Economists from around New England gather in Boston today to present their latest outlook. Among them will be Charlie Colgan with the University of Southern Maine's Muskie School of Public Service. Colgan says his latest Maine forecast shows continued slow, but steady growth.
"The forecast is that the economy will continue to improve," he says. "Although, the recent announcements with respect to Bucksport and other layoffs are going to put a dent in the already rather meager growth rate for the economy. The expectation is that Maine will be back to prerecession levels of employment of about 620,000 jobs — in my current forecast it's the middle of 2016, but, frankly, the Bucksport layoffs and other things are probably going to push that back a little bit."
The jobs being lost at Verso Paper in Bucksport are well-paying jobs. I asked Colgan if the state is not just recovering jobs, but recovering well-paying jobs.
"We've lost almost all of the low-wage manufacturing jobs in Maine," he says. "We have mostly high-wage manufacturing jobs left. And, so, when a paper mill shuts down, that takes out a lot of high-wage manufacturing jobs, and those are unlikely to be replaced in Hancock County anytime soon. If you look at Maine as a whole, those jobs probably will be replaced by people in professional and technical services in Bangor, Lewiston or Portland. But they're unlikely to be replaced in the eastern Maine economy."
Real estate, Colgan says, remains another part of the economy improving, but slowly.
"Real estate in Maine has generally been recovering," he says. "The last analysis that I did in the spring for the Maine Real Estate Developers Association showed a little bit of a slowdown in the recovery of existing home sales. And commercial real estate in Maine remains pretty flat. Although there is a lot of construction activity here in Portland, statewide, there really hasn't been a lot of new addition to supply. And that's mostly because we haven't needed a whole lot of new office buildings because we've still got space to put people back in from the recession and the people who lost the jobs and so, real estate is recovering. The housing market is up, meaning house prices are up. New home construction is up from the bottom, but it's still not anywhere near where it was prerecession."
Some of the lingering sluggishness in new home construction, points toward an underlying demographic trend that, Colgan says, will affect Maine's economy for the next couple of decades.
"For example, in the logging industry, they're beginning to get desperate for people to go out and work in the woods, because some of the older workers are at or near retirement age." he says. "Working in the woods is not an occupation that keeps you employed well into your 70s, even with modern technologies. So, Maine faces its most significant problem in the period after the recovery is complete — simply the lack of workers. Maine, in almost everybody's lifetime, has been a labor-surplus environment. We've had more people and we've always been chasing jobs and, of course, with the Bucksport shutdown, it still looks like that's our problem, but it's rapidly becoming just the opposite, in which Maine is going to become a labor-short environment. And the question [for] about anybody expanding or relocating to Maine is going to be 'Can I find the workers?' That is going to be a huge shift because, among other things, it will require people to be paid more; we'll have to pay at the national scale in order to attract workers to stay here and to come here. We'll be recruiting workers the way we've been recruiting capital in the past. And, this is going to be the major challenge for the Maine economy, really, into the 2030s."
Charlie Colgan is a retiring professor of public policy and management at the Muskie School of Public Service at the University of Southern Maine. He'll be presenting his Maine economic outlook to the New England Economic Partnership meeting in Boston today.
