Growth in personal income in Maine has lagged behind most of the rest of the country since the Great Recession began in 2007, but jumped ahead in the past year, an economic analysis indicates.

The study, by the Pew Charitable Trusts, found that the average annual increase in personal income was just 1.0 percent in Maine from the final quarter of 2007 to the first three months of this year. That increase exceeded personal income growth in only two states – Nevada and Illinois – and was less than the national average growth rate of 1.7 percent. Two other states – Connecticut and Arizona – matched the personal income growth in Maine during the period.

North Dakota had the strongest personal income growth during the recovery, posting an average annual increase of 4.7 percent, but like Maine, reversed course over the past year: While Maine’s income growth over the last year was the second strongest in the country at 4.6 percent, North Dakota was one of only three states to see personal income drop, declining 3.9 percent for the year. Falling oil prices hurt employment in that state and caused the decline in personal income growth. Three other poor-performing states – Wyoming, Oklahoma and Alaska – were also likely affected by the declining fortunes of the mining sector, which includes coal, natural gas and oil production.

Maine’s personal income growth for the past year trailed only neighboring New Hampshire, where personal income grew 5.4 percent.

Charles Lawton, an economist with Maine-based Planning Decisions and a columnist for the Portland Press Herald, said the income figures reflect a recovery that has been uneven throughout the country.

“The primary reason for this variation is regional specialization,” he said, pointing to states in the oil patch. Those states came back strong once the recession ended, but have been hit hard by the sharp decline in oil, natural gas and coal prices over the last two years.


Lawton said states with large metro areas have also benefited from a continuing migration from rural areas to bigger cities.

Maine’s state economist agreed, and also pointed out that the comparison of the first quarter of this year to the first three months of 2015 might paint a more positive picture for Maine.

That period in early 2015, Amanda Rector said, “was a weak quarter nationally and particularly bad in New England, where we had a harsh winter.” By comparison, the beginning of 2016 was much milder, which meant lower heating bills and more disposable income. That, along with low inflation, has helped the state economy this year, she said.

But both Lawton and Rector said Maine still has economic problems that will limit future growth.

“Without robust population growth, the aging of Maine’s existing population will lead to fewer available workers, meaning wages and salaries might start to see higher increases as businesses seek to attract workers,” she said in an email, but “if Maine is to see continued personal income growth, policymakers will need to address those things that have contributed to the below-average growth over the past few years. This includes attracting more people to the state (workers, business owners, investors).”

Lawton agreed.

“Longer term, we remain limited by our demographic imbalance,” he said. “To maintain earned income growth, as opposed to property and transfer income, we need more people, increasing the availability of cheaper alternative energy sources for heating and transportation, and making Maine a place where a variety of industries can thrive – especially those with higher average wages.”


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