Maine’s productivity per worker one of worst in country, rural character a factor

By Whit Richardson, BDN Staff
Posted Aug. 01, 2013, at 1:20 p.m.

AUGUSTA, Maine — The productivity of Maine workers ranks among the worst in the nation, a function of the state’s rural nature rather than the quality of its workforce, according to a new report released Thursday morning.

The report, Productivity in Maine, was produced by the Maine Development Foundation and the University of Maine School of Economics. UMaine economics professor Todd Gabe wrote the report.

Maine generated an average of $64,556 in gross state product per worker in 2011, according to the report, which cites data from the U.S. Bureau of Economic Analysis. Using that productivity metric, Maine ranks 48th in the United States, ahead of only Vermont and Montana.

That metric — gross state product per worker — grew by 3.49 percent in Maine between 2000 and 2011, according to the report. That growth rate ranks the state 38th in the country, and is well below the U.S. growth rate of 5.77 percent.

“By these accounts, productivity in Maine is quite low and its growth is lagging,” writes Gabe.

This is not an exercise in number crunching, warns Gabe. “Productivity in Maine — the amount of output generated per worker — will ultimately determine the vibrancy of our state’s economy,” he writes.

Maine business owners have long praised the quality of Maine’s workforce as one of the best in the country, and the report is not seeking to contradict that claim, according to Ryan Neale, MDF’s program director who oversaw completion of the report.

“Maine workers have a well-deserved reputation as very dedicated and hard-working,” Neale writes in an email to the Bangor Daily News.

The productivity measurement is not solely a function of the quality of workers, Neale points out. Productivity is driven by a number of factors, including the amount of capital available for investment in infrastructure and business equipment, and the education and available skills training for workers, according to the report.

“Maine can improve its productivity by continuing to invest in, and encourage investment in, these areas,” Neale says.

The education of Maine’s workforce is not the problem, Gabe concludes in his report. In fact, given that 28.4 percent of Maine’s working age population has at least a bachelor’s degree, a percentage that places Maine 20th in the country, Gabe determines that all else being equal, Maine’s productivity should be at least $82,000 of output per worker.

What Gabe finds is that the main factors to blame for Maine’s relatively low productivity are its rural character and mix of industries.

Rural areas tend to support low-skilled jobs in low-productivity industries that pay below-average wages, according to the report. Maine’s rural economy is based largely on agriculture, health care, retail trade and, to a lesser extent, manufacturing, while more urbanized areas tend to support high-paying jobs such as scientists, engineers and corporate administrators, according to the report.

“Although the state is in the top one-half nationally in terms of college attainment, Maine workers are more likely to find jobs in low-skilled occupations — that may not match their educational backgrounds — than workers in more urbanized regions,” Gabe writes.

The conclusion? Neale said Maine needs to find ways to increase the number of high-skilled, high-paying jobs in rural areas.

“Identifying the jobs and industries that can thrive in a rural area like Maine, and investing in human capital, R&D, innovation, and services to support those industries can improve our productivity and competitiveness over time,” he writes.

The report is the first in what MDF expects to be a quarterly report that investigates in more detail the 26 economic indicators included in the Maine Economic Growth Council’s annual Measure of Growth in Focus report . MDF administers the growth council.

http://bangordailynews.com/2013/08/01/business/maines-productivity-per-worker-one-of-worst-in-country-rural-character-a-factor/ printed on July 26, 2014