New personal income report shows Maine’s heavy reliance on government programs

Posted Oct. 17, 2013, at 4:56 p.m.
Last modified Oct. 19, 2013, at 1:39 p.m.

PORTLAND, Maine — When it comes to income, Maine residents are more reliant on government payments and derive a smaller percentage from earnings than the rest of the country.

That’s one of the main takeaways from the Maine Development Foundation’s quarterly economic report released on Thursday. While MDF’s annual Measures of Growth report tracks Maine’s per capita personal income and compares it to the rest of the country, the quarterly reports allow for a deeper dive into the data, according to Ryan Neale, MDF’s program director.

“One of the areas we’ve touched on but never had the opportunity in the context of the Measures of Growth report to explore is the makeup of Maine’s per capita personal income, how that compares and the discrepancies within geographic areas of Maine,” Neale told the Bangor Daily News on Thursday.

Maine’s per capita personal income was $38,299 in 2011, the most recent year for which data is available. That figure placed Maine 29th among the states, and was lower than the national average of $41,561, according to the report, which was completed in collaboration with the University of Maine and authored by Ann Acheson of the University of Maine’s Margaret Chase Smith Policy Center.

The Maine counties with the highest per capita income in 2011 were Cumberland ($47,015) and Lincoln ($40,534), while the counties with the lowest per capita income were Franklin ($30,757) and Oxford ($30,999).

Interestingly, the counties with the highest poverty rates — Piscataquis at 19.5 percent and Washington at 21.7 percent — did not have the lowest per capita personal incomes. Piscataquis and Washington counties had per capita personal incomes that year of $32,189 and $32,738, respectively.

To understand why, Neale looked at what makes up personal income. Personal income consists of three sources: earned income, which comes from wages; investment income, which come from dividends and interest; and transfer payments, which are government benefits, including Social Security and Medicare and Medicaid payments to health care providers.

Transfer payments made up the largest share of Piscataquis and Washington counties’ per capita personal income, at 33 percent and 37 percent, respectively.

While the findings themselves aren’t groundbreaking, they provide valuable context for the policy discussions lawmakers will have in the next legislative session, which begins in January, Neale said.

“The general commentary is that we’re more reliant on transfer payments than the rest of the country and we derive a smaller percentage from earnings,” Neale said. “To drive our economy, we’d like to see earnings and investment income — those two pieces of the equation — come up.”

The three sources of income “are not all created equal in what they mean for economic impact and what they mean for economic growth,” Neale said.

As a state, transfer payments made up 23 percent of the total per capita personal income, which is higher than the national average of 18 percent, according to the report.

In the report, Neale blames Maine’s outmigration of younger workers, and its increasing proportion of elderly and lower-income residents, as the reasons behind this statistic.

Interestingly, Hancock, Knox and Lincoln counties had the highest proportion of income coming from investments in the state — 24 percent, 23 percent and 25 percent, respectively. That compares to a state average of 15 percent and a national average of 16 percent.

Those numbers are a result of “well-to-do” retirees in those counties who rely on their pensions and investments for their income, Neale said.

“However, relying on developing Maine primarily as a destination for well-off retirees has its drawbacks,” the report says. “Economic development that attracts younger wage earners needs to continue to be a high priority if the state’s per capita personal income amounts and patterns are to come close to national averages.”

CORRECTION:

An earlier version of the story listed Ryan Neale as the author of the report. Ann Acheson is the author.

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