The old Watergate-era explanation for understanding a complicated puzzle – follow the money – applies well to regional changes in the Maine economy and the basis for our much bemoaned brain drain.

Consider for a moment “new hires” meaning not total or net new employment, but the number of people beginning a job with a Maine employer, separate from those who may have been called back to work, been laid off or have retired. In the year ending with the first quarter of 2014 (the most recent period for which these data are available), there were 15,678 “new hires” in the Portland metropolitan area. In all of Maine’s non-metropolitan areas (i.e., all of Maine less the Portland, Lewiston and Bangor metro areas), there were 8,595 new hires, just over half the number in Greater Portland.

In Greater Portland, the annual average earnings of those new hires was $25,412. In non-metro Maine that average was $22,290. Over the four-year period 2011 to 2014, the number of new hires in Greater Portland had grown by 11 percent. In rural Maine, that figure had grown by just 7 percent. The growth of average annual earnings in the two regions over that period was virtually the same – approximately 7 percent.

The point of this glimpse into the dynamics of local labor markets is threefold. First, it is not enough to focus just on jobs. Everyone knows we need more jobs to create a sustainable way of life here in Maine. But we need to look more carefully at the sources of those jobs. Where they are coming from? Why do companies seek new hires? Do they represent growth? Or are they merely replacing existing workers who are retiring?

Second, we need to examine the jobs not being filled. Are the number of new hires fewer than they might be because of skill shortages (actual or perceived) in the labor market? How many new hire are now going begging because employers can’t find the people they think they need? And is that failure the result of offering inadequate pay? Or, is it the result of poor linkages between our educational institutions and our employers. Is our labor supply “plumbing system” so old and antiquated that (like an antiquated water infrastructure) full of leaks that waste valuable resources?

Third, it is clear that regionally, Greater Portland is leading the way with whatever economic recovery we have in Maine. Rather than bicker over the distribution of fiscal resources between municipalities, we need – at least from the perspective of the state’s labor market – look to strengthen our economic engine.

And that means strengthening Greater Portland because it is clear (particularly in the realm of pay) that increases in Greater Portland lead to increases in our rural region.

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

clawton@planningdecisions.com

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