One way of understanding Maine’s economic challenge is to compare the national experience of production, employment and unemployment over the period of the Great Recession and its slow but steady recovery with our own experience here in Maine.

Between 2007 and 2010, total nonfarm employment in the U.S. fell by 7.7 million, a drop of 6 percent. Over the same period, the total output of those workers who remained employed dropped only slightly (about one-tenth of a percent) in 2008, and then rose by 5.7 percent by 2010.

Total output per U.S. worker remained stable at about $107,000 during 2006 to 2008, then rose to $112,400 in 2010. In short, U.S. businesses got more productive by making the same or more output with fewer workers.

Since 2010, nonfarm employment in the U.S. rose by over 8.7 million – a 7 percent gain that has more than recouped the 2007 to 2010 job loss.

But most importantly, this job increase has not reversed the productivity gain of the recession years. Output per worker continued to rise from $112,000 per worker in 2010 to more than $113,000 per worker in 2014. Indeed, it is this continued increase in productivity that contains the seeds for continuation of the U.S. recovery. Whatever its cause – more highly skilled and motivated workers, improved technology, better enterprise management – the rising tide of increasing productivity is the only way all our boats will continue to float.

Economic recovery is not simply returning people to lost jobs; it is finding and managing people to be more productive.

It is interesting, therefore, to consider the same variables over the same period in Maine. Between 2006 and 2010, nonfarm employment in Maine fell by 31,000, a drop of about 5 percent. And – as was true in the U.S. as a whole – productivity as measured by output per worker continued to rise, jumping from $77,500 per worker to $79,800.

Since 2010, however, the similarity to national patterns ends. Between 2010 and 2013, Maine gained back only 21,700 of the 31,000 jobs lost in the downturn, and then in 2014 reversed this upward pattern by losing another 1,200 jobs.

Even more troubling, these new hires are not maintaining the positive trend in productivity. Instead, output per worker in Maine has fallen from the nearly $80,000 peak reached in 2010 back to $77,300 in 2014 – lower than any year since 2003.

Whatever the reason – inadequate skills, inadequate capital investment, poor enterprise management, government dysfunction (and all undoubtedly play some role) – this pattern of declining productivity points to trouble ahead for our economy.

Whatever the problems today in Augusta (and in local town halls) finding ways to balance budgets, we can be sure they will be worse next year and in following years if we don’t find some way to reverse our downward productivity trend.

This is not a tax problem, nor an education problem nor a regulatory problem. It is a connection problem. We must find ways to bring schools and businesses and government agencies together in multiple ways to help our people become more productive. It is ultimately a community productivity problem.

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

clawton@planningdecisions.com

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