Maine’s central public-policy challenge is figuring out how to resolve the dilemma of rising employment and a diminishing labor force. The effects of this demographic reality touch all parts of the state, but their size, intensity and impact will vary widely from region to region.
Consider, for example, the midcoast region – Lincoln, Knox, Waldo and Hancock counties. Between 2010 and 2016, when the economy was recovering from the Great Recession, resident employment in the four-county region grew by nearly 3,500 – an increase of 4.3 percent, a rate that slightly exceeded the statewide increase of 4 percent.
Yet, over the same period, the region’s labor force actually declined by nearly 100 workers. Employment growth was sustained by a drop of nearly 3,600 in the number of unemployed, combined with a net gain of nearly 2,700 residents (about 1,300 from other states and about 1,400 from other countries). The first of these pools of potential workers – the unemployed – has a very limited capacity to meet future employment growth, both because the ranks of the unemployed are shrinking and because those who remain unemployed over time require additional training to meet employer needs. The second pool – people who move here from other states or countries – is equally limited because many come to retire rather than to look for a job.
Between 2010 and 2015, the number of midcoast residents age 15 and under fell by approximately 1,200. The cohort age 16 to 65 (from which the vast majority of those working or looking for work are likely to come) fell by approximately 2,700. And the ranks of those age 65 and older increased by nearly 4,100. In short, above-average employment growth did not overcome the demographic inertia of an aging population. In the midcoast region, migration (at least in part) contributed to the overall aging of the population rather than ameliorating that trend through the attraction of younger people.
And Maine Office of Policy and Management projections indicate that this trend is only going to accelerate over the near future. These projections show a decline of nearly 3,000 in the number of residents under 16; a decline of approximately 14,400 among those ages 16 to 64; and an increase of approximately 12,600 in the 65-and-over age cohort. In short, the projections for the midcoast call for an across-the-board population decline of 3 percent and a 36 percent spike in the number of residents age 65 and older.
Clearly, finding enough workers to meet employers’ needs during periods of even modest economic growth will be a considerable problem. And if employment begins to drop, the fiscal impact of the region’s increasingly unbalanced demographic structure will emerge more clearly as school enrollments fall and demand for services for the elderly rises.
The midcoast’s traditionally below-average property tax rate may be threatened. Indeed, it may already be slipping away. In 2016, the average property tax rate across all the towns of the four-county region was $13.95 per $1,000 of assessed value, about 12 percent lower than the state average. However, between 2010 and 2016, the average tax rate in the midcoast region increased just over 15 percent, while the average increase statewide was just below 5 percent.
What, then, can local and county governments do to move beyond the shortsighted but inevitable struggle to increase property values and keep down spending and to try instead to anticipate how to deal with these seemingly inexorable demographic changes? I suggest three tasks:
• Designated data days: The most important days of the year for fiscal purposes are Oct. 1 and April 1. On these two days, the state makes its official count of students, and on April 1, it requires reports on the taxable property in every municipality in the state.
These two values provide the basis for allocating about $1 billion in state aid to education, which, in turn, drives the largest public expense in virtually every town and city in the state. Yet few carefully consider the interrelation between these values. How many residential properties have students? How has this ratio changed? Why? Will the results increase or decrease costs per student?
• Count commuters: How many residents of a given community live there but work somewhere else? How many employers in a given community provide jobs for workers who live in another town or city? These numbers are readily available from U.S. Census and Department of Labor sources, but they’re rarely examined regularly as part of the local budgeting process. They should be.
• Re-evaluate regulations: Creating jobs is not the job of government. But understanding how housing, infrastructure and land-use regulations affect the business location and employee attraction process is very much the role of local and regional governments. This responsibility will increasingly determine a community’s ability to meet all of its other responsibilities. It should be an integral part of the budgeting process.
Consulting economist Charles Lawton, Ph.D., can be contacted at:
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