I noted several weeks ago that Maine has become increasingly dependent on the health care sector for its economic well-being. Over 22 percent of our gross state product derives from revenue to our health care providers. We rank first among all states in the share of our gross state product that comes from health care spending – far above the national average of 15 percent.

Given the uncertain future of our national health care system, this puts both our physical health and our economic health at risk. But this trend also risks exacerbating the disparities between our urban and rural regions.

Some observers say that health care providers have become the new mills, helping to replace the manufacturing sector that has been so devastated over the past several decades. To a certain extent, this is true. Between 1997 and 2015, Maine lost nearly 37,000 manufacturing jobs and gained nearly 32,000 jobs in the health care and social assistance sector.

But that nearly offsetting net effect was not distributed evenly across the state. In our metro areas (Portland, Lewiston-Auburn, Augusta-Waterville and Bangor), the manufacturing sector lost nearly 25,000 jobs, while the health care and social assistance sector gained over 28,000 jobs, thus generating a net job gain. In the non-metro areas of the state, in contrast, manufacturing lost over 12,000 jobs while health care and social assistance gained fewer than 3,800 – a critical net loss. In our rural areas, health care gains in employment didn’t come close to offsetting losses in manufacturing.

In addition, health care is not a monolith. Each of its major categories – provider offices, hospitals, nursing and residential care facilities, and social assistance – has its own pattern of employment, wages and growth.

In metro areas, all four health care subsectors experienced substantial growth between 1997 and 2015. In non-metro areas, on the other hand, job growth was almost entirely concentrated in hospital and social assistance. Employment in nursing and residential care facilities actually dropped 5 percent, and employment in provider offices grew by less than 4 percent, far below the nearly 53 percent growth in metro areas.

Quite apart from jobs and job growth is the question of wages and wage growth. Here, there is a major difference between the provider offices and hospital subsectors and the nursing and residential care facilities and social assistance subsectors.

In 2015, average annual pay was $55,000 at metro-area provider offices and $60,000 at metro-area hospitals. In non-metro areas, the average annual wage was $45,000 for workers at provider offices and $53,000 for hospital employees. Though still not as high as the pay of their metro counterparts in 2015, the average pay in provider offices and hospitals rose much more rapidly in rural areas from 1997 to 2015 than it did in urban areas, so the regional pay differential in these subsectors has diminished substantially.

This has not been the case, however, in the other two subsectors. In metro areas, the average worker at nursing and residential care facilities earned just under $30,000 in 2015, while the average social assistance worker made just over $24,000. In non-metro areas, these figures were $27,000 and $23,000, respectively. Between 1997 and 2015, wage growth in these subsectors was approximately the same, thus leaving the urban-rural pay differential approximately the same.

In short, the idea that growth in the health care sector has offset decline in the manufacturing sector depends on what part of health care you are considering. In metro areas, the average pay of providers ($55,000) and hospital employees ($60,000) compares favorably with the average pay in metro manufacturers ($57,000), but for the nursing home ($29,000) and social assistance ($24,000) subsectors, the comparison is not even close. In non-metro areas, only hospital pay ($53,000) exceeds the average pay of remaining manufacturing jobs ($48,000). In the other health subsectors – providers’ offices ($45,000), nursing and residential care ($27,000), and social assistance ($23,000) – average earnings lag the average manufacturing pay.

The central point here is that the health care sector in Maine – far from being a countervailing force against the ravages of globalization on the state’s manufacturing sector– is itself extremely vulnerable, particularly in our rural areas. Either together as a nation, or alone as a state, we must find a way: first, to expand our health care delivery system to serve all our people; second to pay for it on a sustainable basis; and, third to drive continuous cost reductions. If we do not, we in Maine will be the first canaries to signal that economic collapse is near.

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

cttlaw3@gmail.com

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