State lacks comprehensive strategy for job growth, economic prosperity

Augusta, ME – A new analysis conducted by experts in economic competitiveness ranks Maine poorly against other states in key benchmarks, including worker productivity, job growth, business creation, and innovation. The “Maine Competitiveness Assessment,” commissioned by the Maine Jobs Council and conducted by Porter Development Initiative Consulting (PDI), is a comprehensive assessment of Maine’s competitive position for attracting jobs, investment and talent into the state and, for existing Maine businesses, how Maine’s policies, cost structures and workforce impact their ability to succeed in the national and global economy.

“This analysis documenting Maine’s lack of competitiveness and its impact on our economy should be a wake-up call for Mainers to work together for a better future,” said Joe Edwards, Executive Director of the Maine Jobs Council. “Jobs, private investment and workers all have choices about where to go. This assessment takes an honest measure of Maine’s ability to compete for these key ingredients for economic growth. Today, we have economic plans that simply look inward but ignore the fact that there’s a whole world of economic competition out there. As a result, these plans are silent on what it will take for Maine to attract companies to our state or to help our existing businesses thrive to grow good-paying jobs and sell high-value products and services beyond our borders.”

With roots in the Harvard Business School Institute for Strategy and Competitiveness founded by Professor Michael E. Porter, PDI utilized its proprietary model for understanding the central role of competitiveness among locations and applied them to Maine’s economy. These include use of its “Diamond Model” for measuring the quality of the business environment, an analysis to identify existing and emerging cluster strengths, and recommendations for the role that clusters can play in enhancing regional economic development.

“Key measures of competitiveness indicate that Maine is not attracting new employment at the same rates as other areas of the U.S. and that existing firms in Maine are not achieving the high levels of productivity that would support increasing wage levels for employees,” said Rich Bryden, primary analyst and author of the report for PDI.

Bryden continued, “Particularly given the structural transformations underway in both the national and Maine state economies, an effective economic development strategy must build on Maine’s current assets and strengths, but it also must create the conditions for Maine to compete successfully in national and global markets.”

Key findings of the study include:

• Low Productivity: Maine ranks #41 among U.S. states for economic output per capita and #46 per worker.
• Labor Force: Although labor force participation rate is higher than the national average among working-age Mainers, total labor force participation rate is less than 60% and ranks #39, due to the fact that the state has the highest proportion of residents over 65 in the nation.
• Low Job Creation and Business Starts: Maine ranks #37 for private job creation, #44 for employment growth driven by foreign direct investment, and #50 for new business formation per capita.
• Low Wages: Lagging productivity and low economic activity depress wage rates and incomes in Maine. Although wages have grown more rapidly in Maine than the U.S. average since 2010, the state still ranks #34 for average wages. Even in typically higher-wage “traded cluster” jobs, Maine wage levels are more than 20% below the U.S. benchmark.
• Challenging Business Environment: Maine’s low rate of new business formation, low R&D and innovation intensity, rising cost of living and slow growth in jobs related to foreign direct investment all signal weaknesses in the business environment. Maine currently ranks #44 in patenting intensity and #46 for university research and development spending. High industrial electricity costs, state and local tax burdens also pose challenges.
• Few Strong Employment Clusters: Maine has a significantly lower proportion of employment in traded clusters. Among “strong” traded clusters, Maine’s proportion of employment is just 5.5% compared to 14.3% across all regions in the U.S.

In evaluating Maine’s current economic plans, the report concludes that the current underperformance of Maine’s economy derives directly from being uncompetitive across a range of key factors for success. Turning that around requires a comprehensive, integrated, and strategic plan that focuses legislation, regulation, and public policy on talent attraction, investment, and job creation.

The full report and exhibits can be found at: https://mainejobscouncil.com/competitiveness About Maine Jobs Council Founded in 2019, the Maine Jobs Council has been advocating for economic prosperity by promoting the attraction, growth and preservation of foundational jobs in Maine. This we believe is for the benefit of generations to come. We are a statewide, nonpartisan, member-driven advocacy organization of over 200 business leaders throughout several sectors across Maine.