June 10, 2012

Charles Lawton: Manufacturing holds key to prosperity in 'Rim Counties' – and state

Too often, the economic fate of rural Maine seems to be nothing more than a hopeless drumbeat of depressing statistics. Over the past two decades, our so-called "Rim Counties" (Washington, Aroostook, Piscataquis, Somerset, Franklin and Oxford) have seen their share of the state's total employment fall from 19 percent to 16 percent; their share of total earnings fall from 17 percent to 14 percent; and their share of total population fall from 22 percent to 20 percent.

While the population of central Maine (Androscoggin, Kennebec and Penobscot counties) rose over 4 percent over this period, and the population of coastal Maine (the seven counties running from York to Hancock) saw its population increase by nearly 16 percent, the population of the Rim Counties actually fell by more than 3 percent. And while the real (inflation-adjusted) earnings of workers in the coastal and central regions increased over the period, those of Rim Counties fell slightly from $34,700 in 1990 to $34,300 in 2010.

For virtually all of that period, the state has been trying to find ways to reverse this economic decline. From promoting quality of place, to expanding tourism from the coastal region, from encouraging renewable energy development and local agriculture, to funding efforts to expand hi-speed Internet connections into our rural regions, the state has been seeking ways to extend economic growth into our struggling periphery.

A careful examination of the data suggests that one topic that deserves further examination is rural manufacturing. As noted above, the Rim County shares of total state employment, earnings and population suffered declines over the past two decades. With regard to manufacturing, however, a somewhat different story emerges. The Rim County share of total state manufacturing employment did decline somewhat, dropping from 25 percent of the state total in 1990 to 24 percent in 2010. Its share of total employee earnings from manufacturing, however, rose from 23 percent to 24 percent. And, most significantly, the average earnings of a manufacturing employee in the Rim Counties jumped from 94 percent of the state average manufacturing wage in 1990 to 100 percent in 2010. In inflation-adjusted terms, this represents a jump in the average annual earnings of a Rim County manufacturing worker from $49,700 in 1990 to $65,900 in 2010.

These figures point clearly to two important factors in the economic transformation of the past two decades. The first is the importance of manufacturing. The second is the diminishing link between manufacturing and the surrounding state or regional economy.

In 1990, the average earnings per worker in manufacturing was 30 percent higher than the average earnings per worker for the economy as a whole. And, most significantly, that 30 percent differential held true across the state. It was 30 percent higher in the Rim region and in the central region and in the coastal region.

In 2010, in contrast, while the average manufacturing earnings in the Rim Counties increased by 33 percent, the average earnings for all industries in the Rim Counties actually declined slightly. As a result, the manufacturing wage "premium" in these rural counties increased from 30 percent to 90 percent. A similar, but less extreme, pattern held true in the central and coastal regions, where the manufacturing "premium" increased to 50 percent and 60 percent, respectively, over the all industry wage.

This "premium" clearly represents the results of increasing productivity in the manufacturing sector. It also, however, points the way to increasing the state's prosperity, especially in our rural regions -- rebuild the linkages between our manufacturing core and the surrounding economy.

And that task must follow the same path pioneered by manufacturing -- ceaseless increases in productivity. And that, in turn, points to the critical importance of industry-specific innovation and training programs.

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at:

clawton@planning decisions.com

 

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors




Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)