By some measures, economic conditions in Maine seem to be improving. Between 2000 and 2012, per capita personal income increased 48 percent to $40,100. That was still less than the U.S. level of $43,700, but our rate of increase was 11 percent faster than that of the U.S. We’re catching up.
Over the same time span, the average earnings of all those of us in Maine who are employed increased 39 percent to $43,300. That was still less than the U.S. level of $54,700, but our rate of increase was 7 percent faster than that of the U.S. So again, we’re catching up.
In addition, over the same time period, the average earnings of those of us in Maine who aren’t employed by someone else but run our own operations as sole proprietors increased 21 percent to $21,400. That was still less than the U.S. level of $30,500, but our rate of increase was 21 percent compared to an increase of only 12 percent for the U.S. Again, we’re catching up.
All of these statistics are good news. The incomes of people living and working in Maine are increasing faster than the national average. We’re catching up on a number of fronts.
But there’s a catch. The numbers of us enjoying these positive trends isn’t growing very much. For the U.S. as a whole, the number of people employed increased by 9 percent between 2000 and 2012. That’s 14 million more people working in 2012 than did in 2000. In Maine, the increase in jobs was only 17,400, only 1.3 percent of our total population. And even that figure is somewhat misleading because it is the result of combining a loss of 10,800 wage and salary jobs with an increase of 28,200 in the sole proprietor sector. Fewer of us are working for someone else, and more of us are working for ourselves.
In short, we’re catching up with the U.S. in terms of average income and average earnings not because we’re creating lots of high paying jobs, but because we have so few workers that those who are working are able to command a somewhat higher average pay compared to what workers were able to command 12 years ago.
This too is good news in that it indicates that the labor market is sending the right signals – if employers want to find workers, they are going to have to offer higher wages. But simultaneously, it is challenging news in that employers don’t have to offer higher wages. They could also simply keep going at their current levels, close up shop or move away. And all of those alternatives present us with a stark and very unpleasant future.
In many ways, Maine finds itself in the eye of a very violent storm. During the 1990s, we experienced a burst of population growth accompanied by a sprawling pattern of residential development. As this demographic bubble has aged into the labor force but not been replaced by an equivalently large cohort of new young families, we have enjoyed a period of slow employment growth and relatively rising incomes as workers already in the labor force advance in their careers.
But such a demographically unbalanced population cannot persist. Eventually, the working-age population will retire or die. To be replaced by whom? That is the critical question. If the answer is “By no one,” we will see increasing numbers of employers undertake orderly closings or relocations of their businesses. If the answer is, “By young immigrants drawn by Maine’s rising relative wages and enviable quality of life,” we will see a renaissance of growth and a bright and increasingly prosperous future. The alternative outcomes are starkly different. And neither is inevitable. The choice is ours to make. The right tax, regulatory, educational, transportation and broadband policies can usher in a new era of prosperity. Or, changing nothing will make true the handwriting we can already see on the wall.
Charles Lawton is chief economist for Planning Decisions Inc. He can be reached at: