Jobs report: Maine is not competitive with other states
File photo / Renee Cordes
Maine lags other states in job creation, a new report says.
Maine is not attracting new employment at the same rates as other states and Maine firms are not achieving the high levels of productivity that would support increasing wage levels for employees.
That’s according to a new report that measures Maine’s competitiveness with other states for job creation, investment and talent attraction.
The study, commissioned by Readfield-based Maine Jobs Council, was done by Porter Development Initiative, a Washington, D.C., consultant.
Productivity lags
According to the report, Maine is among the least productive states in the nation, despite high levels of labor force participation among working-age Mainers.
At $53,876 of gross domestic product per capita in 2023, Maine ranks No. 41 among U.S. states, where the average is $67,692.
When measuring GDP per worker, Maine’s ranking falls to No. 46.
Between 2010 and 2023, Maine’s rate of growth for GDP per capita was 1.4%, compared to a national growth rate of 1.7%.
Other findings:
- Maine creates fewer jobs, attracts less investment and starts fewer businesses than most other states.
- Worker wages are low and contrast with higher cost burdens.
- Maine lacks many of the hallmarks of a competitive location for business, including low rate of new business formation, low R&D and innovation intensity, rising cost of living, high industrial electricity costs and state and local tax burdens.
- Positive hallmarks include high rate of labor participation, educational attainment comparable to national averages, a recent trend of positive in-migration (except for a decline among those aged 20-24), high quality of life and abundant natural resources.
Business environment
The business environment has pros and cons, the report says.
- Maine has few large national or international firms.
- There is a low rate of new business formation and slow growth in foreign direct investment.
- Maine has abundant natural resources and high quality of life attractive to workers, visitors and retirees.
- But there is a skills mismatch with employer needs.
- There is low innovation and R&D intensity, limited access to capital and rising costs of living relative to incomes.
- Maine has shallow industry clusters, low concentration of employment in strong traded clusters, and is limited in local suppliers and supporting industries.
- There is low availability of specialized research and training.
Clusters enhance productivity
Clusters are geographic concentrations of firms, suppliers and related institutions in particular fields and are observed as drivers of competitiveness and prosperity in all advanced economies, the report says.
National examples include the technology industry in California, life sciences in Massachusetts and aerospace in the state of Washington.
In Maine, wood products historically acted as both regional and statewide clusters because of the linkages among timber harvesting, sawmills, lumber yards, papermaking and all of the related supply, maintenance and service businesses that specialized in serving these operations (transportation, equipment sales and maintenance, finance, accounting, legal, etc.).
“Clusters can enhance productivity, efficiency and regional performance, enable innovation and commercialization, and lead to new business formation,” the report says. “When a location has strong, active clusters, economic policy can have greater impact because it strengthens multiple firms simultaneously, promotes research, exports and investment, enhances collaboration and raises the sophistication of competition.”
Maine’s low proportion of cluster-based employment has been exacerbated by losses in traditional clusters such as paper and packaging, forestry and printing services, the report says.
However, since 2010, Maine experienced employment growth well above benchmark rates in many clusters including insurance services, agriculture, communications equipment and services, wood products, water transportation, information technology, food processing and manufacturing, construction, financial services and biopharmaceuticals.
Forestry, hospitality, tourism and business services remain large employers.
“Awareness and policy focus around cluster strengths in the state present an opportunity for leveraged competitiveness improvements and economic growth,” the report says.
Overall, the report says that Maine needs an economic strategy that focuses on creating a more competitive and distinctive position for businesses competing in the global market, building on assets and strengths.
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