I have been asked several times recently about the significance of milestones reached by Maine companies this year. One was the announcement that South Portland-based Wex Inc. had crossed the $1 billion in annual sales plateau. The others were the announcements that the stock of Westbrook-based Idexx Laboratories has been added to both the S&P 500 stock index and to the Nasdaq-100 stock index. “What, if anything” I was asked, “did these facts mean for Maine?”

My initial thought was that the effect was mostly reputational. Broad national and international recognition that two companies started in Maine had succeeded in growing to be world leaders in their fields would be good for the state. Maine could, I thought, gain positive exposure from some of the reflected glow generated by these achievements.

On closer reflection, however, I thought that perhaps there were more concrete benefits to the state. Obviously, the goods and services that these – and other Maine-based companies – sell all over the world bring money here that provides jobs, pays taxes and supports local upstream vendors.

But to the extent that these companies and others like L.L. Bean and Hannaford are headquartered in Maine, their employees don’t just make stuff and ship it out to the world. They also provide support for other company employees located outside the state. Management, strategic planning, companywide financial services, investor relations, research and development, human resource management – all of these activities exist in Maine because Maine is where these companies’ headquarters are located. Clearly such activities provide benefits to the state that are more than reputational. Is there any way to document these “headquarters” effects, I wondered?

As a first cut at answering this question, I looked at the U.S. Department of Labor’s Occupational Employment Survey for the Portland Metropolitan Area for 2010 and 2016. I picked three occupational groupings – management, business and financial operations, and computer and mathematical operations – as those most likely to be associated with headquarter operations. In looking at these three occupational groupings over the 2010 to 2016 time period, three facts emerged:

 They commanded annual wages well above the all-occupation average – $73,200 versus $42,700 in 2010, and $84,600 versus $47,800 in 2016.

Their rate of job growth over the period was nearly triple that of total growth of all occupations – 17 percent versus 5 percent.

Their rate of salary growth over the period (16 percent) far exceeded the overall wage growth for all occupations (12 percent).

It would, of course, be incorrect to claim that all of this differential can be attributed to corporate headquarters. Virtually all companies have at least some managers, some business and financial operators, some people doing computer and mathematical operations, even if they involve only the owner/operators of small companies and new startups wearing different hats at different times of the day. In many companies, it would be impossible to categorize all employees by one and only one occupational category. Indeed, cross-training and collaboration are increasingly the watchword for today’s desirable new hires.

To try to tease out the “headquarters effect” a bit more, I compared the Portland numbers for the three selected occupational groupings with those of the Bangor Metro Area, on the grounds that fewer of the state’s larger “headquarters companies” are located in that area. The results revealed a similar but generally less exaggerated pattern. Average pay for the three “management type” occupational groupings in the Bangor area was above the Bangor all-occupation average, but below the Portland “management” average.

The rate of job growth in these “management” occupations in the Bangor area exceeded total area job growth and even exceeded the Portland growth rate (21 percent versus 17 percent). However, even after this growth, the share of total jobs in these three occupational categories in the Bangor area (10 percent) was still far below the 15 percent share that held for the Portland area.

Thus, pending a more direct and more detailed survey of Maine’s “headquarters” companies, my educated guess is that such companies do have an above-average share of total employment in these high-growth, high-pay occupations, and thus, that they do contribute more to Maine than simply the reflected glow of individual company accomplishments. They represent a source of additional job growth for Maine, and, most importantly, the sort of job growth that requires high skill and commands high wages.

These are exactly the sorts of jobs we need to attract accomplished Mainers longing to come home and talented non-residents. These are exactly the jobs we so desperately need to offset the demographic imbalance in our current labor market. They are thus a reason to keep and, hopefully, to expand our crop of Maine-headquartered companies.

Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:

[email protected]

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