Last week someone called me the most optimistic dismal scientist she knew, that I could take the very same data someone else was presenting as a disaster in the making and somewhere in it find a glass that was half-full. At the risk of being accused of irrational exuberance, I’ll counter some of my own dire warnings by pointing to one encouraging sign in the labor market.

Between 2008 and 2013, the number of establishments in Maine with fewer than five employees fell by nearly 1,400 and the number of jobs offered by these small firms dropped by nearly 1,200. Glass half-empty.

But over the same period, the total wages paid by the small firms that did survive to the employees that did remain rose by nearly $38 million. As a result, the average weekly wage paid by such firms rose from $662 in 2008 to $758 in 2013. This was an increase of nearly 14 percent, more than double the 6 percent increase experienced nationwide for firms in the “fewer than five employees” category.

Here, then, is the “glass half-full” side of the story: While the number of very small businesses in Maine dropped over the last five years and the number of people they employed fell, the average wages paid by the businesses who remained rose, and rose in Maine at a rate more than double the national average rate of growth for the “fewer than five employees” category. So the story is fewer but more competitive small businesses in Maine.

And this pattern of rising relative wages held true for the larger sized business categories as well. In the “5 to 9 employee” category, average weekly wages in Maine rose 8.8 percent over the period compared to 8.1 percent for the U.S. In the “10 to 49 employee” category, average weekly wages in Maine rose 8.5 percent, compared with 7.2 percent for the U.S. Indeed, the only business size category in Maine where average weekly wages rose less than their comparable U.S. cohort was the “100 to 249 employee” category.

In short, Maine’s labor market is working. We are inundated with dire news of our status as the “oldest state in the nation,” the rising tide of retiring baby boomers and the absence of young workers to replace those planning to retire. It is unsurprising, and indeed encouraging, therefore, to see that businesses as a group are responding by paying workers more. And this is a trend that will have to continue if Maine business is to thrive, indeed even survive.


And the corollary, of course, is that business must seek to increase productivity. In spite of what wishful thinkers and believers in fairy dust may think, wages can’t be forced up. The line of causation must be understood clearly. Businesses don’t “have” to raise wages, they have to find ways to run their businesses that enable them to pay the wages required to obtain the workers they need. Some succeed, others don’t. Whether for lack of imagination or stubborn refusal to give raises doesn’t matter.

The simple fact is that in a world with fewer and fewer people of traditional working age, business will have to find new ways to attract, train, reward and retain the workers they need. Public policy should do all it can to encourage and support that process, but recognize that trying to mandate results is a fool’s errand.

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

[email protected]

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