August 1, 2013

Report: Maine workers among least productive in U.S.

But rather than blaming the workers themselves, the report says it is employers who are not taking full advantage of workers’ abilities.

By J. Craig Anderson canderson@pressherald.com
Staff Writer

Despite a relatively high education level, Mainers are among the country's least productive workers, says a report issued Thursday by the Maine Development Foundation.

The problem isn't lazy workers, according to the report. It cites the state's rural character, abundance of low-skilled occupations and lack of investment in training and equipment as likely reasons.

Improving productivity, defined by the report as the amount of money the average worker contributes to the gross state product each year, is critical to boosting the state's economy and attracting desirable employers, it says.

According to data from the U.S. Bureau of Economic Analysis, Maine workers generated an average of about $65,700 in gross state product per person in 2011, the most recent year for which reliable figures are available.

The report, based on earlier figures released by the bureau, estimated the average wealth generated per worker in 2011 at $64,600.

Both figures were calculated by taking the latest estimate of Maine's 2011 gross state product and dividing it by the average number of workers in the state during that year.

By that measure, Maine ranks 48th nationally in worker productivity, ahead of only Vermont and Montana. Maine was 23 percent below the average U.S. productivity of about $85,100 per worker in 2011.

Maine also lags most states in productivity growth, according to the report, a joint project between the nonprofit, nonpartisan foundation and the University of Maine's School of Economics.

From 2000 to 2011, gross state product per worker in Maine increased by an average of 3.5 percent annually, the report says, compared with the national average of 5.8 percent in the same period. Maine ranked 38th out of the 50 states in its rate of growth.

The report's authors, led by UMaine economics professor Todd Gabe, say Maine's economy should be generating about $17,000 more per worker each year than it does, based on the education level of the state's work force.

Rather than blaming low productivity on workers, the report says the industries in which they work don't take full advantage of their abilities.

Maine's economy is driven largely by agriculture, health care, social assistance and retail jobs, which are typically at the lower end of the pay scale and don't offer as many opportunities for employees to use their skills and education.

While the Maine Development Foundation recommends improvement in education as a way to increase productivity, the report notes that 28.4 percent of Maine's working-age population has at least a bachelor's degree.

"The state is 20th nationally by this measure of human capital, which does not line up with its bottom-three ranking in productivity," it says.

The foundation's program director, Ryan Neale, said some factors that affect productivity in Maine would be difficult to change.

"Part of our low productivity is simply because we are a rural state," Neale said, while many of the industries that contribute to higher productivity are concentrated in urban areas. They include professional services and technology-based jobs such as engineering and software development.

Another problem in Maine is what Neale called "underemployment," when workers cannot fully utilize their college degrees or other education because of a shortage of available jobs in their chosen fields.

That problem can be solved in part by encouraging students to pursue more marketable degrees, such as those in science, technology, engineering and mathematics, Neale said.

Another way to boost productivity over time would be for the state to invest more in education, research and development, he said.

Portland Regional Chamber CEO Christopher Hall said Maine must spend more money on enticing quality employers to come to the state, especially its rural areas.

He said the productivity report merely underscores what members of the state's business community have been saying for years.

"We've known that this gap has existed for a long time," Hall said. "What hasn't happened is a solution -- an answer."

Hall said Maine lacks public-private incentive and outreach programs that are competitive with other states in attracting quality employers and industries.

"Maybe we haven't been aggressive enough in attacking," he said.

Neale said the state's productivity problem is complex and has no quick fix.

The report is the first in a series of quarterly research papers to be written by graduate students and faculty members in UMaine's School of Economics, said the school's director, Mario Teisl.

Teisl said the next report likely will focus on poverty in the state, followed by a report on education.

J. Craig Anderson can be contacted at 791-6390 or at:

canderson@pressherald.com

Twitter: @jcraiganderson

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