Old Before Its Time

The news late last month that Maine remains one of the oldest states in the nation didn’t grab a lot of headlines, but it should have. The state’s average age rose from 38.8 to 39.4 between 2000 and 2002, making Maine the third oldest, behind Florida and West Virginia. At the same time, Maine had the second largest decline in the number of children under 5.

Aside from restaurants serving more early-bird specials and fewer kiddy meals, the graying of Maine can have major implications for the state’s vitality and economy. In the short term, things may look good as the state’s wages are above the national average and unemployment is below it. But that is because Maine’s aged workers are at the high end of the earning range and those without jobs tend to be the young, not the middle- aged. These more highly paid workers also pay more income tax and typically own more expensive property and therefore pay more in local property taxes.

But the good news could end soon because, as current workers reach retirement age, there will be large demands on state and federally supported social services with fewer workers to pay for them. Income tax revenues will decline and, already a powerful political lobby, older property owners are likely to advocate for lower rates. The implications for state and local revenues of the upward trend in age could be severe, says Philip Trostel, an economist at the University of Maine. “There are a lot of reasons to be uneasy,” he says.

Aside from the economics, older states are less vibrant and innovative and, therefore, less attractive to younger people who may consider moving there. Furthering the problem, companies locate and expand in places where there is a ready supply of good workers. With an aging population and an exodus of young people, Maine could face stagnation lasting a couple decades.

Gov. John Baldacci and other state lawmakers seek to change the state’s demographic destiny by finding more ways to encourage the state’s high school graduates to stay put. This solves only part of the problem. The state must find ways to encourage young people from all over the country and abroad to move here. Encouraging young workers and their families to move to Maine will address many of the state’s demographic weaknesses. More employees means more income taxes and perhaps new business which only further brighten the future. Plus it means more homeowners and more property taxes, which is good for communities.

One way to encourage people to move here would be to offer incentives such as paying off student loans. This is done with varying success to attract doctors and others in specific professions where there is great need for workers. Rather than draining already scarce resources, the funds could come through a bond issue. Think of it as a down payment on the state’s future.