The most recent news from the labor market last week – at least on the national level – was mixed. Employment didn’t go up as much as many analysts had expected (less than 200,000 jobs), but average earnings did rise somewhat, leading many to believe that consumer spending could continue to keep the national economy from falling prey to the slowing growth outside the United States.
Using data from Longitudinal Employer-Household Dynamics, a joint U.S. Department of Labor-Census Bureau program, it is possible to dive more deeply into this “jobs and pay” question, particularly by level of education. And the findings for Maine are quite startling.
Using four-quarter annual totals from 2010-11 (the third quarter of 2010 through the second quarter of 2011) and 2014-15 (the third quarter of 2014 through the second quarter of 2015 – the most recent period for which data are available), total employment in Maine rose by 19,280 jobs, or 2.9 percent.
Then break down these totals by level of education, using three broad categories: low (workers with less than a high school education, a high school diploma or the equivalent, plus workers age 24 or younger for whom no educational data are available); medium (workers with some college or an associate degree); and high (workers with a bachelor’s or an advanced degree).
For workers with no more than a high school education, employment grew by 14,639 jobs, or 4.5 percent, between 2010-11 and 2014-15. For those who have some college or an associate degree, employment grew by 4,736 jobs, or 2.6 percent, over the same period. And for the most-educated workers, employment actually fell by 95 jobs, or 0.1 percent.
For average earnings over these three educational groupings, the variation is equally stark. The average annual earnings of the least-educated workers increased 10.9 percent, from $26,900 to $29,800. For those with some education, average annual earnings increased 7.9 percent, from $38,500 to $41,500. And the average annual earnings of the most-educated workers increased just 6 percent, from $57,000 to $60,400.
In other words, the rate of increase in average pay in Maine over the most recent four years for which data are available is inversely related to the level of education of the worker. That’s certainly one way to solve the problem of growing income inequality.
There is a clear difference in the labor market between employers who feel the pinch of a tight labor supply (virtually all of them) and those who are willing to do something about it, who feel the need so strongly that they are willing to raise wages significantly to attract needed workers. From this level of detail, it is no wonder that we are suffering a brain drain.
Obviously, recognizing that pay and job growth varies according to workers’ educational attainment, across all employers in all sectors, is a long way from doing a detailed examination of exactly what skills are needed and which employers in which sectors are raising wages to attract needed workers.
Nonetheless, even this first cut at delving beneath the raw totals of the labor market reveals several important facts about both the underlying structure of the Maine economy and the changes we must make if we are to achieve a higher level of prosperity.
• The first point is that the Maine economy is still highly dependent on workers with relatively low levels of education.
• The second is that employers in these sectors recognize that their continued existence depends on paying higher wages to draw these workers and that (on the whole), they have been doing just that over the past several years.
• The third point is that this “We have to pay more to attract the talent we need to survive” attitude has not fully penetrated the consciousness of many of Maine’s employers.
Perhaps this is simply a reflection of an attitude that can be summed up as “We have survived the worst recession since the 1930s by holding firm with the workers we have, so why risk a change now?” If so, it is just so much whistling past the graveyard. The educated workers employed today will soon become the educated retirees of tomorrow.
If Maine is to thrive in the coming decade, its employers are going to have to pay more attention to attracting talented workers today. And that includes offering them substantially higher pay.
Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at:
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