November 14, 2013

Maine won’t reach pre-recession job levels until 2018, economist says

A prolonged period of weak employment growth in Maine – as well as an aging population and youth flight – is hurting the state.

From staff reports

Maine is expected to see a slight increase in jobs by the end of 2017, but numbers will still lag pre-recession levels, according to the fall economic outlook released by the New England Economic Education Partnership.

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With major hotels under construction, Portland should see gains in the leisure and hospitality sectors. This May 2013 photo shows a Marriott hotel going up on Commercial Street.nd hospitality will be the leading job sectors over the next four years.

John Ewing/2013 Press Herald File

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Maine will have about 617,000 jobs by the end of 2017, but that’s still down from 620,000 jobs before the recession, according to the report by Charles Colgan, professor of public policy and management at the University of Southern Maine’s Muskie School of Public Service.

Leading sectors in the recovery will include professional and business services, and leisure and hospitality, Colgan said. Much of the gain in the leisure and hospitality sector will be seen in Portland, where major hotels are under construction and scheduled to open in 2014.

Colgan said he expects the manufacturing sector will continue to struggle unless the pace of housing construction throughout the Northeast is robust enough to increase demand for lumber.

The government sector will continue to shed jobs, especially at the local level as the state ends revenue sharing and cuts aid to local schools.

Retail trade employment will grow only by a little more than 2,000 jobs, a small increase in a sector with more than 80,000 employees, Colgan said. He said the weak growth in retail was attributable to increased competition from Internet sales and the end of growth in big-box stores.

The other major sector showing much-slower-than-expected growth is education and health, which is primarily composed of the health care and social assistance industries. While this area has been a major employer in Maine, hospitals are cutting costs and staff, Colgan said.

The prolonged period of weak employment growth in Maine, as well as the aging population and weak migration of younger people into the state, is having an effect on the Maine economy, he said.

Colgan expects wage and salary growth will accelerate from 1.1 percent per year to 3.3 percent per year at the end of 2017, but that would still fall below the 4.1 percent per year growth prior to the recession.

The economic forecasts for the New England region and each of the six New England states will be presented at the Fall Economic Outlook Conference hosted by the New England Economic Partnership on Thursday at the Federal Reserve Bank of Boston.

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