AUGUSTA — The number of private sector jobs in Maine hit a new high in 2016, eclipsing pre-recession levels and growing at a sustained rate that flummoxed a state economist.

“I’m still struggling trying to understand how this could happen and how long it is sustainable,” Glenn Mills, chief economist at the Maine Department of Labor’s Center for Workforce Research, told members of the state’s Consensus Economic Forecasting Commission on Wednesday.

Mills and other economists also said that Maine’s current rosy situation is tempered by the reality that, absent an influx of young workers, the state likely faces an employment “plateau” in the coming decade as more Mainers age out of the workforce.

Much of the economic news presented by Mills and others Wednesday was positive.

Maine’s 3.2 percent unemployment figure in February is tied for the lowest on record and contributed to the third-longest stretch of unemployment below 4 percent in four decades.

There were, on average, 517,300 private sector jobs in Maine in 2016, up from 511,000 in 2015 and 489,000 in 2010. The Maine Department of Labor said the largest gains in 2016 were in the health care, hospitality and construction sectors. And despite the loss of additional paper mill jobs, total employment in the manufacturing sector remained steady in 2016.

“The number of manufacturing jobs was unchanged, as gains in transportation equipment (including shipbuilding and aircraft parts) and other industries offset the loss of 700 paper mill jobs,” a data sheet from the department stated.

HEAVY COMPETITION FOR WORKERS

While the total number of jobs is still somewhat lower than pre-recession levels because of the smaller workforce in local and state government, the number of federal jobs in the state is rising thanks, in large part, to a hiring spree at Portsmouth Naval Shipyard in Kittery.

Additionally, Mainers are earning more as companies vie for workers in a shrinking job pool. According to the Bureau of Economic Analysis, the total personal income of Mainers rose from $56.9 billion in 2015 to $59 billion in 2016. Going back to 2010, the average wage for a private sector job was $36,589. In 2015, it was $41,287. Final wage data for 2016 hasn’t been released yet.

“Wages are rising at a tremendous rate,” Mills said. “We have not seen, after inflation, this kind of rise in wages in decades. … It is symptomatic of a very tight labor market. There is a lot of competition for workers.”

As a case in point, a group of Maine employers chartered a bus to Boston last week for an event they organized to attract highly skilled workers to jobs in Maine.

According to the U.S. Bureau of Economic Analysis, personal income in Maine grew by 3.7 percent between 2015 and 2016, just above the 3.6 percent rate nationally. Mainers’ personal income grew by a smaller margin than their neighbors in New Hampshire and Massachusetts – at 4.7 percent and 4.3 percent, respectively – but exceeded the income growth seen in Connecticut, Vermont and Rhode Island, according to the bureau data.

Among potential reasons for the job growth are the possibility that more adults in their 40s through their 60s are getting jobs, and that the U.S. Census Bureau underestimated Maine’s working-age population. Mills said more young people also could be leaving areas of Maine where jobs are scarce and landing jobs in southern Maine rather than leaving the state.

ODD TAX TRENDS IN LIGHT OF HIRING

Yet despite the positive economic reports, Mike Allen of Maine Revenue Services said he was “baffled” that Maine saw a nearly 9 percent decline in individual income tax withholdings between the final fiscal quarters of 2015 and 2016. While not as severe, the state still saw a 1 percent decline year-over-year in income tax withholding during January and February, Allen said.

“You have all of this evidence that we should be seeing even higher withholding … and, in fact, we are seeing a 1 percent decline year over year for the first two months. It’s kind of difficult to explain,” Allen told commission members. “The good news is we are having a tremendous March.”

The five-member Consensus Economic Forecasting Commission is charged with providing analyses and recommendations to the governor and Legislature on the state’s future revenue flow. Two major ballot initiatives approved by voters last November – to increase the minimum wage to $9 an hour and to impose a 3 percent tax surcharge on earnings above $200,000 – will have an impact on the flow of tax dollars into state coffers, although to what extent remains unclear.

The Maine Office of Policy and Management released an analysis this month estimating that private sector employment would decline by 2,400 to 4,300 jobs and that the state’s gross domestic product would fall by $40 million to $160 million as a result of the 3 percent tax surcharge. Gov. Paul LePage and other critics of the ballot initiative to funnel more tax dollars toward schools predict the surcharge will drive some wealthier Mainers and/or their companies out of the state or discourage others from moving here.

Ultimately, commission members said they were not confident that the strong job growth seen in 2016 can be sustained. And while 2017 likely will see some growth, they do not expect it to be at the same pace as 2016.

The commission will issue its report early next month.

Kevin Miller can be contacted at 791-6312 or at:

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