Maine was the only New England state in 2011 to see a reduction in gross domestic product, and the headlines are a little alarming. Even when put into greater context, the numbers show a picture of economic stagnation.
Comparing one year’s GDP to another is only one way to measure economic growth. It’s correct that a big reason for Maine’s economy shrinking 0.04 percent was because the Brunswick Naval Air Station closed, eliminating thousands of military and civilian jobs. Many of those workers left the state, taking their spouses and children with them.
No other New England state saw a base closure in 2011. That year, New England grew 1.8 percent in its value of goods and services produced, while the nation saw 1.5 percent growth, according to the Bureau of Economic Analysis in the U.S. Department of Commerce.
But the base closure should not be used as an excuse to ignore what’s really happening to Maine’s economy. Let’s look at another economic measuring tool. When comparing Maine’s GDP change to other states, it’s important to examine trends over several years and the state’s output per person.
Even though Maine’s GDP per capita rate declined along with the nation’s during the recession, its ranking in comparison to other states hasn’t changed much in the past 10 years. Maine GDP per capita ranked 42nd in 2011 and 41st in 2001.
The state must clearly continue a long-term effort to improve its economic condition. It cannot settle. Gov. Paul LePage was correct in his radio address this weekend when he said: “Sitting around supporting the status quo is irresponsible and an approach that has failed our state for the past 40 years.” The difficult part, of course, is making changes.
As Maine continues to transition from a goods-producing economy to one that relies on services, technology and an intelligent work force, the state must focus on innovatively producing new products and finding new markets. Doing so takes many different approaches, including the following:
• There should be continued collaboration between businesses, the government and educators to constantly adapt training programs to align with labor market data in order to build and retain a skilled work force. Transition training is needed for manufacturing workers who lose their jobs to automation. Universities should continue to adapt to the needs of an aging population by offering relevant programs to fill jobs in the growing health care industry.
• More educational attainment equals more earning potential. For a knowledge-based economy, Maine needs to grow its number of educated workers — targeting both high schoolers and adults of all ages. The state is keeping pace with the national average for its percentage of workers with a post-secondary degree, but it’s not hitting the targeted projections needed to meet future demands.
• The Legislature should expand research and development funding to the Maine Economic Growth Council’s recommended level of 3 percent of Maine GDP in order to encourage innovation and the creation of new technologies.
• The Legislature should continue work to lower the cost of doing business in Maine, which is consistently higher than the national average when accounting for labor expenses, energy costs and tax burden. Economy.com has ranked Maine as one of the most expensive states in which to do business for at least 15 years.
• Maine should increase its number of high-speed Internet lines, as Maine trails New England and the nation in terms of Internet subscribers per 1,000 people. More, and faster, Internet connections — and new ideas, such as providing WiFi to entire downtowns — provides the means for more people to learn and work efficiently.
There are many bright spots in which Maine can capitalize, including its country living, recreational opportunities and honest work force. Another positive is that Maine’s export of commodities to other countries has spiked over the last decade; businesses should continue to seek new markets overseas.
Maine also has a high percentage of entrepreneurs, which can benefit the state with needed new ideas. Maine municipalities with ideas that have potential to improve government, solve problems and be replicated elsewhere could submit their innovative solution to the Mayors Challenge, a Bloomberg Philanthropies contest. The top idea gets $5 million, with four additional prizes of $1 million each.
The annual GDP numbers, which are estimates and often revised, are beneficial in context and for prompting debate about how to improve the economy. It’s a discussion that should continue at all levels — at dinner tables, boardrooms and government offices.