Governor Paul LePage last week in his inaugural address emphasized that for Maine to become more prosperous there must be an emphasis on a “living wage” not a “minimum wage.” Is it possible for more people to be earning a living wage and, if so, then how does it become reality?

Some would have the “living wage” artificially implemented by government by simply raising the “minimum wage” to the socalled “living wage.” This philosophy sounds simple but is terribly flawed. There are market and economic laws that will simply not allow this to work. An increase in wages without a corresponding increase in productivity or services increases the employer’s cost for conducting business. The employer must then reduce costs by using fewer employees or by raising prices. Using this method the “living wage” fails in one of three ways: Fewer employees means more people unemployed, raising prices results in that living wage being squandered by paying more for goods and services, and/or the business fails due to costs that cannot be recovered in the marketplace.

Does the governor then advocate an ideal that is unattainable? Not so. The “living wage” must be sought by creating new jobs that pay salaries that meet the criteria of the “living wage.” The “living wage” or good jobs must be created by businesses willing to invest their capital at locations throughout Maine. These businesses exist, but choose to locate in other states. While Maine has improved its ranking in terms of being business friendly, it still lags far behind many other states. What are the characteristics of some states, such as Texas, New Hampshire, and even Michigan that make them attractive to business?

Energy

Business is booming in Texas. Texas is rich in energy. They have oil and natural gas in abundance and an efficient infrastructure to deliver that energy where it can be consumed economically. Maine does not have these types of natural resources. Our electricity costs are extremely high when compared to other states. So how can we have less expensive energy? Past administrations have tried to answer that with wind power. Legislation was passed that favored wind power and restricted other types of energy. Quebec is rich in hydroelectric power and it could be delivered to Maine relatively inexpensively. However, laws that favor wind were put in place which prevent bringing this electricity into Maine in large enough quantities to make it economic. Subsidies to wind power should be eliminated and laws restricting other energy sources should be repealed.

These restrictions on efficient energy not only negatively affect business, but also raise the cost of living to every resident of the state. Every household in Maine could realize savings on electricity that could be used to create more disposable income. These legislative restrictions in fact impose a cruel and hidden tax on many people who cannot afford it.

Lower Taxes

Even in New England which is abundant in regulation and high energy costs, new businesses choose New Hampshire over Maine. One of the major reasons is taxes. New Hampshire has no sales tax, no personal income tax, a lower corporate income tax, no estate or inheritance tax, and motor fuel taxes that are 40 percent lower than Maine. New businesses have executives or owners whose tax burden can weigh heavily on where they choose to locate. The workers in these new businesses can have 10-15 percent more take home pay because of no personal income tax and no sales tax. Family businesses have more incentive to locate in these kinds of states as the businesses can be passed down to the next generation without as much financial impact. Transportation costs are also extremely important for businesses with vehicles on the road, and lower fuel costs again become very attractive.

Right to Work Laws

There is no state that has been hit harder by tough economic times than Michigan. Its largest city is in a shambles. The auto industry has in many cases relocated to other states. However, Michigan is on the recovery. Much of the credit has been given to a major change in labor law. Michigan has become a right-to-work state. A right-towork law basically allows an employee to choose whether or not to belong to a union and thus pay union dues. Other than public employee unions, Maine does not have a large number of union employees. With this being so, why would a right-to-work law matter to everyday Mainers or the new businesses that could bring “living wage” jobs to Maine? “For example, during the 10-year period from 2004-2013, right-to-work states grew jobs at an average rate of 5.3 percent, according to the federal Bureau of Labor Statistics. That’s more than twice the rate of job growth in forced-union states (2.1 percent).” (*)

“Right-to-work states also have experienced higher wage growth. U.S. Department of Labor data from 2003-2013 show wages grew by 15.1 percent in right-to-work states, while wage growth lagged behind at 8.2 percent in forcedunion states.” (*) “Right-to-work states often receive preferred status from businesses looking to invest in economic development projects. For example, Area Development Magazine’s 2012 Annual Corporate Survey found about 75 percent of businesses rated locating in a right-to-work state as “important” or “very important.” (*) Maine would do well to add a right to work law that attracts businesses, creates an atmosphere that encourages job growth, and improves the wages of Mainers.

Governor LePage has charted a course that continues to work for a more prosperous Maine. The people of Maine need to support programs that would put us on a path that provides more jobs and better wages so that the ideal of a “living wage” can become a reality for more of our families.

(*)http://www.jsonline.com/ne ws/opinion/right-to-work-is-rightfor wisconsin-b99422066z1- 287991511.html

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Another View, a Maine Press Association award-winning column, is written on a rotating basis by a member of a group of Midcoast citizens that meet to discuss issues they think are of public interest.