The report from the Maine Economic Growth Council and the Maine Development Foundation finds the state is performing well in areas such as environmental stewardship, Internet connectivity and transportation infrastructure.
Gross domestic product, international exports and spending on research and development have increased. The poverty rate fell, but so did food security and the buying power of workers whose wages were battered by inflation.
The report, released during a morning news conference at The Uptown housing complex in Bath, notes that Maine faces two significant challenges that are rooted in past actions: the impacts of climate change and the cleanup of PFAS "forever chemicals."
"Economic energy has shifted from manufacturing to services, from physical capital to human capital, and from rural to urban areas," the report states. "Our population is older and more urban, jobs have become more service oriented and seismic environmental and industrial shifts impact our forest and marine resources and industries, sharply challenging some of our rural communities."
The report highlights three communities and a business that are tackling these challenges: Bucksport for diversifying its economic base; Bath for expanding affordable housing; Dover-Foxcroft for addressing climate change; and MEMIC for tapping the talents of an older workforce.
Workforce and Wages
Maine's labor force grew 1 percent to 687,000 in 2023, but it's still about 6,000 workers below pre-pandemic levels, the report states. While it's expected to increase to 710,000 by 2030, baby boomer retirements will continue to shrink the ranks of working-age Mainers.
At the same time, many young people delay entering the labor force to pursue education and training opportunities. To counter these trends, the report says Maine must attract more working-age people from other states and countries, retain more young people born here and find ways to keep older Mainers in the work force.
That may be challenging since wages in Maine fell 0.2 percent in 2023 after adjusting for inflation, according to economic and labor statistics. The average annual wage was $60,384 — a 3.9 percent increase over 2022 but still below the U.S. average of $72,357.
However, the wage increase was eclipsed by 4.1 percent annual inflation that reduced purchasing power 0.2 percent. Annual wages exceeded the state average in Cumberland County ($68,877), Maine's most populous and urban area, but trailed in the other 15 counties, with rural Franklin ($47,458) and Piscataquis ($46,489) counties having the lowest wages.
Women's median annual earnings in Maine ($52,457) rose 1.5 percent in 2023, but they remained about 85 percent of men's earnings ($61,430). The average earnings of Black, Hispanic, Indigenous and other people of color rose 4 percent, but they remained 27 percent below white Mainers.
The percentage of Mainers living below poverty level fell 0.3 percent in 2022, from 11.2 percent to 10.9 percent, according to U.S. Census data. That's below the national rate of 12.6 percent, but rates varied widely across the state, from 6.6 percent in Cumberland County to 15.6 percent in Washington County.
Federal poverty level income in 2022 was $13,590 for one person, plus $4,720 for each additional person in a household.
Youth Mental Health and Learning
According to the Maine Children's Alliance, teen mental health is a growing state and national crisis, the report states.
In the 2021-2022 school year, 33 percent of Maine children had diagnosed mental, emotional or behavioral conditions such as anxiety, depression, learning disability or autism — a 14 percent increase from the previous school year and a 27 percent increase from 2017-2018.
It's also 30 percent higher than the national average of 24.5 percent. In 2023, 35 percent of Maine high schoolers reported feeling sad or hopeless every day for two weeks or more.
Performance on school reading and math tests are considered indicators of future success in higher education, employment, earnings and everyday problem-solving, according to the report.
Reading proficiency among Maine's fourth-graders fell from 36 percent in 2019 to 29 percent in 2022 — 3 points below the 32 percent national average. Previously, Maine met or exceeded the national average.
Fourth-grade reading performance on the National Assessment for Educational Progress test fell in 45 of 50 states after the pandemic. In Maine, proficiency declines were larger among students who were Black, economically disadvantaged, had disabilities or were learning to speak English.
Math proficiency among the state's eighth-graders fell from 34 percent in 2019 to 24 percent in 2022 — 2 points below the 26 percent national average. Previously, Maine exceeded the national average.
Eighth-grade math performance on the NAEP test fell in all 50 states after the pandemic. In Maine, proficiency declines were larger among students who were economically disadvantaged, had disabilities or whose parents had lower levels of education.
Housing and Energy Costs
Housing costs spiked since the pandemic, leaving 79 percent of Maine households unable to afford a median-priced home in 2023, up from 56 percent in 2020 and 50 percent in 2014.
That means the cost of a home's mortgage, taxes and insurance would exceed 30 percent of household income and highlight the need for more affordable housing across the state.
Lincoln and Knox counties had the highest proportion of residents priced out of the housing market (88 percent), while Aroostook County had the lowest (61 percent).
The average industrial retail price of electricity in Maine rose 13 percent in 2023, from 11.03 cents to 12.43 cents per kilowatt hour, compared to a national decrease of 3 percent, the report states.
Maine's price jump was caused by its reliance on costly natural gas for power generation, seasonal supply variations and weather impacts on grid infrastructure. Maine's industrial electricity rates exceed the national average by 54 percent.
The price of electricity factors in the overall cost of doing business. Maine ranked 10th highest in the nation for overall business costs in 2022, but second lowest in New England after Connecticut. Maine ranked 19th in the nation for labor costs, 10th for energy costs and 7th for tax burden.
Economic Growth Factors
Today, 89 percent of Maine locations have either average Internet service or broadband, up from 78 percent in 2022, the report states. The state has invested over $250 million in high-speed infrastructure, with a goal to provide reliable, affordable connectivity to all residents and businesses.
Maine's inflation-adjusted gross domestic product rose 3 percent in 2023, ranking 21st in the nation and outpacing the U.S. (2.9 percent) and New England (1.8 percent) averages, the report states.
While the state saw GDP increases in real estate (7 percent), professional and business services (14 percent), government (12 percent), and health care and social services (11 percent), manufacturing and wholesale trade fell 2 percent each.
Maine's spending on research and development increased 13 percent to $870 million in 2021, but the share of GDP spent on this sector was stagnant at 1.1 percent, compared to 3.6 percent nationwide.
Maine ranks 37th in proportion of GDP spent on R&D, with private sector and university investments lagging and nonprofits contributing a relatively high amount.
International exports from Maine rose 20 percent to $3 billion in 2021-2023 compared to the previous three years, a measure that accounts for sharp fluctuations in a smaller state economy. That growth was slightly lower than the 23 percent national average, but Maine's exports are expected to grow faster than the U.S. rate going forward.
Seafood exports dropped $88 million (18 percent), due in part to China's tariff on U.S. lobster, the report states. Forest products, aircraft parts and mineral fuels also declined, while electrical machinery, chemical products and prepared foods rose.
Canada remains Maine's leading trade partner, with $1.4 billion in exports in 2023, followed by Malaysia, China, Mexico and Japan.
In 2023, 72 percent of Maine's most traveled and economically significant roads were rated good or fair by the Maine Department of Transportation. That's up from 58 percent in 2018-2019 and a near return to 73 percent in 2013.
Indicators of Health
Health care spending held steady in 2023 at about 1 in 6 dollars generated by the economy in Maine and across the nation. But while the Maine's per-employee annual contribution for health insurance ($5,200) was lower than the national average ($5,600), the employer's cost per employee ($20,000) was higher than the national average ($18,000).
In 2022, 93 percent of Maine residents had health insurance, just above the national average of 92 percent and continuing a trend of exceeding 90 percent since 2015. Still, an estimated 88,000 Mainers don't have health insurance, with coverage rates ranging from 88 percent in Washington County to 93 percent in Cumberland County.
Being overweight or obese was a health factor for 68 percent of Maine adults in 2023, up 21.4 percent from 56 percent in 2000, increasing the risk of chronic diseases such as diabetes, heart disease, stroke, asthma, arthritis and some cancers. In the 2021-2022 school year, 31 percent of Maine youth ages 6-17 were overweight or obese, somewhat below the national rate of 34 percent.
Food insecurity affected 10.9 percent of Maine households in 2021-2023, up from 9.5 percent in 2019-2021, according to the U.S. Department of Agriculture, in part because pandemic-era federal support for low-income households ended. Maine's rate was below the national average (12.2 percent) and above the New England unweighted average (9.5 percent).
Maine's crime rate rose 6 percent in 2022, to 13.2 per 1,000 residents, but it was 44 percent below the national average and the third lowest of the 50 states. Property crimes increased 7.6 percent but were still about 30 percent lower than the national average. Violent crimes continued to fall and were 73 percent below the U.S. average.
Greenhouse gas emissions rose 1.4 percent in 2021, from 21.6 million to 21.9 million metric tons of
carbon dioxide, but they were still 30 percent below 1990 levels, indicating that Maine is making progress toward the goal of 45 percent below 1990 levels by 2030.
The Maine Economic Growth Council was established by statute in 1993 to develop, maintain and evaluate a long-term economic plan for Maine. It is administered by the Maine Development Foundation, a public-private, non-partisan organization created in statute in 1978 to promote equitable, sustainable, long-term economic growth. The council is financed through the Maine Department of Economic and Community Development, with additional support from the foundation.
(c)2024 the Portland Press Herald (Portland, Maine) Distributed by Tribune Content Agency, LLC.
