Something radically destructive happened in Maine during the Great Recession. But, like the unseen initial growth of cancerous cells in a body, it was invisible, and we have been so occupied with issues such as who pays taxes and who gets welfare benefits that we haven’t noticed. It has to do with productivity – our total production divided by our total labor force.

In 1997, Maine’s gross state product measured in constant 2009 dollars allocated equally across all potential willing workers (our labor force) amounted to $63,423. By 2004, this measure of productivity rose to $74,9554, an increase of more than 18 percent – far outstripping the national increase of 14 percent over the same time period.

But since that peak, Maine’s productivity has dropped steadily to a low of $72,129 in 2011. In 2013 it had recovered only to $72,365, an increase of less than half a percent from the recessionary bottom. In short, after growing faster than the national average during the first half of the last decade, our productivity fell steadily for seven years and today seems stuck on a plateau.

For the nation as a whole, in contrast, productivity continued to grow from 2004 until 2007 when it hit a peak of $98,814. In 2008 and 2009, national productivity suffered a sharp drop of 4 percent, but since then it has seen a sharp and steady recovery, hitting $99,922 in 2013. Thus, while productivity for the nation as a whole now stands 3.2 percent above its 2007 pre-Great Recession peak, Maine remains stubbornly 3.5 percent below its 2004 peak.

What happened? Why did Maine’s productivity growth exceed the national rate before the Great Recession? And why has it been so resistant to growth since? The peak-to-valley drop in productivity for both Maine and the U.S. was about 4 percent. But the growth out of that valley for the U.S. has been more than 7 percent, while for Maine it has been less than one percent – essentially flat for five years. What gives?

Finding an answer to this puzzling trend – like diagnosing and finding a treatment for a heretofore unseen cancer – is Maine’s most critical economic problem. Unless we find ways to do everything we do more productively, recovery from the Great Recession will elude us, as will our goals to reform our tax system and provide a stable social safety net.

And, as with solving a health problem, there is no single answer. Hints are all around. The recent study by The New England Council showing that Maine has the lowest share of its production jobs in advanced manufacturing sectors of any New England state is one important indicator. Our declining labor force participation rate is another. The failure of most of our educational institutions to provide clear knowledge of and pathways to careers with high demand and avenues for advancement is yet another. The failure of businesses to articulate the nature of the skills gap between the knowledge, experience and attitudes they need and those they find in job applicants is still another.

Only when we confront the fact that our current economic immune system just isn’t functioning properly, that we need to break traditional institutional practices and boundaries, will we be able to address our problem head on and begin to make progress in solving it.

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

[email protected]

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