Maine’s Private Sector Takes a Beating


According to recently released data from the U.S. Department of Commerce’s Bureau of Economic Analysis, Maine’s private sector share of personal income set an new all-time low of 64.76 percent in the 1st quarter of 2009. (click “continue reading” to view chart)

The primary culprit was the huge jump in personal current transfer receipts (Social Security, Medicare, Medicaid, etc.) of 10.6 percent between the 1st quarter of 2008 and the 1st quarter of 2009.  The total now tops a whopping $10 billion.  State and local government compensation also contributed to the crowding out of the private sector by growing 4.2 percent over the same time-period.

The private sector, by contrast, shrank by 0.9 percent.

While Maine’s predicament closely follows the national trajectory, Maine’s private sector share is still 7.87 percent lower than the national average (64.76 percent versus 70.3 percent).  Policymakers should be frantically searching for ways to get Maine’s private sector share to at least the national average by reforming Medicaid and reducing state worker employment and compensation.