Maine at work

One more traditional Maine business is in decline, jobs are lost, towns are hurt. This time it’s Dexter Shoe, the jobs number 200, the hurting towns are Skowhegan, Milo, Newport and Dexter.

State officials express regret; they say they saw it coming; they promise to do what they can. On the bright side, they observe that, these localized blows notwithstanding, employment is up. Then again, they concede that good-paying manufacturing jobs often are being replaced by lower-paying service jobs.

The economic climate is changing, generally brightening, but with lingering dark clouds. These days of modest job growth and hearty revenues are the good old days of the next recession. This is the time for Maine to stop patching up its leaking economy and to start building a new one. That cannot happen until Maine stops merely counting jobs and starts thinking seriously about the kind of work Mainers do.

A good place to start would be a new study by University of Maine economist James Breece. It’s called “A Rising Tide Does Not Raise All Boats Equally: The Case of Labor Productivity in Maine.” It’s due to be published next week in the University of Southern Maine’s quarterly Maine Business Indicators.

Economics may be the dismal science, but Breece’s study is not gloom and doom. He notes that Maine’s economy is improving — the unemployment, hours worked and business start-up numbers are pretty good, not setting the pace in New England or the nation, but not trailing the pack. Where Maine lags is in the economic indicator often overlooked: productivity.

Productivity isn’t about how hard people work — Mainers work plenty hard. Productivity is economic output per worker, the extent to which different business categories and industry sectors add to the economy. It’s the value of goods and services produced divided by the number of people who produced it. To those thinking about investing in business, whether private venture capitalists or public policy makers planning economic incentive packages, productivity is a measure of the bang obtained for the buck.

Breece generated state and national productivity numbers for 1977 and 1996, the last year for which complete data is available. Maine generally tracks national and regional trends, but here’s the disturbing part: since the economic upturn started in 1992, national and regional productivity has risen sharply. Maine’s is up, but on a much flatter slope. Also troubling: from 1977 to 1996, national productivity increased from $40,000 per worker to $46,000; New England from $37,000 to more than $48,000; Maine from $32,000 to $36,000. New England’s productivity went from trailing the national average to surpassing it. Maine’s still trails, and the gap is widening.

Working smarter

The overall numbers show that Maine has not created value-added jobs to the extent other states have, it has not modernized its economy with work that generates wealth.

The most productive industry in Maine, with the sharpest gain since 1977, is furniture — more than $90,000 in output per worker, 260 percent greater than the national average. It’s a small industry, just two substantial manufacturers and a host of small workshops. Another big gainer is finishing non-metallic minerals. Furniture and gems are tiny sectors, but they make an imprtant point: the real money in a natural-resource heavy state is in adding value. From wooden chairs instead of wood chips and jewelry instead of stones, the desired direction for Maine’s aquaculture and blueberry industries is easy to see.

To some degree, that is happening. The productivity of Maine’s food products industry has grown, from $21,000 in 1977 to $44,000 in 1996, from 57 percent of the national average to 67 percent. It’s an improvement, but in an age of heat-and-serve prepared foods, where the consumer pays dearly for a dash of salt, it should be better. Of course, it takes capital to build processing plants; the aquaculture and blueberry industries are centered in a part of the state where capital is notoriously hard to come by. Something for lawmakers to think about next time they craft an economic-development package.

Maine’s other big productivity gainers since 1977 include rubber and plastic products, paper, transportation equipment, fabricated metal products, motor vehicle components. That’s a lot of technology demands; something for the legislature’s Research and Development Committee to think about when it meets Friday to discuss R&D funding.

The big losers? Lodging, at less than $18,000 per worker; just 61 percent of the national average. Apparel, at about the same level. And, of course, shoe manufacturing.

Tourism is an important industry in Maine; clearly, Maine needs to find ways to make its tourism product worth more. Clothing and shoes are, except for small, high-quality operations, lost causes and will be until Sri Lanka starts paying $8.50 an hour with benefits. Breece’s productivity study shows where the strengths and weaknesses are in Maine’s current economy. It shows that Maine uses plenty of muscle on the job; now it needs to use its head.