Measures of Growth Report reflect stubborn facts of the Maine economy
By Tony Payne | Mar 04, 2010
Augusta —
The Maine Economic Growth Council has released its 2010 Measures of Growth report based on the most recently available data measuring twenty-four separate indicators of Maine's economic health. The fourteen member panel determined that two measures of performance earned gold stars and four areas deserved red flags. That is compared to last year when the Council issued four gold stars and six red flags; fewer flags but fewer stars, as well.
One important measure that received neither a star nor a flag was the cost of doing business in Maine. Our state ranked 8th highest (worst) in the nation in 2007 which is a five-place improvement from its 3rd worst position in 1999 according to Moody's economy.com. That is relatively good news but it still requires that legislators support policies that will move that ranking toward the national average by 2015.
Here are the highlights and low points.
Personal Income (Gold Star)
The first item measured was Per Capita Personal Income. Though all measures help paint the picture of how Maine people are faring, this is the most important. Maine placed #30 of the fifty states in 2008, an improvement from #33 in 2007. The goal is to reach #25 by 2015.
Any upward change in personal income would seem positive, but a look at the source of income tells a more accurate story. The US Bureau of Economic Analysis shows that total Personal Income in Maine rose by 3.2% between 2007 and 2008 (+$1.49 billion).
Wages and salary disbursements for those who were working saw an increase of 2.6% (+$612 million) while transfer payments from government for personal income rose by 3.2% (+$991 million).* In other words, the largest and fastest growing segment of Maine's personal income came from government transfer payments, not employment.
Health Insurance Coverage (Gold Star)
Ninety percent of Maine people are covered by health insurance compared to 84% nationally. No one will dispute the benefit of having people insured for their health but it comes at an unnecessarily high cost. State mandates and lack of competition contribute to making Maine's health care costs the second highest in the nation as a percent of gross domestic product. Another factor is our status as having the oldest average age in the nation.
Research & Development Expenditures (Red Flag)
This measure reflects how much we are spending to develop new products and services relative to other states. Maine's public, private and non-profit sectors spent 1% of the state's gross domestic product on R&D in 2006 compared to 2.6% nationally and 4.9% in New England.The Council believes that all R&D spending in Maine needs to add up to at least 3% of the state's gross domestic product in order "to expand Maine's innovation-driven economy and increase competitiveness with the U.S." All sectors in Maine would have had to spend $900 million more in 2006 to achieve the goal of 3%.
Higher Degree Attainment (Red Flag)
Maine should have the same percent of people as New England holding post-secondary degrees if we are to keep and attract better paying jobs. With a target of 2020 for achieving that goal, Maine actually lost ground between 2007 and 2008. Less education is reflected directly in lower wages. Those with a high school diploma earn an average of $26,000 per year while those with a Bachelor's degree in Maine earn an average of $38,000.
Cost of Health Care (Red Flag)
This measure appears under the heading "Business Climate" given that the burden of this benefit falls primarily on employers and seriously impacts choices regarding business investment in jobs, wages and business expansion. Using the cost of medical care in New England as a benchmark, the Council reported that between 1984 and 2008, the cost of medical care in New England rose 400% while incomes in Maine increased by only 257%. While equalizing incomes and medical costs is the goal, attainment seems elusive at best.
Cost of Energy (Red Flag)
By this measure, Maine continues to move in the wrong direction and at a rapid clip. Maine's cost of energy is 60% higher than the U.S. By comparison, Maine was only 16% higher than the national average back in 1990. Relief from our dependence on foreign oil depends on conservation and diversifying our energy sources according to the Council. They note that Hydro Quebec and New Brunswick Electric Power have energy prices 25% to 60% lower than Maine's. It is time that our political leadership engages in serious discussions to enable cheaper, cleaner power to be imported from our neighbors to the North.
We encourage you to pour a cup of coffee and read the full report or the summary as it provides valuable context for being an informed voter when choosing who you wish to represent you in Augusta and the Blaine House.
* TRANSFER RECEIPTS
This component of personal income is payments to persons for which no current services are performed. It consists of payments to individuals and to nonprofit institutions by Federal, state, and local governments and by businesses.
Government payments to individuals includes retirement and disability insurance benefits, medical payments (mainly Medicare and Medicaid), income maintenance benefits, unemployment insurance benefits, veterans benefits, and Federal grants and loans to students. Government payments to nonprofit institutions excludes payments by the Federal Government for work under research and development contracts. Business payments to persons consists primarily of liability payments for personal injury and of corporate gifts to nonprofit institutions.
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