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January 8, 2013

Maine recovery expected to lag US by more than a year

By Jessica Hall
jhall@pressherald.com
Staff Writer

PORTLAND — Maine's economy is expected to remain stagnant, a leading economist said Tuesday, with minimal job growth and a recovery that will likely trail the nation's recovery by about 15 months.

"Maine is still waiting for the recovery to begin," said Charles Colgan, professor of public policy and management at the University of Southern Maine's Muskie School of Public Service.

Speaking at the annual USM Corporate Partners "Breakfast with Charlie" presentation, Colgan said Maine's unemployment rate will be in the range of 7.2 percent to 7.4 percent over the next year.

Unemployment stood at 7.2 percent in November, down slightly from 7.4 percent in October and little changed from 7.1 percent a year earlier.

"Until the national economy grows more quickly, Maine won't grow more than a couple thousand jobs a year," said Colgan.

He expects wage and salary growth to increase 0.5 percent in 2013 over 2012, and total employment to rise 1.1 percent. Total employment takes into account self-employed workers and people who are working but not on company payrolls.

According to the state Department of Labor, Maine had 594,300 non-farm payroll jobs in November, down from about 620,000 non-farm payroll jobs before the recession.

While the U.S. has recovered half of the jobs it lost in the recession, Maine has regained about 10 percent of its jobs. In comparison, Massachusetts has recovered about 80 percent, Colgan said.

"We're in the same place we've been," Colgan said.

Maine represents 0.4 percent of the U.S. economy and needs the national growth engine to fuel improvements on the state level.

"We're the hair off the end of the tail on the dog. Unless the dog gets moving, we just sort of flap along in the breeze," Colgan said.

Colgan projects it will take 78 months for the U.S. economy to recover to pre-recession employment levels, and Maine will take 93 months to recover. The recession ended in June 2009.

Maine's manufacturing sector, which relies heavily on forest products, has not had a recovery. The health of that sector will depend heavily on the housing market in New England, Colgan said.

Maine also is not well positioned in growth areas such as professional and business services, while leisure and hospitality remain flat. Some sectors of strength include health care and community banking, he said.

Colgan's comments were echoed by local staffing and employment agencies.

Nathan Burns, manager of Maine Staffing Group in Portland, said in an interview that he has seen the biggest demand for health care employees and the greatest slump in calls for manufacturing jobs.

"Health care has always been in demand. People are always going to get sick, so health care is always going to be strong," Burns said. "Manufacturing has been rough. We haven't seen the long-term growth in that market that we'd expect."

While Congress' recent fiscal cliff agreement helped keep the economy from falling back into a recession, there are other risks on the horizon, Colgan said.

Colgan joked that the fiscal cliff agreement was the equivalent of fixing a leaky window in the first-class cabin of the Costa Concordia, the cruise ship that has remained partially submerged off the coast of Italy for about a year. Long-term issues loom over the economy, he said, ranging from health care and the ability to fund Medicare and Medicaid to the stagnation of middle-class incomes.

Staff Writer Jessica Hall can be contacted at 791-6316 or at:
jhall@pressherald.com





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