An Overview of the Demographic and
Economic Conditions in Maine: Thomas G. Allen CONTENTS Executive Summary List of Figures Figure 1. Components of
projected population change in Maine to 2025. List of Tables Table 1. Total population in New England and the United States, 1990
and 2000. This report provides an overview of selected social and economic topics in Maine as the backdrop for companion studies that examine two important and inter-related issues: workforce development and tax policy. Without addressing these issues directly, this report focuses on demographic and economic trends in Maine. Specific emphasis is given to population changes in Maine, both demographically and geographically, along with selected measures related to education and workforce characteristics. Economic changes in the state are investigated both in terms of broad sectoral shifts, as well as detailed variations in specific industries and occupations. Regional differences in economic growth are also examined. With respect to population, Maine is a slow-growing state in a region of the country that is growing slowly. During the 1990s, the number of Maine residents increased only 3.8 percent - the 4th slowest rate of growth among the fifty states. Compared to a national growth rate of 13.2 percent, New England, as a region, grew 5.4 percent. Although slow growth has its own implications for social and economic policy, the changing demographics of Maine's population and the geographic differences across the state are startling. The aging of the population is a well-known trend that has been predicted for some time. While the state ranks 7th in the country for its proportion of elderly in the population (14.4 percent of total residents are age 65 and older), the number of elderly in Maine is increasing at roughly the national average. Rapid increases in the elderly population are not anticipated until 2010 when the baby-boom generation begins to reach retirement age in large numbers. Of more immediate concern is the slowing growth and declines in the youth population. Over the past ten years, the number of Maine residents under the age of 18 declined by 2.5 percent, compared to increases of 9.4 percent and 13.7 percent in New England and the U.S., respectively. During the decade of the 1990s, 300 of the state's 492 towns and cities (61 percent) experienced a real decline in their youth population (under age 18). As an indication that this trend is unlikely to change in the near future, even more towns (75 percent) lost population among children under the age of ten. These losses are most pronounced in the rural northern, western, and eastern regions of the state. Similarly, fewer than 15 percent of the towns in Maine showed any increase among their young working age population (age 18 to 34). By contrast, nearly every town and city saw growth in their numbers of older working age residents (age 35 to 64), and two thirds of Maine towns had growth rates in excess of 20 percent in this age category. With the third largest population in New England, Maine ranks fourth for its level of economic output. Adjusted for inflation, the value of goods and services (Gross State Product) produced in the state since 1990 grew by 16.2 percent. This was the smallest increase among all New England states and less than one half the rate of growth in U.S. gross domestic product. Related to the total output of the Maine economy is the relatively low output per worker (commonly referred to as productivity). In 1999, Maine had the second lowest level of productivity per worker in New England, and from 1990 to 1999 productivity grew slower in Maine than in any other New England state. Generally, earnings and income are related to labor productivity. Largely as a result of lower productivity in the Maine economy, incomes and earnings typically have lagged behind New England and U.S. averages. The dominant economic trend is the long term shift toward a service based economy that has been underway for several decades. In 1960, manufacturing industries provided over one of every four jobs in Maine. Thirty years later, manufacturing employment accounts for fewer than 12 percent of all jobs. Nine of the fastest growing industries are service related and the twenty occupations projected to have the fastest growth over the next decade are all service based. While selected service industry occupations pay higher than average wages, overall wages per job in manufacturing remain 52 percent higher than service sector jobs and 24 percent higher than jobs in the finance/insurance/real estate sector. From 1980 to 1999, the number of manufacturing jobs in Maine declined by 21 percent, while the number of service sector jobs and finance/insurance/real estate sector jobs grew by 100 and 80 percent, respectively. Maine is a rural state that continues to undergo changes in its population and economy that have important implications for its future. Thirty years ago, manufacturing industries provided over 25 percent of the jobs in Maine. Today, manufacturing employment accounts for fewer than 12 percent of all jobs. Nine of the fastest growing industries are service related and the twenty occupations projected to have the fastest growth over the next decade are all service based. It is the third most rural state in the nation (based on the proportion of its population that resides outside of urban areas), and it is the only state in the nation that has become more rural since 1970 (Maine Rural Development Council, 1999). The state's population is growing older and shifting toward the southern and coastal regions. Presently, 14 percent of the population is age 65 or older and by 2020 the elderly will comprise at least 21 percent of the population. These changes have important ramifications for the future direction and growth of the state's economy, as well as state and local tax policy. Demographic characteristics of the population determine the need for publicly provided services such as education, health care and other social services. Similarly, demographic changes affect the nature of the workforce and the kinds of economic development that take place. Added to this are the spatial dynamics of population change as regions within the state experience different rates of growth or decline in the various segments of their populations, and a long term shift throughout the state toward employment in service and information based industries. The result is a complex dynamism at the level of the local community that affects the balance between the demands for government services and the capacity of the local tax base to support those services. This report presents an overview of the demographic and economic trends that are occurring and projected to occur in Maine as a backdrop for examining state and local policy options as they relate to workforce development and tax policy issues. Part I seeks to create a relative context for looking at Maine by comparing the changes that are taking place here to the similar trends in New England and the United States. New England provides the appropriate regional context for comparing the changes in Maine primarily because economic and demographic trends across the New England region over the past two decades have been somewhat unique in comparison to the rest of the U.S. While other states in the U.S. provide a more direct comparison to Maine along in a single dimension (e.g., degree of ruralness, high economic dependence on natural resources, reliance on tourism activity, etc.) the broader regional economic forces affecting those states are sufficiently different to make comparisons to Maine less useful than examining Maine relative the changes that have taken place in the New England region. Part II focuses more critically on how specific changes are occurring differently in distinct regions of the state. Finally, an annotated appendix presents several series of graphics that depict the full range of economic and demographic trends. As the northeastern most state in the nation, Maine sometimes is regarded as being at the "end of the line" and outside of the American social and economic milieu. Although there are aspects of Maine that make it unique in ways that are both positive and negative, Maine is similar to other states in a variety of ways and faces many of the same challenges and opportunities that are being addressed elsewhere. For example, the effects of increasingly global economic trade and impacts of an aging population confront all of the states. Throughout this section of the report, Maine is compared to both the New England region, of which it is a part, and to the United States as a whole. Comparisons to New England are useful to examine how Maine fares against its closest neighbors, however distinct differences exist in New England. Generally, the northern New England states of Maine, New Hampshire and Vermont are viewed as generally more rural and having more in common with each other than with the more urban southern New England states of Massachusetts, Connecticut and Rhode Island. Nevertheless, connections between all of the states exist in such areas as the competition for economic development and qualified workers, educational opportunities for college students, and regional tourism. Where appropriate, characteristics of the individual states are included along with an overall average for the region. The 2000 census counted 1,274,923 people living in Maine, ranking it as the 40th most populated state in the nation and the 4th most populated of the six New England states (Table 1). Altogether, Maine residents represent 9.3 percent of the people living in New England. (Regionally, Maine also accounts for 9.0 percent of employed workers, 6.7 percent of personal income, and 6.3 percent of gross state product). During the ten years since 1990, Maine's population grew by 46,995 people; an increase of 3.8 percent. By this measure, Maine ranks 46th among the 50 states for its rate of growth. Maine's slow growth rate, however, is not unique in the New England region. Over the last decade, none of the six New England states grew as fast as the national average, and four of the six states (including Maine) grew at a rate that was less than one half the national average. Overall, the population of New England grew by 5.4 percent, compared to a 13.2 percent national growth rate. Maine is a slow growing state within a region that is growing slowly, but there are important differences that make Maine somewhat unique from New England, overall. The factors that directly determine population growth are the natural changes resulting from births and deaths, and the net effects of in migration and out migration. Throughout the 1900s, Maine experienced net natural increases in its population as the number of births exceeded the number of deaths each year, as did all states. The period of greatest natural increase coincided with the high birth rates of the 1950s. In the later part of that decade, the birth rate in Maine exceeded 24 births per 1,000 total population. Since that time, the birth rate has declined steadily to 11 births per 1,000 population in 1998. During the first half of the last century, the death rate declined from 16.4 deaths per 1,000 population in 1900 to 10.9 deaths per 1,000 population in 1950. Since then, the mortality rate has continued to decline but at a much slower pace. By 1998, the mortality rate was 9.7 per 1,000 population. Significantly, it is projected that by the year 2022 the number of deaths will exceed the number of births in Maine and the state will begin to experience natural declines in its population. While births and deaths are based on somewhat predictable demographic factors (e.g., fertility rates, mortality rates, age structure of the population), the other elements of population change, in migration and out migration are susceptible to more volatile forces. Unforeseen economic changes such as the closure of a significant military base or relocation of a major employer can prompt the rapid movement of people in and out of a region. In addition, more subtle shifts due to relative quality of amenities and job opportunities can also have significant effects on longer term population trends. The chart in figure 1 shows the effect of anticipated domestic migration in Maine's overall population projections. While the natural changes show slowing growth and eventual declines, and international migration provides a steady net positive contribution of less than 1,000 people annually, projections for domestic migration dominate with sharply increasing gains over the next decade followed by a period of slower growth. Should these sharp increases in domestic migration fail to materialize then Maine's total population growth will be even slower than is currently projected. This lack of population growth, and even the potential for declines without in migration, will sharply curtail economic growth without significant productivity increases in the existing labor force. Beyond the projected slow growth of Maine's population are the important changes taking place in the age structure of the population. The aging of the population is a widely recognized trend occurring in the U.S. overall, and in this important respect, Maine is less similar to New England than it is to the nation. The number of people in the age category of 65 and older increased 12.3 percent and 12.0 percent in Maine and the U.S., respectively (Table 3). Across New England, the category of elderly people grew 6.9 percent. While Maine ranks only 24th among the 50 states for the percentage increase in elderly over the past decade (only Vermont and New Hampshire ranked higher than Maine among the New England states), it currently ranks 7th for the proportion of elderly in the population (14.4 percent in Maine versus 12.4 percent in the U.S.) (table 2). Since Maine's elderly population grew at about the U.S. average, the state's increase in its proportion of elderly population must be due to slower growth in the non elderly population. From 1990 to 2000, both New England and the U.S. showed increases in the youth population -residents under 18 years of age. This segment of the population grew faster than either the working age population (those between the ages of 18 to 64) or the elderly residents age 65 and older. By contrast, Maine's youth population declined both in real terms (by 2.5 percent) and as a percentage of the total population. In 1990, youth comprised 25.2 percent of the Maine population. Ten years later, the youth population accounted for 23.6 percent of the total population in the state. Without in migration, the declining youth population will significantly impact the working age population in future years. This aging of the population is a long term trend that will become most noticeable approximately ten years from now when the baby boom generation begins to swell the ranks of the elderly. From 2000 until 2010, the number of people age 65 and older in Maine is expected to increase by only 8.3 percent, which is less that the growth during the previous decade. After that, however, population growth among the elderly is projected to increase dramatically, increasing by nearly 40 percent between 2010 and 2020. The reason for this is shown in Figure 2. The baby boom generation in 2000 is clearly visible as the large "bump" in the age categories between 35 and 55. Over the next ten years, those persons will move into the 45 to 65 age categories - older, but still primarily among the working age population of the state. By 2025, the "bump" that encompasses the baby boom generation will have moved solidly into the category of the elderly. The educational status of a population represents the stock of human capital on which much of a region's future economic development depends. The continuing transition toward an information based economy underlies the growing importance of education in the workforce. A recent report by the Maine Science and Technology Foundation finds that over one half of the variation in per capita income across the 50 states can be explained by differences in the percentage of the adult population with a least a 4 year college degree. (Maine State Planning Office, 2001). In 2000, there were 213,000 public school students between kindergarten and 12th grade enrolled in 285 separate school administrative units in Maine. The cost for educating Maine's youth is shared between state (47% of the total budget) and local government (53% of the total budget). The local share of education funding is derived primarily through the property tax, while the state's share is distributed to local communities according to an established funding formula. The state portion is designed to equalize the large local differences in property tax valuations. At opposite ends of the spectrum, the lowest valuation school district in Maine in 1996-97 had $96,000 of taxable property valuation per student, compared to $1.7 million of taxable property per student in the highest valuation district (Dow and Townsend 1998). Presently, the educational status of Maine's population places it below the national average (Table 4). The 2000 Census found that approximately 15 percent of Maine residents age 25 and older have less than a high school diploma, compared with 18 percent, nationally. Among the New England states, only Rhode Island has a higher proportion of its population with less than a high school education (20 percent) (US Census Bureau, 2001). With respect to higher education, Maine is the only one of the New England states where the percentage of the population age 25 with at least a bachelor's degree is less than the national average. In 2000, approximately 23 percent of Maine adults had at least a 4-year college degree, compared to 25 percent of the population across the U.S. Elsewhere in New England, Massachusetts (35 percent) and Connecticut (33 percent) rank first and second, respectively, among all 50 states while New Hampshire and Vermont also rank in the top ten among all states (US Census Bureau, 2001). Spending on education in Maine, on a per student basis, generally ranks among the lowest of the New England states (table 5). At the elementary and secondary grade level, per student spending, while higher than the national average, is higher only than New Hampshire when compared to the other states in New England. At the post secondary level, per student expenditures at Maine's 4 year institutions is much lower than the national average for both public and private schools. Again, only New Hampshire, among the New England states, has lower per student expenditures among public colleges and universities, while Maine's private 4 year institutions have the lowest spending per student. While Maine presently ranks below the national average on educational status, educational achievements among current students rank among the best in the nation. Among the positive measures in a recent report of states' progress toward achieving national education goals, Maine has the 6th best high school completion rate and the 2nd lowest dropout rate. Ninety-two percent of 18 to 24 year olds in Maine have a high school diploma, compared to 85 percent nationally, while only 3 percent of Maine high school students drop out of school. In 1996, Maine 8th grade students ranked 1st in the nation in science proficiency and in the top ten in mathematics (National Education Goals Panel 1999). In 2000, 65 percent of Maine high school seniors intended to go on to higher education. Providing quality education at the elementary and secondary levels suggests a solid foundation for the future of Maine's workforce. However, several other trends bear consideration. First, the numbers of youth in Maine declined during the past decade and are projected to decline further during the next 15 years, both in real terms and as a percentage of the total population. An educated workforce is an essential component for sustainable economic growth, but inadequate numbers of educated workers can place restrictions on growth. This is especially problematic for Maine's smaller communities where the size of the total labor force is small. Secondly, only one half of college students who graduate from Maine high schools attend college within Maine. This is a particular concern because students who attend college outside of their home state are 54 percent more likely to remain out of state than those who those who go to college in state (Kodrzycki 2001). Nationally, approximately three quarters of high school graduates attend college within their home state. However, the high proportion of out of state college attendance is especially typical of students in New England - five of the six New England states rank in the top ten nationally for out of state attendance with Massachusetts ranked 12th. Finally, producing educated young people, even within the state, does not guarantee that they will remain in there as part of a more educated workforce. A new study of the migration patterns of recent college graduates finds that higher levels of education are associated with greater mobility (Kodrzycki 2001). People with education beyond the baccalaureate level are more than twice as likely to move to a state different from the one where they attended high school than are those with only a high school diploma. In New England, the tendency toward mobility is the second highest among the U.S. Census regions. Nationally, five years after graduating from college, 30 percent no longer live in the state where they attended high school, while in New England that proportion is nearly 45 percent. Further, the study finds that young college graduates are more likely to move if they are from a state that has low employment growth, high unemployment or low salaries, and that the majority move to a state with a better condition in at least one of those measures. This mobility of highly educated workers highlights the importance of maintaining the "quality of life" characteristics and the economic opportunities that attract mobile workers to come to Maine, as well as entice young adults educated in Maine to stay here. The total size of the Maine economy, as measured by gross state product (or value added), was $34.1 billion in 1999, the latest year for which data are available. By this measure, Maine has the fourth largest economy of the New England states, ahead of Rhode Island and Vermont (Table 6). Ten years ago, in 1990, Maine had the third largest economy ahead of Rhode Island, Vermont and New Hampshire. Adjusted for inflation, the value of the goods and services produced in the state since 1990 grew by 16.2 percent. This was the smallest increase among all of the New England states and less than one half the growth of the United States' gross domestic product over the same period of time. Productivity in Maine's economy, defined here as total gross state product divided by the total number of full and part time jobs, also ranks low in comparison to the New England and national averages. In 1999, productivity in Maine was second lowest among the New England states and only slightly higher than that of Vermont's. Over the past ten years, real productivity adjusted for inflation grew less in Maine than any other New England state. Productivity increased by 6.2 percent in Maine compared to 20.2 percent growth across New England and 14.7 percent growth, nationally. The low level of productivity in Maine's economy also appears in the form of lower earnings and personal income. Personal income in Maine historically has lagged behind that of New England and the U.S. (Figure 3). According to the most recent figures, per capita income in Maine in 1999 was $24,582 compared to $34,232 across New England and $28,546 in the U.S. Over the past two decades, incomes in Maine relative to the U.S. have ranged from a low of 81.8 percent of the average income in the U.S. in 1981 to a high of 91 percent in 1989 and then declining 86.1 percent in 1999. By contrast, incomes in Maine have fared less well in comparison to the New England region, overall. In 1980, Maine incomes were 78.6 percent of the New England average but have declined almost steadily in relative terms to 71.8 percent in 1999. As a per capita measure covering the total population, these relationships can be affected by several demographic factors such as average household size or labor force participation rates. Maine, however, has smaller households and families than either New England or the U.S. eliminating this factor as a source of the difference. Also, the percent of the population in Maine that was employed in 1999 (51 percent) is the same for New England. Figure 4 shows the three principal components of per capita income for Maine, New England and the U.S. in 1999. Net earnings in Maine (comprised of wages and salaries plus proprietors' incomes minus personal contributions for social insurance), which make up the largest portion of per capita income, are equal to only two thirds of those in New England and 81 percent of U.S. per capita earnings. Yet, the level of transfer payments per capita is actually higher in Maine than in the U.S. and is nearly as high as New England's, overall. Transfer payments are made up primarily of social security, medicare and medicaid payments. Of these, both social security and medicaid payments are higher in Maine on a per capita basis, while medicare payments are lower. The reason for this difference is unclear since the proportion of the population age 65 and older is essentially the same for Maine and the U.S., and the percent of the population living below the poverty level is lower in Maine than the U.S. The pattern of income from dividends, interest and rent follows that for personal income, overall. This suggests that, in addition to having lower earned incomes, Maine residents also have lower levels of wealth. The lower earnings in Maine are evident across all sectors of the Maine economy, as shown in Table 7. In every industry category, the average wage and salary earnings per job are lower in Maine than in either New England or the U.S. The differences range from finance, insurance and real estate where Maine earning are 59 percent of the New England average to government and government enterprises where average earnings in Maine are 84 percent of New England's. In every sector of the Maine economy, the discrepancy in average earnings has grown over the past twenty years. In 1980, earnings per job in every sector were equal to at least 80 percent of the New England average. Today, only two sectors have earnings that are as high, and four of the industry sectors have average earnings that are less than 70 percent of New England's. During the past two decades, Maine has seen only limited job growth in the industries with the highest average earnings, while the greatest job growth has occurred among lower-paying industries. The four top paying sectors, with average annual earnings above $35,000 per year, were also the four industries with the smallest increase in jobs from 1980 to 1999. The sector with the highest average earnings, manufacturing, lost 21 percent of its jobs during that time period. By contrast, the sector with the greatest job growth was retail trade where the average earnings are the third lowest. During the period from 1990 to 1999, the total number of jobs in the state rose by 9.4 percent to 773,441. This rate of growth exceeded the average across all of New England and was fourth highest among the six states. Figure 5 shows the growth in employment since 1980 in Maine, New England and the nation. The 1980s were a period of rapid economic growth in both Maine and New England, overall where the increase in jobs exceeded the national rate of growth. The recession of 1989 also was more pronounced in Maine and New England than it was nationally, where it resulted in a proportionally greater loss of jobs than in the nation as a whole. The period since 1990 has seen slower job growth in Maine and New England than the national average, although employment increases in Maine continue to exceed New England's. As in the rest of the country, Maine continues to experience a shift in employment away from goods producing industries and toward services and non goods producing industries. Twenty years ago, both the manufacturing and services sectors contributed an equal number of jobs in Maine (approximately 23 percent). Today, 12 percent of jobs in Maine are in the manufacturing sector, nearly one third of workers is employed in the services sector and 23 percent are employed in the wholesale and retail trade industries. (Figure 6). Government employment at the federal, state and local levels constitutes the fourth largest source of jobs in Maine accounting for 14 percent of the total (over one half of the government jobs are found at the local level). Among the other sectors of the economy, construction accounts for 7 percent of total employment, finance insurance and real estate provide 6 percent of jobs, transportation and public utilities provide 4 percent, and agricultural services, forestry and fishing contribute 2 percent. Overall, the manufacturing industries have declined both in relative terms of their contribution to total employment in Maine, and in real terms as the actual numbers of manufacturing jobs has shrunk by nearly one fourth (from 119,000 jobs in 1980 to 92,000 jobs in 2000). The change in manufacturing has not been even across specific manufacturing sectors, and as a result, the nature of manufacturing in Maine has changed with varying impacts in different regions of the state. These are explored in greater detail in Part II of this report. In 1980, 60 percent of manufacturing jobs were in non durable industries dominated by leather and leather products (18 percent; primarily footwear), and paper and allied products (15 percent), while only 40 percent of manufacturing jobs were in durable goods industries. The durable goods industries were dominated by lumber and wood products (14 percent) which employed more than twice the number of workers as the next largest durable goods industries (electronics and other transportation equipment each employed about 6 percent of manufacturing workers). By 2000, employment in the non durable goods industries had declined by 39 percent while durable goods industries increased employment slightly, by 3 percent. The decline of the shoe industries resulted in the loss of three fourths of the jobs in the leather and leather products sector. Textile industry employment decreased by 61 percent, and the paper industry lost 27 percent of its jobs (Table 9). Among durable goods industries, the dominant lumber and wood products industry lost 12 percent of its jobs, while jobs were gained in the production of transportation equipment (shipbuilding), and furniture and fixtures. An examination of the primary sources of employment in manufacturing in Maine as compared to New England and the U.S. finds that the makeup of manufacturing in Maine is somewhat different. The top five manufacturing employers in Maine are lumber and wood products, paper and allied products, other transportation equipment, electronics, and food and kindred products. While the rankings are slightly different, the four of the top five industries are the same in both New England and the U.S. - industrial machinery, electronics, printing and publishing, and fabricated metals. However, only one Maine industry falls into the category of the top five for New England and the U.S. In service sector employment, Maine closely resembles New England and the U.S. as all three regions share the same top five service industries with only slight differences in overall ranking. Since 1980, employment in Maine's services sector generally has grown somewhat faster than New England's, overall, but slightly less than in the U.S. However, growth in the top five services industries in Maine has substantially outpaced the growth of those industries in New England and the U.S. The top five service sector employers in all three regions are health services, business services, social services, amusement and recreation services, and educational services. Generally, both Maine and New England have a somewhat greater proportion of employment in the health care area than does the U.S., perhaps reflecting the greater proportions of elderly in their populations. Maine has proportionally less employment in business services than either New England or the U.S., while employment in Maine's educational sector is only one half that in New England, overall. The broader effects that sectoral shifts have the state's economy can be estimated with the use of an input output model of Maine's economy. Such models are commonly used to determine the multiplier effects that ripple through an economy due to some change within a particular industry. Table 8 compares the total impacts estimated by an IMPLAN© model of the Maine economy from the loss of 1,000 manufacturing jobs to the total impacts that would be expected from a gain of 1,000 service sector jobs. In this analysis, the 1,000 manufacturing jobs and 1,000 service sector jobs are assumed to be representative of those broad industry sectors (i.e., they are analyzed as a weighted average of all manufacturing or service sector industries as they currently exist in the Maine economy). A more specific simulation is included by comparing the loss of 1,000 jobs in the leather goods industry to the gain of 1,000 jobs in the health services industry. A note of caution is warranted concerning these results. Input output models make no accommodation for structural changes in the economy and are generally used to estimate marginal changes in industry employment. Clearly, the long term trend away from manufacturing and toward services constitutes a structural change in Maine's economy. Nevertheless, the results are useful to comparing the general effects associated with immediate changes in employment. It has generally been suggested that the creation of jobs in the service sector does not adequately offset the loss of manufacturing jobs because of a substantial difference in the quality of the job and because the loss of manufacturing has a greater impact on the rest of the economy. The first two columns of Table 8 confirm this in the general sense. Since 1980, manufacturing employment in Maine has declined by 23 percent, while service employment has grown by 109 percent. The typical manufacturing job produces nearly twice the gross product and pays higher wages than the typical service sector job. Moreover, the total negative impact of losing 1,000 manufacturing jobs results in a total job loss of 2,429 jobs compared to 1,559 total new jobs that result from 1,000 new service jobs. The differential in average wages coupled with the greater total job impact means that total lost labor income from the loss of 1,000 manufacturing jobs (-$74.7 million) is nearly double the income gained from 1,000 new service jobs ($38.6 million). These changes also impact all forms of state and local tax collections including personal and corporate income taxes, property taxes, sales taxes, payroll taxes and other taxes and non tax fees. The simulation suggests that the negative tax impact from the loss of 1,000 manufacturing jobs would be more than double the gain to be expected from 1,000 new service jobs (-$9.4 million versus +$4.0 million). The changes and the quality of jobs found in the manufacturing and service sectors vary considerably among specific industries. While the first two columns of table 8 compare manufacturing and services in the most general sense. The final two columns of that table compare the effects of job losses and gains in two industries that represent both the extreme examples of their respective sectors, while also being illustrative of the trends that are occurring in Maine. In 1980, leather products manufacturing, with over 21,000 workers, was the single largest manufacturing industry in Maine. Over the past 20 years it has experienced the greatest percentage decline among all manufacturing industries (-74 percent). In 1980, health services was the single largest services industry in Maine (34,713 workers). Since then, it has grown by 76 percent and is still the dominant service sector employer (table 9). Today, jobs in health services have a greater average value of product per job and pay higher average wages than jobs in the leather goods manufacturing industry. Ultimately, the positive impacts that come from the creation of 1,000 health service jobs approximately offsets the negative impacts that result from the loss of 1,000 leather goods manufacturing jobs. Two basic types of employment include wage and salary jobs in which workers are employed by businesses that they do not own, and jobs held by business proprietors. The latter defines a legal form of business ownership generally associated with smaller establishments. Small business and entrepreneurship are of particular interest in Maine because rural economies typically exhibit a greater reliance on smaller businesses for employment than urban economies. In 2000, over 23 percent of non farm, private sector jobs in Maine were held by the proprietors of small businesses, compared to less than 18 percent in New England and the United States. In all three regions, the number of proprietors grew nearly twice as fast as the number of wage and salary workers. As a result, the proportion of jobs held by proprietors has increased since 1980 (table 10). It is particularly interesting that the growth of proprietors in Maine and elsewhere has been nearly constant during the past two decades. Figure 7 shows the steady growth in the number of proprietors since 1980 in Maine, New England and the United States. The pace of growth has been quite similar in all three regions, with only minor interruptions in Maine and New England in 1987 and 1995. This pattern is in sharp contrast with Figure 5, which clearly shows the substantial declines in total employment that occurred during the economic recession of 1989, especially in Maine and New England. Proprietor employment differs from wage and salary jobs both in their growth over the past two decades and their distribution across industries. The top three sectors, in terms of wage and salary workers are services, retail trade and manufacturing. Together these three sectors of the Maine economy employ almost 72 percent of all wage and salary workers. Those same industries account for less than 60 percent of proprietors (Table 11). Although a large proportion of proprietors are found in the services sector (40 percent), the remaining ones are more evenly spread across retail trade, construction, finance insurance and real estate, and agricultural services, forestry and fishing. There also are significant differences in the growth of employees and proprietors across industries. During the past decade, from 1990 to 1999, the number of wage and salary jobs grew by 10.3 percent compared to a 21.1 percent increase in the number of proprietors during that same period. Within the large services sector, the number of employees and proprietors grew 32.5 percent and 23.2 percent, respectively. Employees working in retail trade increased 9.8 percent, while the number of retail proprietors increased 14.2 percent. The manufacturing sector, which lost 15.8 percent of its employees during the 1990s, experienced a 4.8 percent increase in the number of small manufacturing proprietors. In addition to distinguishing proprietors from employees, job classifications generally are described by the nature of the work that is involved and cut across industry categories. Since most proprietors perform a variety of tasks in the operation of their business, occupational classifications generally pertain to wage and salary workers. Table 12 lists the major occupational groups as defined by the U.S. Bureau of Labor in descending order by their numbers in Maine. Generally, there are no substantial differences in the occupational makeup of jobs between Maine, New England and the United States. Of the 22 occupational categories, the top two occupations account for more than one fourth of all jobs - Office and administrative support, and Sales and related occupations. There are considerable differences in the average annual wages earned in the occupational categories between Maine, New England and the United States. In every occupation, the average annual wage in New England is higher than the average wage paid in the U.S. In all but two occupational groups, the average wage paid in Maine is less than both the average for New England and the average for the U.S. Maine exceeds the U.S. average in wages paid in the food preparation and serving related occupations (the fourth most numerous job in Maine), and in farming, fishing and forestry occupations (the lest numerous job in Maine). The difference in average annual wages between Maine and New England ranges from a 9.0 percent difference in production occupations and healthcare practitioner occupations to a 34 percent difference in management occupations and computer and mathematical occupations. One way to gauge how future wages in Maine will compare to New England and the United States is to examine the average wages for the fastest growing occupations. Table 13 lists the 20 detailed occupations that are projected to grow the fastest between 1998 and 2008. The projected average change for all U.S. occupations over that ten year time period is 14 percent, therefore the number of jobs in the listed occupations are expected to grow much faster than the overall national average. Of the twenty fastest growing occupations in Maine, fourteen are also among the twenty fastest growing occupations in the U.S. Altogether, these twenty occupations are projected to add 9,450 new jobs between 1998 and 2008. Part II. Maine and Its Regions Maine, overall, is characterized as a slow growing state that is somewhat older than the national average, with below average personal income and wage levels. However, Maine is a large state and the social and economic characteristics vary across its different regions. This section examines Maine's regions in greater detail. There are five EDA-sponsored Economic Development Districts in the state that serve 14 of the state's 16 counties. The state's population is concentrated in the southern and central areas of state while large areas of the northwestern and eastern regions remain unsettled (Figure 8). The two southern most counties of York Cumberland account for six percent of the total land area but are home to more than 35 percent of the state's residents. Not surprisingly, these counties have some of the highest population densities in the state with 265 and 175 people per square mile, respectively. Other counties with densities in excess of 100 per square mile include Androscoggin (206 per sq. mi.), Sagadahoc (158 per sq. mi.), Kennebec (122 per sq. mi.), and Knox (per sq. mi.). Each of these counties is located in the southern and south coastal areas of the state. By contrast, the northern, eastern and northwestern counties have large land areas and sparser population. Aroostook County in the north of Maine is the largest county (21 percent of total land area) but has the second lowest population density (11 people per square mile) due mainly to the presence of large expanses of unsettled forest lands. A similar situation exists for the northern regions of Penobscot, Piscataquis, Somerset, Franklin and Oxford counties. Outside of Bangor in Penobscot, none of these counties had a town or city with a population greater than 10,000 people. There are approximately 492 municipalities in Maine the have their own form of local government. These include cities (22), towns (433), plantations (34) and Indian reservations (3). Additionally, a small number of people live in 36 unorganized territories that are administered by the state government. Typical of New England, most services are administered at the local level with only very limited responsibilities assumed by county government. As a result, many of Maine's small towns provide their own education, safety, transportation and other public services. The resulting duplication of services among small neighboring towns is often viewed as an inefficiency that leads to higher costs for the provision of services. The towns and cities where Maine residents live are mostly small in size. Of the 492 organized places in the state, 26 percent have fewer than 500 residents and 60 percent have fewer than 1,500 residents. Only Portland, in Cumberland County, has more than 50,000 residents, while Lewiston in Androscoggin County and Bangor in Penobscot County have a population in excess of 30,000. Hancock, Lincoln, Piscataquis, Waldo and Washington Counties do not have any towns or cities with more than 5,000 residents. Since 1990, Maine's population overall has grown by only 3.8 percent. Of the five economic development districts (EDDs) in Maine, only the Southern Maine Economic Development District (SMEDD), comprised of York and Cumberland counties had a population growth rate that exceeded the statewide average. The counties of Lincoln and Sagadahoc also had higher than average growth rates of 10.7 percent and 5.0 percent, respectively. The Androscoggin Valley Council of Governments EDD includes one county that lost population between 1990 and 2000 (Androscoggin, 1.4 percent) and two counties that had small to moderate increases (Franklin, +1.6 percent; Oxford, +4.1 percent). Eastern Maine Development Corporation EDD, the largest development district in the state, includes six counties with mixed growth rates. The central coastal counties of Hancock (+10.3 percent), Knox (+9.1 percent) and Waldo (+9.9 percent) all experienced substantial population growth during the 1990s. Penobscot ( 1.1 percent), Piscataquis ( 7.6 percent) and easternmost Washington County ( 3.9 percent) experienced declines in population (table 14). The Kennebec Valley Council of Governments EDD includes two central Maine counties that both grew slowly from 1990 to 2000. These include Kennebec (+1.0 percent) and Somerset (+2.3 percent). Finally, the Northern Maine Development Council EDD includes only Aroostook County which lost 14.9 percent of its population during the 1990s. Figure 9 provides a more detailed view of population change in Maine from 1990 to 2000. The higher resolution afforded by examining changes at the municipal level identifies more precisely where growth and decline have occurred and shows the differences that occur within counties. As the map shows, the towns with the fastest growth rates (greater than 15 percent growth between 1990 and 2000) tend to be located along a corridor that runs from the southern tip of the state up to central Penobscot County. This generally follows the route of the state's primary transportation route, Interstate-95. While the interstate highway continues northward into Aroostook County, it is clear that the population growth does not. Indeed, the majority of the towns located in Aroostook County saw their population decline during the 1990s. In addition to widespread losses in Aroostook County, many towns in the rural fringes also experienced declining populations. The northern tier of the developed areas reaching from the western border toward central Maine includes many towns that lost population or experienced only slow or moderate growth. In Washington County, the number of towns that increased population is approximately equal with the number that declined, although those that declined are more likely to be located within the lesser developed interior fringe areas of the county. Finally, the map shows several towns or cities within the generally faster growing corridor region that also declined in population. Comparing the map in figure 9 with the one in figure 8 shows that the declining towns within this region are primarily the larger population centers with 10,000 of more residents. Perhaps the most powerful force currently underway is the changing age structure of the population. As alluded to in previous sections, the aging of the population has important ramifications for the kinds of public services that must be provided as well as the availability of tax revenues to fund those services. Equally important is the aging of current workers and the flow of younger workers into the future labor force. While the labor force can generally be defined to include people between the ages of 18 and 64, this section of the report examines the labor force as two groups: young adults aged 18 to 34, and the older, more established workers aged 35 to 64. Table 15 shows the percentage change in population in four different age groups for Maine's counties and economic development districts. Most striking are the declines in the younger population groups. Four of the five development districts experienced a decline in the number of people under the age of 18, while 15 of the sixteen counties also saw their numbers of youth decline. For many parts of the state, these numbers mean that there will continue to be declines in the number of young workers during the next decade, similar to the decline of young workers that has occurred during the 1990s. During the past ten years, every one of Maine's sixteen counties experienced a decline in the number of younger workers between the ages of 18 and 34. Given this past trend, it is easier to understand the anecdotal evidence that some Maine industries during the latter half of the 1990s reported difficulties in finding entry level workers. By contrast, the table shows clearly the complete movement of the "baby boom" generation into the category of older workers aged 35 to 64. Every county experienced growth in this age group and, in all but one county, this age group showed the greatest percentage increase during the 1990s. In Aroostook County, this age group grew only 2.6 percent while the number of people age 65 and older increased by 12.6 percent. The large age spread in this category makes it less clear how quickly the numbers in this group will move into the category of senior citizens, however, more detailed analyses suggest that the greatest increases in the number of older persons will occur between 2010 and 2025. Already, every county in Maine has experienced growth in the number of people 65 and older at rates that exceed their overall rates of population growth. The series of maps in figure 10 portray the regional differences in the rates of population change for the different age groups, and portray in stark terms the pervasiveness of population declines in people under the age of 35. The first map, depicting percentage change of the population under the age of 18 shows fairly widespread declines with the exception of moderate growth in southern, central and mid coastal areas. In all, 300 of Maine's 492 communities (61%) lost population in this age group. The prospects for an immediate rebound in these numbers are dim: even more Maine towns (75 percent) experienced declines in their numbers of children under the age of 10. The second map shows the dearth of growth in the numbers of the young working age population age 18 to 34. Only 70 of 492 Maine communities (14 percent) had any growth in the numbers of people in this age group, and just 18 of those had growth in excess of 20 percent. The third and fourth maps in the series show a much different picture. The robust growth rate found at the county level for people in the 35 to 64 age group is evident in the extent of the growth in this age group at the town level. Fewer than nine percent of Maine towns lost population from this age group, and more than one half of those that did lose population were located in Aroostook and Washington counties. Much of the growth was fairly strong. In nearly two thirds of the towns, the increase in population in this age group exceeded 20 percent. Growth in the elderly population is also fairly widespread as shown in the fourth map in figure 10. More than three quarters of Maine towns experienced growth in this population, with over 44 percent of the towns having elderly growth rates greater than 20 percent. The prevalence of strong growth in the elderly population throughout most of the state is mildly surprising given the geographic pattern of elderly as a proportion of total population in Maine towns. As can be seen in figure 11, the elderly population is much more predominant in the populations of towns outside of the corridor region. While there is not a large percentage variance in the proportion of elderly (fewer than 12 percent compared to greater than 15 percent) the geographic pattern is evident. The higher proportions of elderly are clearly found in the coastal communities, in the northern fringe communities from the western border to central Maine, and throughout Aroostook County. This is nearly identical to the geographic pattern that emerges when examining the median age of Maine's communities. The median ages shown in table 16 points up the startlingly rapid pace at which Maine's population is aging. In a period of 20 years from 1980 to 2000, the median age in most counties has increased by almost 10 years. In the case of Aroostook County, it has increased by more than 11 years. By contrast, the median age of the U.S. has increased more slowly, from 30.0 in 1980 to 32.9 and 35.3 in 1990 and 2000, respectively. Another way to examine the location of population change is by the total population size of the towns and cities. Organized in this way, the fastest growing towns were smaller ones with population between 500 and 1,499 residents in 2000 (+8.2% increase) and those between 1,500 and 4,999 (+7.7% increase). Very small towns with less than 500 residents expanded at roughly the overall state average. While towns with 5,000 to 24,999 residents grew less than the overall average. The three towns in Maine with a population over 25,000 declined an average of 4.1 percent (table 17). This general growth pattern where smaller towns are expanding in population while the largest ones a growing slowly or declining is related to the phenomenon of sprawl that has attracted considerable attention. A report by the Maine State Planning Office estimates that sprawl leads to increased state and local taxes by requiring new and redundant infrastructure in rural communities, by increasing the service routes for fire, safety and road maintenance services, and by creating urban centers with declining populations and underused infrastructure (O'Hara 1997). The State Planning Office has designated 29 Maine towns and cities as primary service centers (Figure 12) based on level of retail sales, the ratio of jobs to workers, the amount federally assisted housing, and the volume of service sector jobs (Task Force on Service Center Communities, 1998). Table 18 compares several characteristics of the 29 primary service centers to the 142 towns that lie adjacent to them and share a border. On average, the service center communities are much larger with 11,073 residents compared to 2,499 in the adjacent communities. During the 1990s, while the adjacent communities grew and average of 13.1 percent, the service centers lost 3.2 percent of their population. The overall working age population is proportionally the same in both the service centers and the adjacent communities at approximately 62 percent of the total population. However, the service centers have a smaller proportion of young people (21.0 percent versus 24.3 percent) and a higher proportion of older people (16.6 percent versus 13.5 percent). The result is a substantial difference in their age specific dependency ratios. On average, the service centers have a median household income that is 11 percent less than that found in the adjacent communities ($28,340 versus $31,548). Finally, the property tax differential shows the greater expense being borne by residents of the service centers. The average mil rate for 2000 in the service center communities is 20.1 compared to 15.8 in the adjacent communities. The total tax commitment in each town divided by the total number of households in the town (i.e., property tax per household) averages $2,478 for service center towns and $2,064 in the adjacent towns. As a measure of property tax effort, the tax burden per household is related to the median household income in each town. Higher household incomes combined with lower average property taxes result in a lower tax burden for the residents of the adjacent communities. In the service center communities, taxes per household average 9.0 percent of median household income. In the adjacent communities, this measure of property tax burden is 6.6 percent of household income. The tax effort for each of Maine's towns is shown in figure 13. Generally, the tax effort is lowest along the interstate corridor from southern Maine into the central portion of the state. The highest tax burdens are found in the coastal communities, especially the mid coastal region and downeast. Other high burden towns are found in the western rural fringe communities and in northern Maine. To the extent that the largest portion of Maine's population resides within the corridor region (figure 8) where the property tax burden is lowest, at least relative to the other regions of the state, it may explain why there has not been a widespread grass roots movement to reduce property taxes. While such an effort is likely to emerge where the tax burden is the highest, those communities exist largely in more rural, sparsely settled regions with less overall population and less ability to present a significant political force. Regional economies of Maine: In part I of this report, a statewide perspective on the economy of Maine highlighted a shift toward service and non manufacturing employment that is characteristic of the Maine and U.S. economies, overall. However, differences exist with respect to the economic makeup of the local and regional economies within the state. For example, during the 1990s, the U.S. Economic Research Service developed a county level typology for non metropolitan counties based on their dominant economic traits. The results for Maine designated five of the thirteen non metropolitan counties as 'manufacturing dependent' (Franklin, Oxford, Piscataquis, Sagadahoc, Somerset), three were 'government dependent' (Aroostook, Kennebec, York), one was 'services dependent' (Knox), and one was designated as 'non specialized' (Waldo). These differences reflect historical patterns of development as well as the effects produced by the changing fortunes of individual industries. Rural areas that traditionally relied more heavily on farming have been affected negatively by declines in that industry, while metropolitan areas have benefited more from the growth of selected service industries. This section examines in greater detail the industries that characterize the regional economies of Maine and some of the changes that have had important impacts on those regional economies. Over the past two decades, the number of manufacturing jobs in Maine declined by 21 percent, resulting in 25,306 fewer jobs in 1999 than there were in 1980. While the loss of manufacturing jobs has been offset by increased employment in other sectors, the effect of lost manufacturing jobs is exacerbated by the fact that the average wage earned in manufacturing industries is second only to employees in the financial sector of the state economy. On average, wage and salary workers in manufacturing industries earned $34,651 in 1999 compared to the overall statewide average of $26,418 for all workers in Maine. In 1999, manufacturers provided 12 percent of all jobs in Maine but accounted for 16 percent of total earned income (down from 21 percent and 28 percent, respectively, in 1980). Employment in manufacturing declined in every county except Sagadahoc and Hancock. Manufacturing employment is of particular importance to the northwestern regions of the state, as shown in figure 14. In those counties, manufacturing employment contributes well above the statewide average of 12 percent of jobs. The reliance on manufacturing in those counties is 16.7 percent in Oxford County, 21 percent in Somerset County, 25 percent in Franklin County, and 26 percent in Piscataquis County. In Sagadahoc County, the presence of a major manufacturing employer (shipbuilding) within a small county results in manufacturing accounting for 38 percent of all jobs there. Generally, manufacturing is of relatively less importance along the coastal counties of Maine. Within the northwestern counties, wood products manufacturing and the pulp and paper industries constitute more than one half of the manufacturing employment in three of the four counties (Piscataquis County has no paper mills, but wood products and textiles account for nearly three quarters of manufacturing jobs). While they remain important industries in those counties today, their relative contributions to the total earned income within their respective counties has declined by nearly one half over the past twenty years. In Piscataquis County, income from the wood products industry has been reduced from 28 percent of total earned income in 1980 to 8 percent today (figure 15). Elsewhere, other manufacturing industries that were major contributors to their regional economies twenty years also have experienced declines that render them relatively less important today. Examples include the textile and leather products industries. Although much of the decline in the textile industries occurred during the 1960s and 1970s, those counties where the industry still had a presence in 1980 continued to experience declines through the 1980s and 1990s. The exception in this industry exists in Piscataquis County where earnings in the textile industry continue to contribute approximately 12 percent of total earned income in that county. The effect of the continuing closures of footwear manufacturers across the state is evident in figure 15. Twenty years ago, the leather products industry was an important part of the regional economy in Somerset, Franklin and Androscoggin counties. In each case, their contribution to earned income has declined by one half or more, relative to all other industries. In 1980, the leather products industry represented 15 percent, 14 percent, and 8 percent of total earned income in Franklin, Somerset and Androscoggin counties, respectively. By 1990, real and relative declines in this industry had reduced their contribution to total earned income to 3 percent in Franklin, 6 percent in Somerset, and 2 percent in Androscoggin counties. Although manufacturing overall has declined in Maine, several industries have experienced employment and wage growth. The greatest numbers of new jobs have occurred in the transportation equipment, printing and publishing, and furniture and fixtures industries. The transportation equipment industry in Maine is dominated by a single firm dependent upon federal defense contracts for much of its output. Therefore, employment in that industry fluctuates considerably and is highly subject to changes in defense spending priorities and decisions made elsewhere. The printing and publishing industry has grown steadily over the past two decades, adding approximately 3,000 new jobs during the past two decades. Measured in constant dollars, earnings growth statewide in the printing and publishing industry over the past twenty years was 94 percent, compared to 51 percent earnings growth in the overall Maine economy. While several counties experienced even more rapid earnings growth in this industry (149 percent in Cumberland County; 199 percent in Hancock County; 158 percent in Lincoln County; 189 percent in Somerset County; and 477 percent in York County), in no county does this industry contribute more than 1.7 percent of total earned income. There is inadequate data at the county level to examine with consistency the changes that have occurred in the furniture and fixtures industry over the past twenty years. However, with the exception of Piscataquis County, the industry represents less than one percent of total employment in any county in Maine. In Piscataquis County, furniture and fixtures contributes approximately 3.7 percent of all jobs. The services sector represents the largest and fastest growing sector of the Maine economy. From 1980 to 1999, employment in service sector industries grew by 109 percent and today it accounts for 32 percent of all jobs in the state. While nearly all industries defined within the services sector grew over the past two decades, there is considerable variation in rate of growth and relative size of the industries, both over time and geographically within the state. Two industries, private households and miscellaneous services, lost a total of 5,928 jobs, while the greatest numbers of jobs were added in the areas of health services (26,356 jobs), business services (25,017 jobs) and social services (17,539 jobs). Together, these three service industries accounted for 57 percent of total service sector job growth. From a job quality perspective, none of these sectors has average earnings that exceed the average earnings per job found in the manufacturing sector. In 1999, the average manufacturing worker earned $34,651 compared to average earnings per employee of $24,228 in the services sector. Unlike overall manufacturing, concentrations of service sector employment, as a percent of total employment, show no obvious geographic patterns within the state (figure 16). Concentrations range from less than 22 percent of total employment in Sagadahoc, Washington and Piscataquis counties, to more than 32 percent of the total employment in Androscoggin, Cumberland and Kennebec counties. Concentrations of specific services, however, present distinct regional patterns within the state. Employment location quotients were calculated to examine industry concentrations within counties relative to statewide levels of concentration. A location quotient greater than 1.0 indicates a county with a relatively higher proportion of jobs within a particular industry than does that industry in the state, overall. The results for selected service industries are shown in figure 17. By this measure, the business services industry is relatively more important in Cumberland (1.56) and Lincoln (1.33) counties, and of slightly higher than average importance to Waldo (1.05) and Kennebec (1.01) counties. Health services are relatively more concentrated in Aroostook (1.28) and Penobscot (1.28) counties, while their percentage of total employment is only slightly higher than the statewide average in Androscoggin (1.18), Cumberland (1.05) and Washington (1.01) counties. The other major services sector employer, social services, has a location quotient greater than 1.0 in central and northern Maine. The geographic concentrations for employment in non profit organizations is very similar to social services. Educational services are relatively more concentrated in central and western Maine. As a state endowed with abundant marine and forest resources, it is not surprising that much of the state's economy revolves around the natural resource base. It generally is agreed that the natural resource based industries include more than the SIC sector called "agricultural services, forestry, and fishing". In addition to the extractive activities of farming, fishing, logging, and mining are selected manufacturing activities that involve the processing of raw extracted products into finished or intermediate goods. These include food processing, wood pulping and paper making, lumber and wood products. Altogether, these industries employ approximately 8.5 percent of the Maine workers, although their importance varies considerably between counties. For example, Cumberland county has nearly the largest number of natural resource based workers (7,728), but they account for less than four percent of all jobs in that county - nearly the smallest proportion of any county. In both Washington and Franklin counties the proportion of natural resource related jobs exceeds 20 percent. Figure 18 shows clearly the location influence of the marine and forest resources. Table 19 lists the county location quotients for several natural resource related industries. The western counties exhibit high reliance on forest resources. Oxford and Franklin counties have particularly high location quotients in the wood products and paper industries. Somerset County relies heavily on wood products, paper making, and forestry. Piscataquis County, with no pulp and paper industry, shows a high dependence on wood products manufacturing and forestry. The numbers for Aroostook County also indicate the significance of forest resources to the economy of that county, particularly wood products manufacturing, but the importance of farming is underscored by the high location quotients associated with farm operations and food processing. Washington County has, perhaps, the most resource dependent economy in the state. It is the only county in Maine to have a location quotient greater than 1.0 in each of the resource related industries included in Table 19. Penobscot County and the counties in the mid coast region appear in figure 18 as having a moderate proportion of total employment in the natural resources sector. For Penobscot County, that designation results primarily from the importance of forestry and some reliance on wood products manufacturing and paper making. Waldo County also is somewhat dependent on forest resources with strong employment in the wood products manufacturing industry, but, like Aroostook County, the farm and food processing sectors are also important sources of employment. The relative importance of marine resources in the coastal counties of Knox, Lincoln and Hancock is apparent in the high location quotients for commercial fishing. Finally, the southern corridor counties of York, Cumberland, Androscoggin, Sagadahoc and Kennebec exhibit a low overall reliance on natural resource industries. No industry in Table 19 has a location quotient greater than 1.0 in either York or Kennebec counties, and none is greater than 2.0 in either Cumberland or Androscoggin counties. Only Sagadahoc, located on the coast, has a location quotient greater than 2.0 (fishing) in any of the natural resource industries. Standard industry classifications do not include a separate tourism industry. Rather, the activities of tourists that visit the state have a direct impact on a variety of industries. In addition to hotels and lodging, tourists typically purchase food and drink at restaurants, travel by automobile, planes or boats, engage in sightseeing, participate in organized recreational activities and buy souvenirs, among other things. For purposes of illustration, this report examines tourism and recreation activity in association with hotels and lodging, eating and drinking places, and recreational activities. Clearly, some hotel and lodging receipts derive from overnight travel by non tourists, but it is generally assumed that most expenditures are made by out of state visitors. In contrast, a portion of total receipts associated with recreational activities such as golfing, skiing, bowling, attending sporting events and visits to amusement parks can be attributed to tourists, although they are linked primarily to residents. Figure 19 shows the proportion of total employment that falls into these categories in each county. Clearly, this activity is most pronounced in the western mountain and coastal areas where at least 7.5 percent of total employment is found in tourism and recreation industries. A general gauge of the impact of tourists visiting Maine is the level of activity in the hotel and lodging industry. This industry is particularly illustrative of the seasonality of the tourism sector. More than one half of total annual receipts in the hotel and lodging industry in Maine occur during the summer months of June, July and August (based on data from Maine revenue Services) while average monthly employment during the summer is more than double the employment levels during the winter (based on data from Maine Department of Labor). Year-round residents engaged in recreational pursuits are more likely to impact industries such as participatory and spectator sports, fitness centers, and amusement parks. Overall employment in this sector is more stable over the course of the year, however, significant seasonality occurs in the various industries that make up the sector such as golfing, skiing, and amusement parks. The seasonal and part time nature of employment in these industries explains, in part, the lower annual average earnings of employees in this industry. In 1999, average annual earnings per job in the hotel and recreation services industries were $15,409 and $13,138, respectively, compared to $26,418 for all jobs in Maine that year. The general types of activity within these regions can be deduced from the figures in Table 20 which lists the county level location quotients for specific tourism and recreation related industries. Hotels and lodging, which cater largely to visitors, are prominent in the coastal counties of York, Hancock, Knox and Lincoln. Recreation industries are significant in Oxford and Franklin counties and of slightly greater than average importance in York and Cumberland counties. Small business and entrepreneurship: In 1999, there were 38,878 businesses in Maine that employed one or more workers. Of those, 22,519 (58 percent) had fewer than five workers. At the same time, there were 96,884 businesses in Maine that had no employees. Altogether, microbusinesses, defined as those with fewer than five employees and including businesses with no employees except for the owner/operator, accounted for 23.4 percent of all employment in Maine. By contrast, microbusinesses in the U.S. accounted for 17.8 percent of all employment. Statewide, microbusinesses are found in all sectors, although approximately one half of them operate in four broad sectors: construction (16.0 percent), other services (12.3 percent), retail trade (11.2 percent) and professional, scientific and technical services (10.6 percent). They are least numerous in the areas of mining (0.1 percent), utilities (0.1 percent), information (1.0 percent), and educational services (1.4 percent) (table 21). Considerable research has highlighted the role of small business in job creation. However, there is also concern that the high failure rate of small business results in significant job losses. In addition to the issue of job turnover, questions have also been raised concerning the wages and benefits provided by jobs in small firms relative to those available in larger businesses. In this regard, the average annual payroll per job in businesses with one to four employees is at least as great as for the typical employer in Maine. Businesses with no employees do not have a payroll, however, gross wages per worker, including employee contributions to retirement accounts and taxable fringe benefits, were $27,167 among Maine businesses with one to four employees and $26,490 for all businesses in Maine with employees (based on data from County Business Patterns 1999). The proportion of establishments and employment associated with small business is directly proportional to the degree of regional rurality. While small businesses are often portrayed as the vehicles for entrepreneurship, these findings suggest the possibility that the prevalence of small business in rural areas may result as much from the lack of alternative employment opportunities. Figure 20 shows the proportion of total employment attributed to microbusinesses in Maine. The map generally confirms that small businesses are proportionally more abundant in rural areas. Mid coastal and eastern Maine exhibits the greatest reliance on microbusinesses for employment. Western Maine has the second greatest reliance. This may also reflect the industries in these regions. The industries that have the greatest proportion of microbusinesses, construction, retail trade, and professional services are generally distributed according to overall population. The fourth largest category of microbusinesses, forestry, fishing, hunting and agricultural services are largely rural oriented industries. America's Career InfoNet, www.acinet.org 2000 Municipal Valuation Return Statistical Summary. Augusta, Maine: Maine Revenue Services. 30 and 1000: How to Build a Knowledge-based Economy in Maine and Raise Incomes to the National Average by 2010. 1998. Augusta, Maine: Maine State Planning Office. Dow, Patrick M. and Ralph Townsend. 1998. "Reforming Maine's Education Funding Process". Maine Policy Review. Fall, pp. 10-21. Kodrzycki, Yolanda K. 2001. "Migration of Recent College Graduates: Evidence from the National Longitudinal Survey of Youth", New England Economic Review. January/February, pp. 13-34. Maine Rural Development Council. 1999. Building OneMaine. http://mrdc.umext.maine.edu/OneMaine.htm National Center for Education Statistics. Digest of Education Statistics, 2000). http://nces.ed.gov/ National Education Goals Panel. 1999. The National Education Goals Report: Building a Nation of Learners, 1999. Washington, DC: US Government Printing Office. O'Hara, Frank. 1997. The Cost of Sprawl. Augusta, Maine: Maine State Planning Office. Task Force on Service Center Communities. 1998. Reviving Service Centers, Volume 1. Augusta, Maine: Maine State Planning Office. US Census Bureau. 2001. Census 2000 Supplementary Survey. http://www.census.gov/c2ss/www/Products/Profiles/2000/index.htm US Census Bureau. 2001. State Population Projections:1995 - 2025. http://www.census.gov/population/www/projections/stproj.html US Census Bureau. 2001. State Projection Components of Change:1995 - 2025. http://www.census.gov/population/www/projections/st_comp-chg.html US Bureau of Labor Statistics, 2000 State OES Estimates. www.bls.gov/oes/ I. General economic indicators
II. Employment trends in Maine, by detailed industry
III. Employment in Maine economic development districts
IV. Employment trends in Maine, New England and the U.S.
V. Relative proportions of industry employment in Maine, New England and the U.S.
VI. Productivity in Maine, New England and the U.S., by industry
For more information concerning this report or for additional copies, please contact Chris Boynton at mcsc@umit.maine.edu. Total visits since January 9, 2003
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