Maine personal income growth ranks 30th, purchasing power 36th since recession

Posted April 25, 2014, at 6:12 p.m.
Last modified April 25, 2014, at 6:49 p.m.
State economist Amanda Rector
State economist Amanda Rector

PORTLAND, Maine — Ever wonder what it would cost to live somewhere else?

A federal data set released Thursday aims to give a more accurate comparison of purchasing power across the states. The information shows the prices for everyday goods and services in Maine are just slightly below the national average, while the state’s per-capita personal income is just lower than the median, in 30th place. Factoring in Maine prices, consumers in Maine rank 36th in the nation for per-capita purchasing power.

“The fact that our purchasing power in Maine is relatively low makes it difficult to attract workers to the state, which will become an increasing problem as Maine’s population continues to age,” wrote state economist Amanda Rector in an email to the Bangor Daily News, after reviewing the figures released Thursday by the U.S. Bureau of Economic Analysis.

The data release contains two important measures: How per-capita income in each state has changed from 2008 to 2012 when adjusting for prices and how to compare income across states, adjusted for the cost of basic goods and services.

Thomas Dail, spokesman for the bureau, said the regional price adjustments could be used to assess, for instance, how a person’s income would translate to another part of the country.

“If someone were to get two job offers, one in Boston and one in Bangor, these numbers allow the person to compare the relative attractiveness of those numbers,” Dail said.

The figure for adjusting Maine’s per-capita personal income numbers is 0.98, where 1.0 is the national average. A higher number reflects higher cost of various goods and services. The District of Columbia had the highest index, at 118.2. Mississippi’s was the lowest, at 86.4.

That means, at the state level, a person could purchase less at their same income level in the nation’s capital than in Mississippi.

“We know it’s more expensive to live in one place than another but we haven’t had hard numbers behind that,” Dail said.

Beyond the state-level data, Rector said it’s important to note that the overall price of goods and services is near the national average, but certain goods and services within that mix may be more or less expensive in Maine.

For examining personal income growth, the price adjustment provides a new perspective on the previous data sets, which did not factor in the cost of goods. Growth in Maine for the period from 2008 to 2012 depends on how you slice the numbers, represented in 2008 dollars.

Adjusting for prices, Maine’s per-capita personal income rose 2.6 percent from 2008 to 2012. It ranked 20th for personal income growth for that period.

From 2008 to 2009, a period when most states’ per-capita personal income growth declined, Maine ranked second with a 0.43 increase.

From 2011 to 2012, the state ranked second-to-last with per-capita personal income growth of 0.3 percent. Only South Dakota, which declined by 2.3 percent, performed worse during that 12-month period.

“We’re not looking at some kind of long-term stagnation in Maine,” Dail said.

The data also give a look at the figures by metropolitan area. From 2008 to 2012, Bangor’s per-capita personal income rose 1.3 percent to $35,066, from $34,604; the Portland area was up 2.3 percent, from $43,059 to $43,083; and the Lewiston-Auburn area was basically flat, down less than 1 percent to $36,956 from $37,265.

Rector said she was not surprised by slow statewide growth from 2011 to 2012.

“It’s hard to draw conclusions from such a limited time frame, especially coming out of a period of such economic volatility,” Rector said.

The data released Thursday had been available in a preliminary form since June 2013. Thursday was the first official release of the new data set.

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