The news last month that Maine’s gross state product grew more slowly in the fourth quarter of 2016 that it had during the third quarter and that its fourth-quarter growth was the slowest in New England – and the 43rd slowest of all the states – was greeted (if noticed at all) with a yawn. Such a reaction is unfortunate, particularly given the high-pitched frenzy surrounding the budget battle in Augusta and the proposed income tax surcharge.
Looking at the Bureau of Economic Analysis news release and the data underlying it, the link between economic growth and population growth is increasingly obvious. Between 2010 and 2016, Maine’s standing in growth of gross state product was 43rd among the 50 states. But if we exclude Louisiana, Wyoming and Alaska (the 48th, 49th and 50th slowest-growing states) because their slow (or negative) growth rates were an artifact of the shale oil revolution, Maine’s growth ranking would drop to 46th, leaving us ahead of only Mississippi, Connecticut, West Virginia and New Mexico.
The larger, and more important point, though, is not Maine’s ranking but its company. The four states just ahead of Maine in the economic growth rankings are Rhode Island, Vermont, Arkansas and Alabama. Consider these nine states – Maine and the four states just above and just below us in the growth rankings. The average growth rate of these states from 2010 to 2016 was 14 percent, far below the national average of 24 percent.
Next, consider population growth in these same nine states over the same period. Their average growth over the six-year time span was 0.5 percent: again, far below the national rate of 4.5 percent. Maine’s growth was 0.3 percent, and in three states – Vermont, Connecticut and West Virginia – population totals actually declined. Indeed, among this group, only Alabama (1.6 percent) and Arkansas (2.3 percent) exceeded even 1 percent population growth.
Looking at the other end of the economic growth rankings, I excluded North Dakota, whose oil-induced boom and bust left it with a very misleading 44 percent average economic growth rate from 2010 to 2016. The average growth rate for the next nine fastest-growing state economies was 30 percent, ranging from 33 percent in Utah to 27 percent in Michigan.
The average population growth rate for these nine states over the six-year period was nearly 7 percent. Only Michigan – with a population growth rate of only 0.5 percent – was an anomaly within the group. The others had population growth rates ranging from 4.6 percent (Tennessee) to 10.4 percent (Texas).
All of this slicing and dicing of economic and demographic numbers is not to say that more people means more money. That would be too much of an oversimplification.
However, without more people, any state – including Maine – will find it extremely difficult to generate sustainable economic growth.
Indeed, the special cases of the oil boom-and-bust states (North Dakota, Louisiana, Wyoming, Alaska) and the auto state (Michigan) tend to reinforce the general rule that, barring some sort of technological or political anomaly, sustainable economic growth requires sustainable population growth.
Including a 51st “state,” the District of Columbia, further reinforces the general rule. D.C. ranks first in 2010-to-2016 population growth, with an average rate of 13 percent, but in terms of economic growth, it ranks only 24th, with a below-average rate of 22 percent.
The central point here is that Maine isn’t the only state where public policymakers ought to be seeking ways to grow the population.
The same prescription applies equally to other New England states, such as Vermont, Connecticut and Rhode Island; to mid-Atlantic states, such as Pennsylvania; to Midwestern states, such as Ohio, Michigan and Wisconsin; to Southern states, such as Kentucky and Alabama, and to Plains states, such as Missouri and Kansas.
The point is also, therefore, for Maine not to doze off while navel-gazing.
Because population growth is a widespread problem, it is, therefore, a problem for which many are seeking solutions and, thus, a problem for which Maine will face competition in seeking to implement solutions.
In sum, slow population growth is not something we can deal with by saying “Yes, yes, we’ll get to that next year.” No, no, in fact, we can’t wait until next year. We have to start addressing our population problem now because next year, it will only be worse.
Consulting economist Charles Lawton, Ph.D., can be contacted at:
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