Maine seems to be inducing small businesses to add employees. Many small enterprises seem to be thriving but reluctant to take the big step of adding employees.
Some say this reflects the nature of Maine’s attractiveness. It allows, even encourages, a wide range of people to undertake money-making activities – often “on the side” – as a way to “make do.” At the same time, Maine’s vaunted quality of life attracts people interested in “lifestyle” businesses, enterprises in which people with particular skills can earn incomes “from away” without having to “be away,” at least not all the time. Many of these enterprises are founded by immigrants from larger metropolitan areas who came to Maine to escape the pressures of long commutes and high pressure jobs.
Maine certainly needs to welcome as many “lifestyle” immigrants as we can attract. Indeed, we need to welcome as many immigrants of any type as we can attract. But we cannot delude ourselves that the small-scale businesses such migration often spawns will be sufficient to overcome the demographic and economic pressures we face. Maine needs to attract and encourage businesses that want to grow … and continue to grow.
Maine has been very strong in encouraging entrepreneurship, in providing seed funding for many fledgling enterprises with good ideas. We have been much less successful in bringing those businesses along to the level of self-sustaining and continuous growth.
It’s great to have business incubators, but we need to understand the business life cycle beyond birth and early life. We need to get our business “chicks” out of the incubator and out into the wider world.
We need to take a longer view toward our business assistance programs, because only in that way can we hope that our intensive early assistance will produce the long-run results we need to meet the challenges we face.
Charles Lawton is chief economist for Planning Decisions, Inc. He can be reached at: