Experts agree: Governor won’t have an easy job of adding jobs

Posted Oct. 08, 2010, at 8:16 p.m.
Last modified Nov. 21, 2010, at 7:09 p.m.

AUGUSTA — Fifty-six jobs.

That sounds like it could be the number of people employed by a promising new start-up company in Maine. Instead, that figure has become a political sound bite in the race for the Blaine House, offered up by gubernatorial candidates as proof of the anemic state of the Pine Tree State’s economy.

Only 56 more people were working in Maine at the end of 2009 than there were a decade earlier at the end of 1999, according to official labor statistics.

Of course, that number doesn’t tell the whole story of what happened during that tumultuous decade as Maine companies added roughly 30,000 new jobs during the boom years and then shed just as many when the economy collapsed.

Today’s poll

Is job creation the most important issue facing Maine’s new governor?

Yes

No

“The recession basically erased the jobs generated over the last decade, but not just here in Maine. It has happened nationally,” said Adam Fisher, a spokesman for the Maine Department of Labor.

But the “56 jobs” figure has cropped up in stump speeches, TV ads and candidate debates since the run-up to the June primaries. And polls confirm and seemingly everyone agrees — regardless of political leanings — that job creation is the No. 1 issue this election.

“It is all about the economy and all about jobs,” said Dana Connors, president of the Maine Chamber of Commerce.

Where the jobs are The candidates’ plans
Click here to see gubernatorial hopefuls’ plans.

So what is really happening in the Maine economy? And what will it take to reduce the ranks of the unemployed and get Maine’s economy humming again?

Economists, business advocates and labor experts acknowledge there is no easy or single answer, especially when a full recovery in Maine likely depends on what is happening nationally and globally.

David Findlay, a professor of economics at Colby College, said Maine’s constitutional requirement of a balanced budget means that state policymakers cannot unilaterally slash taxes and issue bonds to cover the deficit.

The state also has no control over interest rates or other financial tools the federal government uses to promote short-term economic growth, he said. So while politicians may talk about their job creation plans, Findlay said, it’s not a quick fix for states.

“It’s hard to come up with a state-level policy or program that has a significant effect in the short term on employment or job creation,” Findlay said. “But the fact that policymakers cannot do much in the short term does not mean we shouldn’t be examining medium and long-term solutions.”

Potential longer-term changes to make the state more business friendly include regulatory reform and strengthening the educational system to ensure students are qualified for available jobs, he said, two themes frequently heard on the campaign trail.

Another oft-repeated refrain is the need for tax reform, whether in the form of tax cuts or additional incentives to businesses, both of which Findlay said can be effective.

Connors and other business advocates said the policies and priorities outlined by the next governor could have a major hand in improving the business climate in Maine.

“Government has a very vital role in creating an environment that encourages businesses to invest or enables businesses to invest,” Connors said. “And in order for the economy to grow, businesses need to invest.”

Earlier this summer, the Maine Chamber of Commerce and the Maine Development Foundation released a report — titled “Making Maine Work” — based on feedback from roughly 1,100 business managers.

Survey participants were asked what the state could do to encourage them to invest in their businesses or a new business.

What emerged was a ranking of the Top 5 priorities for the next governor and Legislature: lower health insurance costs, lower energy costs, more predictable state regulation, reduce the personal income tax and improve the transportation network.

Laurie Lachance, president and CEO of the Maine Development Foundation and a former Maine state economist, was somewhat surprised to see lower taxes ranked fourth below regulatory reform.

It’s not that most business owners believe Maine’s regulations are too tough, Lachance said. Instead, business owners are often hesitant to invest in a new venture due to uncertainty and fear that regulations will change, driving up their costs.

“They’re not saying Maine set the bar too high on the environment or safety,” Lachance said. “They are saying set the bar high, but leave the bar in place.”

Added Connors: “The governor’s office has a lot to do with providing a sense of security or stability on this issue.”

While undoubtedly hard-hit by the recession, Maine has fared better than most other states.

Maine’s unemployment rate for the month of August was 8 percent compared to 9.6 percent nationally and 8.6 percent across New England. Maine’s rate has hovered at roughly 8 percent for more than a year. Numbers released Friday had the nation’s September unemployment rate unchanged at 9.6 percent with 14.8 million people out of work. Maine’s September numbers had not been released.

The state is also starting to see relatively slow job growth. But just like that “56 jobs” figure being bandied about by gubernatorial candidates, the unemployment and job growth rates do not tell the whole story.

“There is a mismatch between the skills of the people who have lost their jobs and the types of jobs that are being created,” said Laura Fortman, commissioner of the Maine Department of Labor.

According to the department’s September 2010 database of available jobs versus job seekers, there is an excess of openings in fields that typically require degrees or classroom-based training — jobs such as occupational therapist, software engineer, Web developer and physician’s assistant.

In contrast, there were many more skilled wood-workers, machinists, plumbers and millwrights looking for jobs in September than there were available positions.

Fortman said the state must remove as many barriers as possible to ensure that adults can go back to school to gain the skills needed to compete in an economy that has fundamentally changed in recent years.

“I think there is the recognition that people need to retrain,” Fortman said.

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