Wednesday, April 23, 2014
"We can't get the labor."
Linda Bean on the major barrier to expanding her lobster processing plant in midcoast Maine
Several readers criticized my treatment of the so-called "demographic meteorite" headed for Maine by saying I neglected or even dismissed the important role of retirees who don't depend on jobs in Maine but contribute mightily to spending in Maine.
That fact is certainly true. Retirees -- like the customers of our largest industry, tourism -- bring money into the state that flows to a wide range of businesses thus supporting lots of jobs. Indeed, back in the late 1990's the administration of now Sen. Angus King produced two major studies -- Golden Opportunity I and II (big policy ideas, like blockbuster movies, often come with sequels) -- touting the benefits of an economic development policy designed to attract retirees.
Let's look at Lincoln County as an example. In 2010, per capita personal income there was $38,625, well above the Maine figure of $36,629 and 97 percent of the U.S. level of $39,791.
More telling as an indicator of the economic status of the county's population is the source of its income. Nearly a quarter of Lincoln County's income came from assets -- dividends, interest and rent. Another 22 percent came from transfer payments -- mostly Social Security, Medicare and Medicaid.
Only 54 percent of Lincoln County's income came from employee earnings, far lower than the 63 percent figure for Maine and the 66 percent total for the U.S. as a whole.
In addition, while Lincoln County accounted for less than 3 percent of Maine's 2010 population, it enjoyed nearly 6 percent of the state's seasonal homes.
Finally, the total value of taxable property in Lincoln County (the vast majority being residential property) amounted to approximately $225,000 per person -- nearly double the state average of $123,000.
In short, Lincoln County looks like a pretty good example for exploring the economic impact of retirees. And the results are not particularly encouraging, at least for employment in Lincoln County.
For the U.S. as a whole between 2000 and 2010, employment increased by 5 percent; for Maine, it rose just 1.4 percent; and for Lincoln County, it fell by 2 percent, dropping from 19,252 to 18,874.
More importantly, workers in Lincoln County are overwhelmingly dependent on jobs outside Lincoln County. Total earnings by workers living in Lincoln County in 2010 amounted to just over $711 million. Of that total, however, more than $186 million -- over 31 percent -- was made up of the earnings of residents commuting outside the county for work (net of the much smaller number of non-residents commuting into Lincoln County for work).
By contrast, the net earnings of workers commuting outside the state over those from outside the state commuting into Maine amounted to less than 3 percent of total earnings. And even with all that outward bound commuting to jobs outside the county, the average earnings per worker in Lincoln County was below the state average.
In sum, Lincoln County has a vastly higher than average share of its personal income derived from unearned sources and a vastly higher than average share of its earned income derived from commuting to jobs outside the county. Lots of retirees obviously haven't produced a demand for jobs paying wages sufficient to counteract outward commuting much less support internal employment growth.
And therein lies the only real solution to the dilemma facing both Linda Bean and rural Maine in general -- they need to create jobs with a level of productivity and value on the world stage sufficient not just to draw people off "welfare," but also to draw people who would prefer to work closer to home and to draw still more people who would like to become working neighbors of those fortunate enough to be able to live on their past earnings.
It's the creation of those jobs that represent the only realistic way to divert the demographic meteorite.
Charles Lawton is Chief Economist for Planning Decisions, Inc. He can be reached at: