Maine by the Numbers: How Do We Measure Up?

Maine by the Numbers: How Do We Measure Up?

June 30, 2011 Posted by Kyle Pomerleau - No Comments

Maine by the NumbersWhen debating policy changes for Maine at the state house or advocating for it, it is important to know where Maine stands. Our new publication the 2011-2012 Maine By The Numbers is a comparison of Maine to other states in a comprehensive list of demographic, economic, and policy measures. Maine, in many of these important measures has historically performed poorly; the latest data shows this trend continuing. Maine is still plagued by an aging population, poor economic performance, a shrinking private sector and a ballooning welfare system.

All the data used in the Maine By The Numbers is from public data from government and national sources. Although we use a ton of data, this is more than an enumeration of measures and outcomes. We compiled this data in order to look at comparisons that make sense. We compare Maine to the US, New England, and rural peer state averages. We then compare Maine to the highest and lowest states. This gives a comprehensive and meaningful look at where Maine stands.

Maine remains the oldest state in the country, with a median age of 43.4, the third highest population above 65 at 15.89% and the 3rd lowest population under 18 at 22.15%. Maine, with its less than vibrant economy has struggled with attracting young, college graduates and entrepreneurs to live and work. Our chief economist, Scott Moody, has been warning of this “demographic winter” and the economic toll it will take. The ever-growing population of those over 65, especially on the eve of the retirement of the baby boomers, will continually affect our economy and our state budget.

These demographics, without policy changes, could spell disaster for Maine’s future. Our policies today are not attracting young entrepreneurs to Maine. Our private sector is one of the smallest in the nation. While Maine, according to the most recent data, has outperformed its New England neighbors in private sector job growth, its growth has been anemic in comparison to its rural peers.

Private Sector Job Growth

Maine experienced 0.7% private sector job growth, but it is dwarfed by the 5.4% from our peer states; states including Wyoming, whose growth was more than 22% percent. But you do not have to look 2000 miles west for a state with a booming private sector. Though New Hampshire’s private sector employment grew only 0.4%, its private sector share of personal income is the highest in the country at 75.7%, far exceeding Maine’s 63.6%. Our peer states have been experiencing booming private sectors and have been leading the country in private sector job growth. They have clearly been successful in incubating business investment and bringing jobs to their states, something Maine has not done.

As we outlined in our report: Fix the System: Freeing Maine Families from Welfare Dependency, Maine’s welfare system has grown out-of-control and the numbers show it. In every category, Maine is a bottom-3 performer. Not only does Maine compare poorly with our rural peers states and our neighbors in New England, but we are far out-of-line with the entire country. We have the 2nd highest food stamp participation rate (13.8%) behind only Louisiana (16.2%), which has been recovering from the devastating effects of Hurricane Katrina—the US average is 8.8%. Although our current economy can be somewhat responsible for our expansive welfare state, looking at similar states shows that our welfare system is nearly all the result of poor policy choices. These policy choice have resulted in Maine spending 1 in every 3 dollars on welfare spending.

Welfare Expenditures as a Percent of Total State Expenditures

Taxes have been an issue in Maine for years. Maine consistently ranks in the top 25, and many times ranks in the top ten, highest taxed states. Our top state individual income tax rate is at 8.5% which is higher than the national average of 5.67%. Our top corporate income tax is even higher at 8.93%, again, beating the national average of 6.51%. The only area where we fall below the national average is our sales tax rate of 5%. These rates are in line with our New England neighbors; however, our personal income level is much lower. The state collects much more revenue as compared to personal incomes in Maine. For example, our state and local individual income tax collection as a percent of personal income is 3.3%, which is 12th highest in the country and higher than the US, New England and rural peer averages. Our total state and local taxes as a percent of income is an even uglier picture:

State and Local Tax Collections as a Percent of Personal Income

Because economies do not operate in a vacuum, Maine’s policies put its economy at a disadvantage compared to neighboring states. Our neighbor New Hampshire, which has chosen to have tax policies, such as zero sales tax, and stream-lined business taxes attracts retail sales and business investment. As outlined in Scott Moody’s recent piece, The Great Tax Divide: Maine’s Retail Desert vs. New Hampshire’s Retail Oasis, Maine’s economy is lagging behind New Hampshire’s significantly and has been for nearly two decades. Many of these measures highlighted in Maine By The Numbers are not the result of destiny. Maine has the opportunity, especially with a reform-minded governor, to fix or eliminate policies that have put us behind our peers. Already with our governor’s new budget, the top income tax rate has been reduced. Serious policy changes are the only way to move Maine toward a brighter future. Hopefully the legislature and governor move to enact more policy reforms that will improve Maine’s numbers.