Earnings of Mainers stagnant Full-time employees get surprising level of perks

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BANGOR – Maine’s workers this Labor Day are earning about the same wages they were last year, and according to one think tank, median income may not grow by much in the next year because it hasn’t in the last three years.

In the days leading up to the three-day weekend, many policy and state groups were releasing reports on what they view as the state of the Maine worker. Two of three studies say income growth in the last couple of years has been stagnant.

“We don’t have that much new in the picture,” said Christopher St. John, executive director of the Maine Center for Economic Policy and author of one of the studies. “We have a continuing trend in the picture.”

A third study, however, which surprised many officials, shows that the majority of full-time workers are getting more perks – including having today off – from their bosses than what many analysts thought they were getting.

In his follow-up to last year’s “State of Working Maine,” St. John said 2000 was a “banner economic year.” Unemployment was below the national average, at 3.5 percent, and per capita income was up 5.9 percent. Per capita income is one wage indicator used by economists, and is calculated by adding the wages earned by all workers and dividing it by the state’s population.

But for 1997 to 1999, median household income in Maine was $36,459, up only 1.9 percent. Nationally, it was up 2.7 percent. Median income is that level of income at which half the state’s workers earn less and half earn more.

Not everyone experienced an increase in wages, however. People who already earned the most gained more in wages than those workers in the middle and lower classes, according to St. John’s report. That’s what fueled an increase in per capita income.

“You can have a rise in per capita income with median income remaining flat,” said Michael Hillard, an associate professor at the University of Southern Maine and a Maine Center for Economic Policy board member.

“I’m not very thrilled with this ‘study, ‘” St. John said last week. “There’s not a lot here. Maine’s wages at the median and the low end have been growing a lot slower than the national median. I can’t explain all the reasons why that’s true, why Maine’s wage growth has been slower.”

In his report, St. John wrote, “The lion’s share of most families’ total income is made up of wages. Therefore the sluggish wage growth experienced by most workers over the last decade has been a significant factor in creating slower median family income growth and growing hardship.”

In 2000, median wages were $11.04, or 2.8 percent below the 1989 level, according to St. John’s report. Those workers in the bottom 20 percent saw wages grow 0.3 percent since 1989 while workers in the top 20 percent saw a “modest” gain of 7.3 percent. All figures are adjusted for inflation.

Study called ‘suspect’

But the State Planning Office, which keeps track of Maine’s economic picture, disputes St. John’s report. The 1990s cannot be compared to the 1980s because that period of time was one of phenomenal, incomparable growth that can’t be replicated, said SPO analyst Galen Rose.

“We find the numbers to be suspect,” he said.

In 1980, the state was experiencing an overheated real estate market, an overextended banking industry and bloated defense buildup, Rose said. Defense and federal government jobs were paying the higher wages, he said.

“This was the end of an extraordinary peak that isn’t reproducible,” Rose said. “And I don’t think we’d want to.”

Hillard said the decade-to-decade comparison was a valid one. As a standard practice, most economists will compare one economic peak to another. That’s what the Maine Center for Economic Policy is doing, he said.

“It is impossible to settle whether the 1980s or any decade is truly unique,” Hillard said. “They all have their own idiosyncrasies.”

The State Planning Office also takes exception to comparing what people in a particular wage category – say the bottom 20 percent – were making in the 1980s to what they are making now. It’s not the same people in that category, Rose said. People age, and their employment and wage situations generally improve over time.

“These are not the same people,” Rose said. “They age into other groups. That whole study implies that you’ve got the same group of people. You don’t. … That we could stand some growth portrays the wrong image. People are making progress.”

Room for improvement

The economic boom has passed by many Maine families, and more needs to be done to improve their standard of living, St. John said.

“I don’t think we as a state have done enough to raise wages to living wages,” he said in a telephone interview. “There’s a long way between the minimum wage and the standard to provide people with a living wage.”

Most of the job growth in the last few years has been in positions that pay less than those being lost in traditional Maine industries, particularly manufacturing, and less than the wages earned by federal government or defense jobs before they were lost in the early 1990s.

“Most jobs appear to have been created in industries with intermediate wages and the most jobs lost were in industries with above-average wages,” St. John wrote in his report.

In support of the study, Rose said it is true that the rate of income growth should be improved, but not at rapid levels. A sudden rise can bring a sudden fall.

“We’ve got to be careful of what we wish for,” Rose said. “Really rapid income [growth] has lots of problems.”

Those include increased traffic and pollution, poorer school conditions, and higher crime rates.

Although wages are below the national average, Maine workers have shown continued confidence in the economy, said James McConnon Jr., a business and economics specialist with the University of Maine. More people are working than in years past, and they are continuing to spend money. Growth has been steady, not rapid.

“It doesn’t surprise me that Maine continues to grow, albeit slowly,” McConnon said. “From what I can see, the employment situation seems to be improving. Spending in this state continues to be really high. People are fairly positive about the economy.”

To make it better, St. John suggests the state take measures to protect income security for workers by increasing aid for post-secondary education, giving more attention to living wage requirements, strengthening unemployment insurance, and establishing tax policies that focus on low- and moderate-income earners.

On-the-job perks

What may be contributing to a slower wage growth, though, is the expense paid by employers to give workers fringe benefits such as paid holidays, paid sick leave, paid vacations, health insurance, retirement plans and flexible work hours.

“As the cost of benefits go up, employers are struggling to meet wage demands,” said Bob Kelley, an operations manager for the Maine Department of Labor’s Labor Market Information Services.

After receiving numerous calls from both employers and workers about what other businesses are giving for fringe benefits, Labor Market Information Services decided to conduct a survey on what actually is being offered to workers. More than 1,200 of the 1,470 businesses surveyed responded.

“This is the first time we’ve attempted this,” Kelley said. “This first blush is to give a ballpark … to what’s going on out there.”

The study found:

. Almost 87 percent of all full-time workers – people who work more than 35 hours each week – are given paid holidays, with 36 percent getting seven to nine days. More than 50 percent of part-time workers have paid holidays, with 36 percent getting one to seven days.

. More than 61 percent of full-time workers are given paid sick leave, with more employers allowing six to nine days off.

. About 83 percent of the employers offer full-time workers paid vacation based on years of service.

. About 85 percent provide health insurance. Of that percentage, almost 78 percent was paid by the employer.

. More than 66 percent have a retirement plan, with 66 percent of those employers sharing the contributions with their workers.

. About 56 percent of all employers have flexible work hours.

. About 55 percent offer dental insurance.

Inequality low

Although Maine’s top wage-earning households have experienced greater gains in incomes, they aren’t earning as much as their counterparts in other New England states.

MassINC, a nonpartisan policy group that wants to grow the middle class, notes in a study released last week that the typical household in Maine didn’t have any changes in income levels.

But the state also doesn’t have as many pockets of wealth that can lead to greater inequality between the upper and lower 10 percent of wage earners, said Neil Mello, a MassINC spokesman.

“The inequality in Maine hasn’t changed that dramatically,” he said.

In 1999, the top 10 percent of Maine wage-earning households had incomes that were 7.82 times higher than the bottom 10 percent, according to the study, which was put together with the help of the Center for Labor Market Studies at Northeastern University in Boston. In 1979, Maine was viewed as the most equitable state, with the top 10 percent earning 7.2 percent more than the bottom 10 percent.

In comparison, the top 10 percent of wage-earning households in New York in 1999 had incomes that were 13.72 times greater than the bottom 10 percent. In Massachusetts, it was 11.47 times more.

“The more equitable the state, the more healthy it is,” Mello said. “Economic prosperity or economic despair are equally shared.”