For much of Maine, the primary challenge of economic development is confronting the dilemma of employment growth outstripping growth of the labor force. How can employers maintain the employment growth they have exhibited since about 2010 when the labor force is growing so slowly or even diminishing? How can they meet next year’s growth targets (or even fill next year’s expected retirement losses) when the pool of workers from which they might draw is declining?

For some of Maine’s more rural areas, the challenge is drastically different. Instead of worrying about how to maintain growth, they have to address the issue of continued overall economic contraction. Consider an area one might call the Northeastern Rim – Piscataquis, Aroostook and Washington counties. Between 2010 and 2016:

n Resident employment (people who live in the three-county region and have a job) fell by 3 percent (about 1,600 jobs);

n The civilian labor force fell more than twice as much (7.5 percent, or about 4,300 people).

n Payroll employment (the number of jobs provided by employers in the three-county region, regardless of where their workers lived) fell by 3 percent, or about 1,300 jobs.

In short, the region’s economy has been contracting throughout the period of overall national recovery.

Over this same period, these economic indicators were accompanied by the following regional demographic metrics:

n The number of deaths exceeded the number of births by nearly 2,400.

n Although 259 more people moved there from abroad than left for another country, 3,359 more people moved away from the region than moved there from another region or state – resulting in a net migration loss of 3,100 people.

n The median age of the population rose from to 46.5 to 49.4.

Based on population projections provided by the Maine Office of Policy and Management, the three-county region’s demographic structure will change in the following ways:

n The population under age 16 will fall by 10 percent (nearly 2,000 people).

n The population age 16 to 64 will fall by 13 percent (nearly 10,000 people).

n The population age 65 or older will grow by nearly 26 percent (just over 6,500 people).

Careful examination of these numbers shows a region struggling not to find ways to fill jobs that are now going begging, but rather to adjust to a drastic shift in the very nature of the people living there. This region’s economic challenge is less about how to create or attract jobs and more about how to “right-size” its community development strategies. How is it going to organize and pay for the education of a school-age population facing a continuing decline? How are its health care providers going to plan and pay for the level of staffing needed to meet demand that will certainly continue to grow as its population continues to age?

The best way to answer these questions revolves around investing in housing, transportation and broadband infrastructure designed to strengthen internal hubs where a local service economy can more effectively serve its surrounding populace. And this is a strategy that demands cooperation with Augusta and the state’s urban areas. Right-sizing rural Maine will help the entire state, but it will not be accomplished by grousing about shares of a diminishing pie of potential social investment dollars.

The best current example is the debate about how to fund Medicaid expansion. The “fight over shares of the pie” strategy quickly devolves into a debate over adjustments to existing budgets. The “right-size service provision” strategy requires a longer and broader view. It demands a more thorough enumeration of current costs – those that do not appear in existing or proposed budgets.

These are the costs of last-minute use of expensive emergency room services by those who have not had ongoing health care – be it because of bad habits or low income. These costs are borne as unpaid bills by health providers, and as higher health insurance premiums for everyone else. An effective investment analysis demands not immediate payback from a current budget, but long-run expenditures designed to reduce costs in the future.

The same social return investment analysis needs to be applied to the formulation and delivery of education services, broadband investment, transportation policy and tax reform. Adjusting to changing demographic structure affects each of the state’s regions differently, but it must be addressed by the state as a whole if we are to avoid its otherwise fiscally, politically and socially debilitating effects.

Consulting economist Charles Lawton, Ph.D., can be contacted at:

[email protected]