The demographic dilemma facing the Maine economy is clear and ominous.

Department of Labor employment projections based on long-term national trends indicate that Maine could — if we can meet the demand — see a net growth of more than 35,000 jobs by 2020.

On an annual basis, this growth derives from just over 15,000 replacement job openings per year (assuming expected rates of retirement) and net new growth of approximately 4,400 jobs per year.

The dilemma arises from our unbalanced demographic structure. We have far more older people moving into retirement age than we have young people moving into working age.

Today Maine has about seven people in the 65-plus age cohort for every 10 people in the 20-to-40 age cohort. By 2020, that ratio could well rise to one to one.

Obviously, one solution to this dilemma is simply to increase the labor force participation rate, to have more of our people go to work.

And, as I noted last week, that is exactly what is happening in the 65-plus cohort. Their participation rate has increased from 14 percent in 2000 to 21 percent in 2011.

While this trend may reduce our annual job replacement need somewhat, it doesn’t generate enough new workers to fill the potential job openings. And, however invulnerable and fully versed in all knowledge baby boomers may feel, they can’t continue working forever.

Maine’s real jobs dilemma is that labor force participation for every other age cohort is moving in the opposite direction — declining.

Some portion of this trend reflects the lingering effects of the Great Recession.

There is a natural tendency to stay in school during a recession, to become discouraged, to cease even looking for work and finally to work at part-time jobs while preferring full-time work. In this category, Maine is among the national leaders.

These trends of decreasing labor force participation, particularly among our youngest workers, are dually threatening.

They mean we well might not achieve even the modest job growth now forecast. And they mean we will face not merely the challenge of providing health and retirement income for a growing elderly population, but also providing assistance for a growing group of young people disengaged from the avenues of prosperity that in the past produced what became the touchstone of our recent election — the middle class.

But achieving a prosperous middle class will require far more than tinkering with tax rates. That there even is a middle class is testament to our ability as a society to link social adjustment to technological change.

A century ago, people worried about the millions leaving a world of rural agriculture for a world of urban industrialization.

Today the move is less from countryside to city and less from agriculture to industry than from production to design.

Our challenge today is to find ways to engage all in the process of creating and building sustainable enterprises.

We must break down the artificial walls between education and work, between producing and thinking, between boss and employee, between skills training and humanistic education, ultimately between life and the labor market.

The only way we can achieve a prosperous economy is to engage everyone in the process of making his and her own way in the world. And that effort does not end with departure from the institutions of formal education, nor does it cease at the state’s borders. We must make Maine the way life could be.

Charles Lawton is chief economist for Planning Decisions, Inc. He can be reached at:

clawton@planningdecisions.com

 

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