Maine earnings growth ranks worst among states; incomes lowest in region

By Matt Wickenheiser, BDN Staff
Posted March 29, 2012, at 5:44 a.m.

Maine had the lowest rate of income growth in the country — 3.4 percent — in 2011, according to federal figures released this week.

The national average growth rate in 2011 was 5.1 percent, and North Dakota topped the list at 8.1 percent growth, according to estimates released by the U.S. Bureau of Economic Analysis.

Maine’s last-place finish in terms of income growth is a significant drop from the previous year. From 2009 to 2010, Mainers saw a 2.8 percent increase in personal income, putting the state at 28th in the nation. The national average in 2010 was 3 percent, according to the bureau.

While the last recession officially ended in June 2009, Maine typically takes longer than many states to fully emerge from those economic slowdowns. In his annual presentation a few months ago, Charles Colgan, an economist with the University of Southern Maine’s Muskie School of Public Service, said he doesn’t see a full recovery from the recession for five more years.

Colgan said Thursday he wasn’t surprised by the new numbers.

“In 2010, everybody was pretty flat,” Colgan said. “In 2011, we stayed flat and other places started to grow.”

It was the middle of last year that sunk Maine’s growth, Colgan said. In the first quarter, Maine only slightly lagged the national growth rate for personal income. In the second and third quarters, Maine’s growth was less than half the national average. National and state growth rates increased toward the end of the year, said Colgan.

“Both the national growth rate and Maine growth rate in the fourth quarter picked up a bit,” he said. “There’s some possibility that the outlook [for 2012 and beyond] is more promising than 2011.”

Other states at the bottom included Alabama at 49, Mississippi at 48, Nevada at 47 and Alaska at 46.

According to the latest 2011 numbers, the rest of New England showed much stronger growth than Maine, with an average increase of 4.9 percent for the region.

University of Maine economist Todd Gabe has been studying the effect of the recession on occupations along with fellow researchers Richard Florida at the University of Toronto and Charlotta Mellander at the Prosperity Institute of Scandinavia.

They’ve found “substantial structural changes in the economy” after the last recession, Gabe said, that explain why some regions are doing better than others, as reflected in the latest Bureau of Economic Analysis numbers.

Areas that the economy places less value on today include sectors such as agriculture, construction, low-end manufacturing, fishing and forestry — areas that traditionally have been Maine’s strengths. Sectors that are valued include areas such as computer and mathematical occupations, business, financial and professional services careers and other high-tech jobs.

“Now we’re finding there has been a structural change in the economy [and] it favors the occupations we don’t have,” Gabe said. “We’ve known for a long time that we’re way behind in the high-tech occupations. Now we’re finding that the type of occupational structure has contributed to less economic prosperity in Maine. That’s been happening for a long time, but more recently, that effect has been exacerbated through the recession.”

Gov. Paul LePage said Thursday he is not surprised Maine’s income growth ranking is so low, pointing out the state has lagged the nation for years.

“We have got a lot of work to do,” he said.

LePage said he has proposed several bills in areas that are needed to help the private sector create jobs and improve the state’s economy. He said improving the state’s educational systems, from grade schools to the university system, is crucial.

He praised passage of legislation authorizing a feasibility study of an east-west highway and said he believes the Department of Transportation will start on the study soon. He also stressed the need for lawmakers to address energy costs, pointing out that Maine has the 12th highest costs in the nation.

“We want to be competitive with the Dakotas and Iowa and Wyoming,” he said. “We need to get our energy costs down from double digits to single digits. It’s that simple.”

The Bureau of Economic Analysis also released the latest estimates for 2011 per capita income — which is the total personal income of residents of a state divided by the population of that state. According to the bureau, Maine’s per capita personal income grew 3.3 percent to $37,973 in 2011 from $36,763 the previous year, the bureau reported.

That ranked Maine 49th. The national average growth in per capita personal income was 4.3 percent, to $41,663. Maine outperformed only Alaska, which had growth of only 2.9 percent but continued to have per capita income above the national average, coming in at $45,529 for 2011.

Regionally, New England showed positive results for per capita personal income growth with Connecticut, New Hampshire and Rhode Island ranking 10th, 12th and 13th respectively for 2011.

The largest gains nationally were reflected in states with strong mining sectors. Overall, earnings from mining grew 9 percent nationally, according to the bureau, faster than every other industry, and accounted for the bulk of the growth in the six fastest-growing states: Oklahoma, North Dakota, Wyoming, Texas, Louisiana and West Virginia.

The Maine Legislature is considering a bill to change the state’s mining laws, potentially opening up Bald Mountain in Aroostook County and other areas to the extraction of precious metals.

Looking forward, Colgan said the question for Maine would be whether this recovery includes jobs.

“The major thing right now is whether or not we’re going to get job growth picking up in Maine,” he said. “The January numbers were promising – but they’ve been wrong three years in a row.”

Mal Leary of Capitol News Service contributed to this report.

http://bangordailynews.com/2012/03/29/business/maine-earnings-growth-ranks-worst-among-states-incomes-lowest-in-region/ printed on August 20, 2014