How many jobs does Maine need?

I agree completely with Yellow Light Breen’s column, “Once and future Mainers” (BDN column, Nov. 13), when he said it is possible for Maine college graduates to find good jobs in Maine. My concern is that we aren’t creating enough jobs.

Many people discuss why young people leave Maine. As a mother of two recent college graduates living out of state, the answer is clear to me. In a word: jobs. Not just any jobs, but competitive career entry jobs in their area of expertise. Not just a few jobs, but a sufficient quantity of entry-level jobs for the thousands of college graduates.

First, how many jobs do we need to create, and second, what policy changes will create them? Finally, do we have the political will to take the steps needed?

For the first question, I looked at the state of Maine Department of Labor. Its Maine Employment Outlook projects Maine will add 56,261 new jobs in this first decade of the century. That is roughly 5,626 a year. Still, how many jobs are there for college graduates? The department’s brochure, “Careers in Maine for College Graduates,” gives the employment outlook from now until 2010 for college graduates. It anticipates 3,214 new jobs each year for entry level as well as experienced college graduates. So the number of entry level jobs created in Maine for college graduates each year is less than 3,214 jobs.

How many students graduate from Maine colleges and universities each year? By using an informal survey of colleges I estimate that Maine colleges and universities graduate about 10,000 students a year. This is an incredible talent pool exported into the United States’ economy annually.

So, we have 10,000 new college graduates hitting the job market each year and only a fraction of that many job openings in Maine. It is clear that we are wasting our investment in education. We invest millions in public education only to close the door to our students when they graduate. My suggestion is that we create 10,000 more jobs annually to allow more Maine college graduates to start their career in Maine.

This is certainly a different way of thinking about job creation. Rather than starting another economic development program or more Pine Tree Zones, we need to ask how many jobs these programs will create in the next year, and is that enough? Let’s commit to a goal of offering jobs equal to our number of college graduates each year. Let’s commit to the goal of taking the final step in our education investment and invest in policy changes that will allow our college graduates to stay in Maine and contribute their skill and knowledge to the Maine economy. Let’s offer them jobs, not loan forgiveness, but competitive jobs, in the numbers needed for 10,000 young people each year.

By thinking about how many jobs our economy needs to create annually, we also need to think about changing policy in a way that has a high degree of likelihood of achieving the desired result. For instance, reducing taxes has a predictable impact on job creation. What would Maine lawmakers have to do to use tax policy to create 10,000 new jobs?

For the second question, I used the computable general equilibrium model, Maine State Tax Analysis Modeling Program, a dynamic tax model of the Maine economy. This program is from the Maine Public Policy Institute.

If we eliminated the sales tax, we would create about 7,500 net new jobs, fewer than the 10,000 needed. Eliminating the tax would reduce state revenue by about $851 million, while increasing the Gross State Product by only about $724 million. The largest job gains would be in hotels and amusements (4,257 jobs) and in retail (11,206 jobs). New capital investment would be a staggering $64.6 million, with the largest investments in retail and real estate.

If we cut the income tax by 22 percent we would create 10,448 net new jobs. Cutting each bracket by 22 percent would reduce state tax revenue by $230 million, but increase Gross State Product by $524.2 million, almost $2 in economic growth for each $1 in reduced tax revenue.

The largest job growth would be in business services (2,096 jobs), health services (1,222 jobs), construction (742 jobs), banking (488 jobs), and industrial machinery and equipment (140 jobs). Each major segment of private industry would add jobs, and a reduction in state jobs, totaling 10,448 new jobs. Capital investment would be about $19 million.

Clearly reducing the income tax creates the most jobs for the least loss of tax revenue than reducing or even eliminating the sales tax.

Finally, do we have the political will to invest in jobs for Maine graduates? Do we care enough about creating jobs to defer some tax revenue for the sake of our children? Do we care enough to win over those threatened by the change to the status quo? We certainly can continue our current policy, but we won’t create the numbers of jobs we need to offer a job to each Maine college graduate, and the numbers of college graduates in Maine will continue to decline.

As a community, we need to decide if we really want to make a place for Maine college graduates in our state. Do we want to reap the reward of our education investment or not? Do we really want to stop exporting our most talented young people? Do we want to end the brain drain? If we do, it is within our power.

If we are committed to this goal and willing to make the policy changes every graduate of a Maine college or university could start his or her career and rise his or her family in Maine.

Betsy Chapman is a financial consultant, board chair of the Maine Public Policy Institute and lives in Hampden.