It is often said that Maine is a small-business state. It would be more accurate to say that Maine is a state without large businesses.

According to Department of Labor data for the first quarter of 2013, Maine had 44,301 establishments that employed fewer than 50 people. This amounted to just less than 97 percent of all private establishments in the state. Establishment here means any unit filing a separate payroll report. Thus, this category includes both independent businesses and subsidiaries of larger entities.

Such a large concentration in the “fewer than 50 employees” category seems to confirm the “small-business” nature of Maine’s economic structure. But in fact, Maine’s business structure barely differs from the national average in this regard. For the U.S. as a whole, 96 percent of all establishments fall into this “fewer than 50” size category.

Maine’s difference is found in its lack of larger establishments. In the 50-to-499 employment size category, Maine stands at 75 percent of the national average. In the 500-to-999 employment size category, Maine stands at 71 percent of the national average. And in the 1,000-plus employment size category, Maine stands at just 46 percent of the national average.

The consequence of this relatively smaller number of middle and larger size businesses is that Maine is far more dependent on its small businesses for jobs and income. While Maine is only 1 percent above the national average in the share of its private business units in the “less than 50 employees” size category, it is 19 percent above the national average in the share of jobs provided by this category and 28 percent above the national average in the share of wages provided by the “less than 50 category.”

And, since this “less than 50 employees” category tends to pay lower than average wages ($659 average per week in 2013, compared with $1,272 for the “1,000-plus” category), Maine’s income tends to be lower than the national average.


All of this is to say that the key to increasing Maine’s overall economic health is not just encouraging entrepreneurship and new business formation, but cultivating business growth. Starting a new business is one thing. Keeping it going and growing it over time is quite another. It’s great to see new businesses form, and great to have incubators to help them survive the early stages of life. But we need to see them develop to self-sustaining growth if we are to transform our economy.

In this regard, the Department of Labor data do reveal one very interesting, encouraging and reality-facing sign. Between 2008 and 2013, the average weekly wage in Maine increased faster – in each employment-size category – than its comparable U.S. average. This was particularly notable in the 500 to 999 employment size category where the average weekly wage in Maine increased from $926 to $1,175, a jump of over 25 percent.

This trend is encouraging because the only way Maine is going to be able to grow its small businesses into midsized businesses into large businesses is by attracting capable workers. And the only way to do that is to pay good wages, especially in a demographic environment in which the number of Maine workers retiring over the next decade will far outnumber the number of new young people entering the labor market.

In short, the mantra of “business formation, business formation, business formation” must be accompanied by the repeating echo of “enterprise growth, enterprise growth, enterprise growth.”

Charles Lawton is chief economist for Planning Decisions Inc. He can be reached at:

[email protected]

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