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Maine Voices: It takes people to spur growth

By MICHAEL LeVERT

AUGUSTA - Even as Maine and the country begin to recover from the effects of the global recession, jobs remain the most important issue on the minds of Maine voters.

ABOUT THE AUTHOR

Michael LeVert is the Maine state economist.

And there is no shortage of ideas on how to improve Maine's economy, many of which focus on reducing business costs and streamlining government.

Certainly, those are important to move the Maine economy forward. But the plain truth is, by themselves they won't be enough.

The real key to economic success goes beyond cheaper energy, lower transportation costs and regulations, although those things are important. It's about people.

Any discussion about improving Maine's economy should include the need to grow our population, attract new people to our state and keep our best and brightest at home.

Consider Portland. From 2001-2008 (the most recent data available), the Portland metropolitan area has seen its population grow by 4 percent, earnings by 33 percent and employment by 9 percent.

BEATING BOSTON

That beats economic growth for the Boston and Manchester metropolitan areas, which are often held up as places with a better business climate and lower taxes.

There are many reasons Portland metro has done well: It has an airport; it's close to Boston; it's urban; 40 percent of residents in Portland proper have bachelor's degrees -- that's higher than Boston; and, perhaps most important, people are drawn to Portland to live, work and visit because of its wonderful place-based assets and quality of life.

This impressive record is true even though Portland has roughly the same business, regulatory and tax environment as the rest of Maine.

So what may we learn from Portland's relative success?

That economic growth is much more than streamlining government and cutting taxes. In fact, from Portland to Fort Kent, the old way of doing business -- competing on low costs, selling commodity products and passively benefiting from tourists from away -- is dying a hard death.

Commerce today is global, and the competition is fierce. There will always be someplace with cheaper labor and energy costs, more generous tax incentives, and less stringent environmental regulations.

Today, the opportunities for economic growth are in value-added manufacturing and quality services. Think of the Sappi paper mill in Westbrook, which has an integrated technology center where engineers brainstorm new products.

Or think of Hodgdon Yachts in East Boothbay, where experienced boat builders use wood composite materials and computer-aided design to craft state-of-the-art vessels.

Opportunities are in experiential tourism, where entrepreneurs like Matt Polstein at the New England Outdoor Center in Millinocket and Nancy Grey at the Harraseeket Inn in Freeport bring up-scale clientele to Maine's rivers, mountains and coast.

Opportunities are also in cutting-edge information technology solutions to make faster, smarter, better decisions in everything from energy consumption to health care. Think of Health Dialog, in Portland, where a couple hundred talented analysts are using medical claims data and sophisticated computer software to improve preventative care strategies.

For sure, lower taxes, more efficient government and better roads will help Maine businesses take full advantage of these growth opportunities. And on these fronts, there has been significant progress during Gov. Baldacci's administration that must be continued: Maine state government has shrunk by 1,000 positions; many of our school districts have consolidated their backroom administrative functions; our county and state jails have unified, by law freezing their share of property taxes at 2007 levels; taxes on business equipment have been eliminated; and, by holding the line on taxes throughout the recession, our combined state and local tax burden has fallen since 2004.

PEOPLE ARE NEEDED

But to grow, what Maine businesses need most of all is people -- skilled Maine residents, entrepreneurs from away, and young people fresh out of good universities.

Maine businesses live or die on human capital, which often comes from other places.

And this shouldn't be a surprise. Where Maine's economy has prospered -- from Millinocket, the "Magic City," circa 1900, to Portland metro for most of this decade -- it has been dependent on an ability to attract people, particularly skilled people, to live, work and play here.

In the coming months, many ideas will be proposed to continue to lower business costs, improve infrastructure and make government more efficient.

But to have an honest and frank dialogue about moving the Maine economy forward, we must recognize they are not ends in themselves. They are tools to grow our population and support our workforce, and thus our economy.

And by themselves, without human capital to implement them, they will not be enough.

- Special to the Telegram