Maine has a people problem. We have always prided ourselves as crusty, independent and always hardworking, the gold standard of the labor force, as the secretary of the Navy once said of the workers at the Portsmouth Naval Shipyard (located in Kittery, Maine). And, over the past several years, we have had it beaten into our consciousness through a drumbeat of demographic reports that we are the oldest (median age of 45 versus national average of 38) and whitest (94 percent versus 62 percent for the whole country) state in the nation, that we need to attract more young people (of all colors) if we are to revive our economy.
All this conventional wisdom is true, but I don’t think that the wrenching changes it implies for our public policy is fully appreciated. According to the latest U.S. Census data, only three Maine counties had more births than deaths over the past six years (Cumberland, Androscoggin and York), and only four experienced positive population growth (Cumberland, York, Waldo and Knox).
Consider for a moment three groups of counties – the four with positive population growth, the five with population losses of more than 1,000 (Aroostook, Penobscot, Kennebec, Washington and Somerset) and the remaining seven counties with population losses between one and 999.
In the four counties where the population increased, personal income grew 22 percent between 2010 and 2016, ranging from 24 percent in Cumberland County to 18 percent in Waldo County. For the five counties with a population loss of 1,000 or more, personal income grew only 12 percent over the same period. In the remaining counties, which saw moderate population loss, personal income grew 15 percent over the period. Without attributing any causal effect, it is clear that population growth is at least associated with higher income growth.
But then consider sources of income – earnings versus property and transfers. Remember that personal income includes three main components – so-called earned income (wages and net income of sole proprietors), property income (interest, rent and dividends) and transfers (pensions, Social Security, Medicare, Medicaid and other forms of payments from government programs).
For Maine’s four population growth counties, the share of personal income coming from current earnings in 2016 was 63 percent – virtually equal to the national average. In the seven counties that saw moderate population loss, the share of personal income derived from current earnings was only 56 percent, and that share had fallen nearly 2 percent since 2010. In the five high-population-loss counties, the current earnings share of personal income was just over 57 percent in 2016 and had fallen by 2.5 percent since 2010.
In sum, population loss is tantamount to greater economic dependence. As employment opportunities decline, those who can do so move away to find a new source of earnings elsewhere, and those who remain become more dependent, either on their own saved earnings from the past or on government transfer payments of one sort or another.
The populations of the counties with demographic decline are not just aging, but they are also decreasing their involvement in the current economy. And this structural change has significant ramifications for public policy.
In Piscataquis County, where less than 49 percent of personal income comes from current earnings, there is clearly and quite naturally a greater vested interest in maintaining the flow of “unearned” income than in reviving the current earnings economy. This is not to cast aspersions on the motivations of the people in this and other counties where an increasing share of the populace is dependent on “unearned” income. It is simply to say that such fiscal impacts of population change are natural and unavoidable. Judging and attributing motives to such changes are simply further evidence of the dysfunction of pitting one category of society against another. In acknowledging the problem, they make its solution more difficult.
We must, rather, recognize that demographic change is not just a count of people, it is a fundamental change in the structure and operation of a society of people. Assuming that people will, or demanding that they should, behave in some ideologically defined “correct” way – be that becoming “properly motivated to work” or “properly motivated to share” – is simply to prolong the problem. We must instead recognize that assumptions about “proper” or “correct” motivations or character traits are merely ways of delaying solutions to our very real problems. We must come to treat economic upheaval more as a natural disaster that demands concerted common action and less as a “failing” of people living in certain areas.
Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:
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