In Maine, it’s economic doom > Low wages, high costs decried

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BANGOR – The economic boom experienced nationally during most of the last decade was a fizzle in Maine, unless you were a chief executive officer at a large corporation.

According to a report released Sunday by the Maine Center for Economic Policy, Mainers are working more hours at lower-paying jobs to try to keep up, and are taking on more debt when they can’t make ends meet.

The report shows a contrast in the state’s economic landscape between the 1980s and the 1990s, from when Maine outpaced the nation in wage and income growth to a time when economic prosperity elsewhere barely affected 80 percent of the state’s families.

“For many families, the national economy has not restored wage and living standard losses experienced during the 1980s and 1990s,” wrote author Christopher St. John in the report, titled “The State of Working Maine 2000.”

“After many decades of growing slower than the nation as a whole, the Maine economy grew faster than the national economy in the 1980s, but it has fallen behind again in the 1990s. Maine median family incomes, therefore, remain at 80 percent of the national median.”

The Maine Center for Economic Policy’s report was compiled by data from the Economic Policy Institute, a nonpartisan think tank in Washington, D.C., the U.S. Census Bureau and the Maine Department of Labor.

Incomes for the wealthiest 20 percent of Maine’s families grew 5 percent from the late 1980s to the late 1990s, and were up 25 percent from the late 1970s to the late 1990s, according to the report.

For the heads of corporations throughout the country and in Maine, incomes grew 91 percent in the last decade. Incomes include stock options, cash payments, bonuses and other forms of compensation.

Eighty percent of Maine’s families, however, experienced actual losses in real income from the late 1980s to the late 1990s after appreciating gains up to 12 percent in a 20-year period. Actual wage growth, and not family income, in the last decade for all Maine workers was slightly more than 2 percent, the report states.

“As EPI points out, ‘in 1999, a CEO worked half a week to earn what an average worker earned in 52 weeks,”‘ St. John wrote.

Michael Hillard, a professor of economics at the University of Southern Maine, said people should be saddened by the disparity in wages between the rich and the poor.

“Eighty percent of Maine families lost income in the last decade,” Hillard said. “That’s shocking. We should be shocked by that.”

A third of Maine’s children and almost a quarter of working-age adults live with incomes below 200 percent of the federal poverty level, wrote St. John. National and state research suggests that an income more than 200 percent of the federal poverty level is required to meet basic needs in the geographic area where most Maine people live, he wrote.

“Many of them have less access to health insurance and health care and suffer poor health,” St. John wrote. “They live in substandard and expensive housing. They deal with high debt burdens and have little to no savings. Some experience utility and fuel shut-offs, periods of homelessness and food shortages.”

However, income inequality between the wealthiest and the poorest in Maine grew at a slower pace than the rest of the nation, St. John wrote.

“This is because Maine has fewer wealthy citizens, whereas, in other states, the gains of many wealthy people have dwarfed those of most other families and widened the overall income gap.”

In Maine, more so than the rest of the nation, residents were working more hours and some at more than one job to maintain a standard of living, St. John wrote. For most, those second jobs are seasonal and are lost when summer ends.

The increase in hours and the number of jobs held will reach a breaking point, said Hillard, who reviewed St. John’s report before it was released Sunday. Nationally, as in Maine, workers are giving more time to their employer, and increasing production output.

“But wages are stagnating,” Hillard said. “The way households have coped with declining wages is by working more hours. Americans now work longer hours than any other country, except Portugal. We now work hundreds of hours more than Japan. You would think with the growth over the last four or five years people would be doing better.”

Sending more family members into the work force is one way Mainers are trying to maintain a standard of living they were enjoying in the 1980s, Hillard said. This “voluntary strategy,” though, has its limits, he said.

“It may reach the point where that’s exhausted itself,” Hillard said. “What are you going to do, send your 12-year-old out to work? We’ve done that over the last 20 years. We can’t do that anymore.”

“That doesn’t surprise me,” said State Planning Office economist Laurie LaChance. “The multiple job holding rate has stayed high and has been higher than the rest of the nation.”

Although the report primarily focuses on the last decade, it acknowledges the job gains in the last couple of years. Those are mirrored in the Federal Reserve Bank of Boston’s New England Economic Indicators report of economic performance of New England states.

“The Pine Tree State was the fastest growing state in New England in 1999,” according to the bank’s report.

Per capita personal income, although the lowest in New England, grew 6.2 percent from 1999 for the second fastest in the region and tied for the third fastest in the nation.

State economists, though, admitted in the past that much of the income and job growth could be attributed to the influx of workers to build the natural gas pipeline since 1998. The economists, and St. John in his report, noe that Maine in coming years will not exceed the growth rates of other states, but will experience continued moderate growth.

St. John suggests 10 ways the state can build its standard of living, and most focus on workers’ wages. Among the suggestions is for the state and businesses within its borders to support union organization and bargaining.

Too much of the focus from corporate management is being placed on growing “shareholders’ value” and profits in a company at the expense of its workers, St. John said.

“There is far too much attention to shareholders and far too little attention to treating the human resource the way it should be,” St. John said.

Recent strikes by Bath Iron Works employees and Verizon telecommunication workers should educate the public about the difference in wages between top executives and employees, and how unions try to stand up for workers’ rights, St. John said.

“I think the idea of organizing has had an historical bad taste [among people], and this is an extremely difficult one to reverse,” St. John said. “It would be worthwhile for the Legislature to note and show that organizing is not a bad thing and that it helps people’s standard of living.”

Other suggestions by St. John include focusing economic development on improving wages, requiring living wages in all state contracts and business assistance programs, strengthening pay equity for male and female workers doing similar jobs, supporting employee ownership, and raising the state minimum wage higher than the federal rate.

“We as a state have sold ourselves short,” said St. John about trends outlined in his report. “We need to raise standards and [not] sell ourselves cheap.”

St. John’s report can be read on the Internet at www.mecep.org/stwkme.