Mainers are familiar with economic decline, but what are the solutions?

Shoppers throng on Exchange Street in Portland Friday Nov. 23, 2012 in this time-lapse photo. The Greater Portland metro area now counts for more than half the state'€™s economic output.
Troy R. Bennett | BDN
Shoppers throng on Exchange Street in Portland Friday Nov. 23, 2012 in this time-lapse photo. The Greater Portland metro area now counts for more than half the state'€™s economic output. Buy Photo
By Matthew Stone, BDN Staff
Posted Oct. 25, 2013, at 12:07 p.m.

Maine is digging itself out from the recession, but it’s not out of the hole yet. And for Maine, the digging is slower than it is for the rest of New England and the nation.

That’s Maine’s economy, in aggregate terms, nearly six years after the start of the largest recession since the Great Depression. On average, Maine recovered all the jobs it lost during past economic downturns within 27 months of the recession’s start. That was the average for recessions starting in 1969, 1973, 1980, 1981, 1990 and 2001, according to the Maine Department of Labor.

In official terms, the recession that began in December 2007 ended in June 2009, according to the National Bureau of Economic Research. But about 70 months after its start, Maine has yet to recover all 29,000 jobs it lost during the downturn.

The recession was more severe than most in terms of job losses. But the fact that Maine hasn’t recovered all the jobs it started losing six years ago points to a transformation in Maine’s economy. In recent decades, the industries that accounted for much of Maine’s traditional employment have shed jobs, while the industries experiencing the most growth regionally and nationally following the recession don’t have as strong a foothold in Maine.

The result? Maine is destined for an economic recovery, but it’s expected to come later here than elsewhere.

“Why is Maine lagging so badly?” asks Charles Colgan, a former state economist and now a public policy professor at the University of Southern Maine, in an economic analysis completed for the New England Economic Partnership. “The simplest answer is that Maine is not well positioned in the industries that are recovering employment in the U.S.”

According to Colgan, Maine isn’t expected to recover all the jobs it lost following the recession until the end of 2015 — eight years after the recession’s start.

Growth, slowly, by the numbers

Maine isn’t alone in having fewer jobs today than it did nearly six years ago, but Maine’s jobs recovery has been slower than New England and the nation’s.

New England’s August jobs total was 1 percent below its December 2007, pre-recession count, while the nation’s was 1.4 percent lower, according to the U.S. Bureau of Labor Statistics. Maine had 2.9 percent fewer jobs in August than it did in December 2007.

But to start, Maine’s recession job loss wasn’t as steep as the nation’s. Maine lost 4.7 percent of its jobs between December 2007 and August 2010, when the state hit its low point for employment. The drop for New England, which hit its jobs trough in February 2010, was similar.

Nationally, employment was also at its lowest in February 2010, when it was 6.3 percent off pre-recession levels.

As with the employment picture, Maine’s economic output never slipped to the same degree as the nation’s during the recession. But Maine has been behind its neighbors and the nation in regaining ground.

Nationally, the economy shrank 3.9 percent between 2007 and 2009, as measured by the U.S. Bureau of Economic Analysis using gross domestic product adjusted for inflation. In Maine, the drop was 3 percent. Regionally, New England’s drop was slightly more pronounced at 3.4 percent.

But six years after the recession’s start, Maine’s $45.99 billion economy is still smaller than it was before the recession — $46.2 billion in 2007 — while New England’s and the nation’s economies have expanded beyond pre-recession levels. Last year, Maine’s economy grew 0.5 percent while the nation’s grew 2.5 percent.

A jobs transformation

In 1969, the industries that formed the backbone of Maine’s rural economy — agriculture, forestry and manufacturing — accounted for one in four Maine jobs. By 2004, that figure had dropped to one in 19, according to a 2007 research paper by Colgan and Richard Barringer, a former conservation commissioner, state planning director and Muskie School professor.

Meanwhile, occupations in health care and social assistance have continued to grow as Maine’s economic and demographic picture has changed. Today, those occupations represent more than a fifth of Maine’s private-sector jobs, according to the state Department of Labor.

The decline of Maine’s traditional industries and the rise of health care point to two fundamental transformations in the state’s economy. Maine’s economy — and population — has become more urban in recent decades, and jobs have shifted from industries that produce goods to industries that provide services.

Economic activity and population in recent decades have flowed largely to the state’s three metropolitan areas — the Bangor and Lewiston-Auburn regions and Greater Portland in particular.

According to Colgan, about 90 percent of Maine’s population growth between 2000 and 2010 took place in those three metro areas, in Maine’s two “micropolitan” regions (Augusta-Waterville and Rockland), and in the state’s service-center communities — state-designated regional hubs for jobs and services. The Portland area now accounts for more than half of Maine’s economy. With Bangor and Lewiston-Auburn, the metro areas are responsible for almost 70 percent of the state’s economic output.

Over the last decade, the goods-to-services transformation has continued, according to Maine Department of Labor statistics. Between 2001 and 2013, service-providing industries added 18,000 jobs. They now employ about 404,000 people. Meanwhile, goods-producing industries were in nearly constant decline during that period, shedding more than 27,500 jobs. Those industries today employ just 83,000 Maine people.

But as Maine struggles to come back from the 2007 recession, it’s not experiencing the growth in service-providing or goods-producing jobs that the U.S. and New England are experiencing.

Manufacturing employment, for example, has grown in the U.S. since the low point of the recession; in Maine, it’s declined, even as the state’s manufacturing sector has grown its economic output.

What’s the outlook? What’s the solution?

Those are the topics of an event the BDN is hosting the morning of Wednesday, Oct. 30, at Hannaford Hall on the campus of the University of Southern Maine.

The BDN is bringing together experts from the public and private sectors to discuss education and workforce development, Maine’s place in the global economy and how the state can support innovations that will grow Maine’s economy.

Visit BDNMaineFocusEvents.com for more details and to register for the free event.

Matthew Stone is the BDN’s opinion page editor.

http://bangordailynews.com/2013/10/25/business/mainers-are-familiar-with-economic-decline-but-what-are-the-solutions/ printed on November 25, 2014