The Milken Institute – a research institute based in California and best known in Maine for its outstanding teacher awards – has just released its 2010 Best Performing Cities report. The report, conducted annually since 1999, ranks the nation’s metropolitan areas according to a variety of indices intended to “provide an objective, comprehensive measure of economic performance across metropolitan areas of the country.”

Unlike many other reports and indices that rank cities and states on inputs such as energy and health care costs, tax burden, regulatory climate, quality of life and other elements considered necessary for economic prosperity, the Milken report focuses exclusively on economic outcomes.

“Static input measures,” the report says, “are subject to large variations and can be highly subjective, making them less meaningful than more objective indicators of outcome.”

Given this commitment to empirical results, the Milken analysts base their report on measures of growth in production, employment and wages, both overall and in a group of 22 so-called “high-tech” industries that Milken’s research deems particularly significant for overall prosperity.

“Metros dedicated to growing their technology base and human capital,” the report says, “are better positioned to overcome short-term shifts in the economy.” In addition, it concludes, “growth in high-tech GDP creates a number of additional jobs in non high-tech industries.”

AVERAGE OVERALL

It is interesting, therefore, to see how New England’s metro statistical areas (MSA’s) fare under the Milken analysis.

In terms of overall job growth, Maine’s three MSA’s (Greater Portland, Greater Bangor and Lewiston-Auburn) do fairly well.

Only four of New England’s 15 MSA’s exceeded the national average in overall job growth over the past five years. These were Hartford, Cambridge, Boston and Rockingham-Strafford County in New Hampshire.

After these, Maine’s three MSA’s ranked with Burlington, Vermont at 99 percent of the national average, exceeding the growth of Connecticut MSA’s, southern and western Massachusetts MSA’s and even the Manchester, N.H. MSA.

Similar relative results held true for short-term (one year) job growth and for five-year and one-year rates of wage growth.
When it came to the high-tech components of the Milken index, however, Maine’s MSA’s fell short.

The Lewiston-Auburn MSA actually led all New England MSA’s in growth of high-tech production – 12 percent above the national average – but high-tech production growth in the Portland MSA was 12 percent below the national average, and in the Bangor MSA it was 21 percent below the national average.

IT’S ALL ABOUT HIGH TECH

Maine as a whole, therefore, simply equaled the national average.

In overall concentration of production in high-tech industries, Maine also fell short. The leader here – quite naturally, given its educational infrastructure – is the Cambridge, Massachusetts MSA. It’s high-tech concentration index was 3.25 times the national average.

ortland’s in contrast was 0.72 times the national average; Bangor’s was 0.72 times the national average; and Lewiston-Auburn’s was only 0.37 times the national average.

A similar pattern held true for diversity of high-tech industries. Of the 22 industrial sectors deemed by the Milken Institute to be high-tech, the Cambridge MSA had production levels above the national average in 18. The Worcester MSA had above average concentrations in 14 industries; the Rockingham-Strafford County MSA had above average concentrations in 13, and the Manchester MSA was above average in 12 sectors.

The Portland MSA, in contrast, was above average in only 7 sectors, the Bangor MSA in only 4 and the Lewiston-Auburn area in only 3 sectors. Maine’s overall high-tech diversity score, therefore, was approximately 4.7 compared to the New England MSA average of 8.8.

The overall point to be drawn from this report, therefore, is that Maine’s economic problem is not simply job creation. In terms of overall job creation over the past five years, we are only slightly below the average for all metro areas in the country.

The problem, rather – at least from the perspective of the Milken Institute – is that we are not creating the quantity and diversity of high-tech jobs that we need in order to ensure our future prosperity.

IDENTIFY AND EDUCATE

The reasons for this shortcoming are legion. But the most important, I think, is our failure to identify precisely the particular skills, experience and attitudes most needed by the high-tech businesses we do have and to communicate these clearly and directly to our institutions of higher education.

We need to do this not just so that our educators can prepare classes but so they can prepare a whole array of learning experiences and learning locations designed to help our high-tech businesses grow.

As the Milken Report concludes, “knowledge-based economies tend to form where high-tech activity is growing, creating more incentives for businesses and entrepreneurs.”

Given the strong and growing presence of such high-tech activity in the MSA’s immediately to our south, there is no reason, other than political resolve, that we in Maine cannot extend such growth into our state as well.

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at:
[email protected]