12 Jan Calling all one-handed economists!
“Give me a one–handed economist,” demanded a Harry Truman. “All my economists say, ‘on the one hand…on the other.’” The poor president wanted clarity instead of ambiguity as he assumed a post-war economy. Today, with volatile energy prices, unfavorable demographics and income disparity, people in Maine and New Hampshire also are looking for clarity. So what are the economists saying?
The good news according to most every economist looking at the region is that we’re on an upward trajectory for employment. Though slow, jobs as one measure continue to increase. Both states hope to reach or surpass pre-recession levels of employment through the coming year. But what are those jobs going to look like?
The professional/business service economy is expected to lead the way for employment growth in New Hampshire followed by leisure/hospitality and education/health sectors. In Maine, education/health will lead the recovery with professional/business and leisure/hospitality running second and third in terms of strength. According to estimates in Business NH magazine, annual job growth will not exceed 2 percent right through 2018. That tepid growth can be seen in Maine, as well.
Manufacturing will remain the sector with high added-value margins, however, the number of new jobs will be minimal as efficiencies and technology will require higher skills from fewer workers.
One only has to look at the decision to adopt free-trade legislation to see what happened to manufacturing employment in the region and across the nation.
Nationally, the U.S. lost 2.1 million manufacturing jobs – about half of all jobs in that sector. In Maine, the manufacturing sector lost 33,337 jobs between 1994 and 2014 according to the US Bureau of Labor Statistics. In New Hampshire, job loss has been tallied at more than 26,000 during the same period.
Compounding this job loss was the global impact on wages. U.S. workers are now competing against low-wage producers. Many employers state-side have had to choose between investment in automation versus generally higher wages. Technology won.
In real terms, all U.S. families lost ground in family income to the tune of 5 percent since 1980. The only group to realize a growth in median family income according to Maine economist Charles Colgan was the top 10 percent whose median family income grew by just 2 percent. Professor Colgan argues that in order for the economy to grow, the disparity in income needs to narrow. How that is achieved will be the subject of public policy debates as well global economics.
What has to happen to bend the curve to either slow or reverse this income disparity?
- Northern New England needs more access to natural gas to lower the cost of electricity. Efforts are underway to end a political logjam in Massachusetts that has prevented major pipeline development for this transitional energy source.
- Public higher education needs to enroll far more students who currently are in the workforce. According to Prof. Colgan, Maine has more jobs than skilled workers to fill them which runs counter to popular beliefs that we have too many people looking for too few jobs. Education has been and will remain the income equalizer in a free market economy. That means tax dollars are needed to support our public universities and community colleges.
- Maine and New Hampshire must attract new and younger residents to our states. The median age in the Northeast was 39 in 2010; 43 in Maine; 42 in Vermont; and 41 in New Hampshire. The national median age is 37.
Though the baby boomers will be leaving the workforce over the next 20 years, our demographically challenged states will not only have to replace the retirees with young workers but look to our existing workforce to gain new skills. On the one hand, becoming a learning culture is a key to our success. On the other hand, we could fail to upgrade our skills and that is too hard to accept without making an effort to change.