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Economist: Without huge changes, Maine’s aging population could lead to financial ruin

Posted Sept. 10, 2013, at 11:21 a.m.
Last modified Sept. 11, 2013, at 11:41 a.m.
University of Southern Maine economist Charlie Colgan addresses a roundtable forum on elder issues on Tuesday, September 10, 2013, in Augusta.
University of Southern Maine economist Charlie Colgan addresses a roundtable forum on elder issues on Tuesday, September 10, 2013, in Augusta. Buy Photo
Mark Eves
Mark Eves Buy Photo

AUGUSTA, Maine — Without 60,000 new arrivals in the next 20 years, Maine is doomed, a renowned economist warned Tuesday.

Any efforts to improve the economy in Maine will be thwarted by the state’s aging population unless the state can attract more young people, and the widely held goal of preventing young Mainers from moving out of state won’t come close to solving the problem.

That was the keynote message from University of Southern Maine economist Charles Colgan during the first installment of a four-part forum launched Tuesday morning by House Speaker Mark Eves, D-North Berwick.

“People assume that if we could just keep our young people here, it would solve the problem,” said Colgan to dozens of people who gathered at the Augusta Civic Center. “There are not half enough of them because not enough young people are born here. We have to get people from other places to move here. We’ve got to get more people in.”

Colgan, who is regarded as one of the state’s most experienced economists, estimates that in addition to keeping Mainers from moving away, the state must attract at least 3,000 new residents a year for the next 20 years in order to sustain the state’s workforce.

It won’t be easy.

In addition to myriad reasons that Maine is at a competitive disadvantage — ranging from tax rates to frigid winters — a dearth of high-paying jobs that could prompt young people to come to the Pine Tree State poses a major recruitment challenge.

“Unless we can get productivity to exceed the increased cost in workers, we will suffer competitively in the long run,” said Colgan. “The issue here is not just the wages, not just the physical number of people. We are going to have to have smarter, quicker and more productive workers. If we cannot compete on quantity, we are going to have to compete on quality.”

House Republican Leader Rep. Kenneth Fredette of Newport, who did not attend Tuesday’s forum, resisted Colgan’s assertions because Colgan served as state economist under Gov. John Baldacci, a Democrat.

“If we want to reverse the trend of the past few decades, then maybe we should start listening to new economists,” he said in a written statement. “How can you continually advocate higher taxes and then wonder why people aren’t moving to your state? It’s time Maine examines what’s working in other states, where lower taxes, responsible budgeting, less welfare and a pro-growth attitude are bringing people in.”

Eves’ Round Table on Aging in Maine is designed to cull ideas that could lead to legislation for the next session, which begins in January. Tuesday’s was the first of four installments between now and the end of October.

“Addressing the impacts of Maine’s aging population is a policy imperative,” said Eves. “Whether you are among the aging population increasingly needing health care or a family member caring for a parent or an employer looking at a retiring workforce, Maine’s shifting demographics will impact all of us.”

Maine is the oldest state in the nation, per capita, and its population of older residents is growing rapidly. U.S. census data show that 21 percent of the state’s population is 60 or older and that by 2030, one-quarter of Mainers will be older than 65.

“We must look at these challenges and shift the conversation away from simply how to manage long-term care,” said Eves. “We need a new dialogue about how to create a state that embraces older citizens. We must expand opportunities for older people in areas such as housing, transportation and the workforce.”

Colgan said the changes he advocates will require a cultural transformation unlike anything that has been seen in American history.

“It requires us, in short, to do all the things that American society and organizations do woefully badly,” he said. “There is a place here for Maine not only to adapt, but lead the world in terms of the ability of society to reform itself to adapt to an older population.”

Though the initiative is led by Eves, one of the highest-ranking Democratic legislators, two Republicans who serve on the round table committee said his goals are shared by both parties.

Sen. Patrick Flood, R-Winthrop, a member of the Legislature’s powerful Appropriations Committee, called the proceedings a “well-organized effort,” though he said he suspects any solutions won’t come from government agencies, but rather from the private sector.

“The numbers and analysis presented here today will lead to a better understanding of the problem,” said Flood. “There are some pretty well-rounded, deep thinkers involved. The speaker is correct: This is not a partisan issue.”

Rep. Carol McElwee, R-Caribou, who also serves on the committee and is a member of the Legislature’s Health and Human Services Committee, said she saw dozens of bills aimed at helping senior citizens go through the process during her first year as a lawmaker. But she noted that Colgan’s presentation linking the aging population to the economy showed her the breadth of the problem and its ramifications.

“We’re a nation on the go,” she said. “When you set out to help someone else, it will in turn help you. The elder population is definitely in a place that needs help, and we owe them that much.”

It’s crucial that something is done, said Rep. Denise Harlow, D-Portland.

“We’ll be paying for it, one way or the other,” she said.

Peter Merrill, administration division director for the Maine State Housing Authority, which is now called MaineHousing, said he and numerous other people throughout Maine have been involved in efforts to address elder issues in the past but that he hoped this one would lead to results.

“There are a couple of really nice reports sitting on my shelf that address this issue,” he said. “I think you do have to break this into bite-sized chunks and when you do that, you end up with some real challenges. From the housing perspective, there are many, many older people who are living in homes that are far too big and too rural for them to be living in. But they don’t want to move.”

Gov. Paul LePage also weighed in on the problem Tuesday in a prepared statement. He said the state’s tax policy discourages entrepreneurs from creating jobs, exacerbating the problem, although Colgan presented information that shows more people are moving from New Hampshire to Maine than vice versa, despite New Hampshire’s reputation as a low-tax state.

“I also believe our concentration of senior citizens can be an asset for Maine if we can lower taxes to encourage others to see Maine as a true retirement destination,” said LePage. “That is why I have proposed abolishing taxes on pensions. … We need to enact policies that lower taxes, reduce welfare and create a business-friendly state that attracts companies and good-paying jobs. More private-sector businesses will create the jobs and the revenue that is needed to grow our economy and take care of our aging population.”

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