Maine’s 30th annual Measures of Growth Report released Wednesday calls for action to address a protracted workforce shortage, declines in children’s learning and mental health, and the high cost of housing and energy.

The report from the Maine Economic Growth Council and the Maine Development Foundation finds that the state is performing well in areas such as environmental stewardship, internet connectivity and transportation infrastructure.

Gross domestic product, international exports and spending on research and development have increased. The poverty rate fell, but so did food security and the buying power of workers whose wages were battered by inflation.

“Workforce is still limiting our economy’s ability to grow,” said Heather Johnson, commissioner of the Maine Department of Economic and Community Development.

Established by statute in 1993, the Maine Economic Growth Council is funded through the department and administered by the Maine Development Foundation, a public-private, nonpartisan organization also created by statute to promote equitable and sustainable economic growth.

The annual report, released during a morning news conference at The Uptown housing complex in Bath, helps the state measure progress on long-term economic goals, many targeted to be reached by 2030. It also provides a snapshot of the economy considering many factors.

“Economic energy has shifted from manufacturing to services, from physical capital to human capital, and from rural to urban areas,” the report states. “Our population is older and more urban, jobs have become more service oriented, and seismic environmental and industrial shifts impact our forest and marine resources and industries, sharply challenging some of our rural communities.”

The report notes that Maine faces two significant challenges that are rooted in past actions: the impacts of climate change and the cleanup of PFAS “forever chemicals.”

“They’re going to take unprecedented coordination and public investment to resolve,” said Yellow Light Breen, foundation president and CEO.

The report highlights three communities and a business that are tackling these challenges, including Bucksport for diversifying its economic base in the wake of a paper mill closure; Dover-Foxcroft for incorporating climate resiliency into long-term planning; and MEMIC for its efforts to attract and retain workers age 55 and older.

The report also spotlights the city of Bath for helping to ease the housing crisis with The Uptown, a 60-unit mixed-income housing project developed by The Szanton Co. that includes a renovated former YMCA building and six retail spaces.

The project required a “wedding cake” of community support and funding sources, including housing tax credits, grants and a local tax break, said Amy Cullen, vice president and project partner with Szanton.

“When it comes to building affordable housing in Maine, you need a community-minded developer willing to take it on, municipal and community collaborators, and multitiered public-private funding partners,” Cullen said.

WORKFORCE AND WAGES

Maine’s labor force grew 1% to 687,000 in 2023, but it’s still about 6,000 workers below pre-pandemic levels, the report states. And while the state hopes to boost the “talent pool” to 710,000 by 2030, baby boomer retirements will continue to shrink the ranks of working-age Mainers.

“The workforce has grown a little bit, but the economy has grown a little faster,” Johnson said. “At the same time, the older workforce is retiring.”

To counter these trends, the report says Maine must attract more working-age people from other states and countries, retain more young people born here and find ways to keep older Mainers in the workforce.

That may be challenging since wages in Maine fell 0.2% in 2023 after adjusting for inflation, according to economic and labor statistics.

The average annual wage was $60,384 – a 3.9% increase over 2022 but still below the U.S. average of $72,357. However, the wage increase was eclipsed by 4.1% annual inflation that reduced purchasing power.

The state’s goal is to increase wages 10% from an inflation-adjusted $45,370 in 2018 to an inflation-adjusted $49,907 by 2030, and it almost made it last year. The inflation-adjusted average annual wage in 2023 was $49,763 and would have exceeded the 2030 goal seven years early if not for inflation, the report states.

Annual wages in 2023 exceeded the state average in Cumberland County ($68,877), Maine’s most populous and urban area, but trailed in the other 15 counties, with rural Franklin ($47,458) and Piscataquis ($46,489) counties having the lowest wages.

Women’s median annual earnings in Maine ($52,457) rose 1.5% in 2023, but they remained about 85% of men’s earnings ($61,430). The average earnings of Black, Hispanic, Indigenous and other people of color rose 4%, but they remained 27% below white Mainers.

The percentage of Mainers living below poverty level fell in 2022, from 11.2% to 10.9%, according to U.S. Census data. That’s below the national rate of 12.6%, but rates varied widely across the state, from 6.6% in Cumberland County to 15.6% in Washington County.

Federal poverty level income in 2022 was $13,590 for one person, plus $4,720 for each additional person in a household.

YOUTH MENTAL HEALTH AND LEARNING

According to the Maine Children’s Alliance, teen mental health is a growing state and national crisis, the report states.

In the 2021-22 school year, 33% of Maine children had diagnosed mental, emotional or behavioral conditions such as anxiety, depression, learning disability or autism – a 14% increase from the previous school year and a 27% increase from 2017-18.

It’s also 30% higher than the national average of 24.5%. In 2023, 35% of Maine high schoolers reported feeling sad or hopeless every day for two weeks or more.

In the classroom, reading proficiency among Maine’s fourth graders fell from 36% in 2019 to 29% in 2022 – 3 points below the 32% national average. Previously, Maine met or exceeded the national average.

Fourth grade reading performance on the National Assessment for Educational Progress test fell in 45 of 50 states after the pandemic. In Maine, proficiency declines were larger among students who were Black, economically disadvantaged, had disabilities or were learning to speak English.

Math proficiency among the state’s eighth graders fell from 34% in 2019 to 24% in 2022 – 2 points below the 26% national average. Previously, Maine exceeded the national average.

Eighth grade math performance on the NAEP test fell in all 50 states after the pandemic. In Maine, proficiency declines were larger among students who were economically disadvantaged, had disabilities or whose parents had lower levels of education.

Performance on school reading and math tests are considered indicators of future success in higher education, employment, earnings and everyday problem-solving, according to the report.

“Our economic success depends on our people,” Breen said. “That includes equipping kids with the knowledge and skills to succeed, and tackling physical, mental and access barriers so all Mainers can prosper.”

HOUSING AND ENERGY COSTS

Housing costs spiked since the pandemic, leaving 79% of Maine households unable to afford a median-priced home in 2023, up from 56% in 2020 and 50% in 2014.

That means the cost of a home’s mortgage, taxes and insurance would exceed 30% of household income and highlight the need for more affordable housing across the state.

Lincoln and Knox counties had the highest proportion of residents priced out of the housing market (88%), while Aroostook County had the lowest (61%).

The average industrial retail price of electricity in Maine rose 13% in 2023, from 11.03 cents to 12.43 cents per kilowatt hour, compared to a national decrease of 3%, the report states.

Maine’s price jump was caused by its reliance on costly natural gas for power generation, seasonal supply variations and weather impacts on grid infrastructure. Maine’s industrial electricity rates exceed the national average by 54%.

The price of electricity factors into the overall cost of doing business. Maine ranked 10th highest in the nation for overall business costs in 2022, but second lowest in New England after Connecticut. Maine ranked 19th in the nation for labor costs, 10th for energy costs and seventh for tax burden.

ECONOMIC GROWTH FACTORS

Today, 89% of Maine locations have either average internet service or broadband, up from 78% in 2022, the report states. The state has invested over $250 million in high-speed infrastructure, with a goal to provide reliable, affordable connectivity to all residents and businesses.

“There’s some more work there to be done,” said Johnson, the Economic and Community Development commissioner.

Johnson also noted that business startups (7,716) exceeded closures (5,888) by 31% in 2022, according to the report. That’s down from 2021, when startups (7,867) exceeded closures (4,668) by 68.5%, but the sustained growth is a good sign, she said.

“This is a really positive indicator,” Johnson said. “We will continue to support new businesses.”

On a macro level, Maine’s inflation-adjusted gross domestic product rose 3% in 2023, ranking 21st in the nation and outpacing the U.S. (2.9%) and New England (1.8%) averages, the report states.

While the state saw GDP increases in real estate (7%), professional and business services (14%), government (12%), and health care and social services (11%), manufacturing and wholesale trade fell 2% each.

Maine’s spending on research and development increased 13% to $870 million in 2021, but the share of GDP spent on this sector was stagnant at 1.1%, compared to 3.6% nationwide.

Maine ranks 37th in proportion of GDP spent on R&D, with private sector and university investments lagging and nonprofits contributing a relatively high amount.

International exports from Maine rose 20% to $3 billion in 2021-2023 compared to the previous three years, a measure that accounts for sharp fluctuations in a smaller state economy. That growth was slightly lower than the 23% national average, but Maine’s exports are expected to grow faster than the U.S. rate going forward.

Seafood exports dropped $88 million (18%), due in part to China’s tariff on U.S. lobster, the report states. Forest products, aircraft parts and mineral fuels also declined, while electrical machinery, chemical products and prepared foods rose.

Canada remains Maine’s leading trade partner, with $1.4 billion in exports in 2023, followed by Malaysia, China, Mexico and Japan.

In 2023, 72% of Maine’s most traveled and economically significant roads were rated good or fair by the Maine Department of Transportation. That’s up from 58% in 2018-2019 and a near return to 73% in 2013.

INDICATORS OF HEALTH

Health care spending held steady in 2023 at about $1 in every $6 generated by the economy in Maine and across the nation. But while the Maine’s per-employee annual contribution for health insurance ($5,200) was lower than the national average ($5,600), the employer’s cost per employee ($20,000) was higher than the national average ($18,000).

In 2022, 93% of Maine residents had health insurance, just above the national average of 92% and continuing a trend of exceeding 90% since 2015. Still, an estimated 88,000 Mainers don’t have health insurance, with coverage rates ranging from 88% in Washington County to 93% in Cumberland County.

Being overweight or obese was a health factor for 68% of Maine adults in 2023, up from 56% in 2000, increasing the risk of chronic diseases such as diabetes, heart disease, stroke, asthma, arthritis and some cancers. In the 2021-22 school year, 31% of Maine youth ages 6-17 were overweight or obese, somewhat below the national rate of 34%.

Food insecurity affected 10.9% of Maine households in 2021-23, up from 9.5% in 2019-21, according to the U.S. Department of Agriculture, in part because pandemic-era federal support for low-income households ended. Maine’s rate was below the national average (12.2%) and above the New England unweighted average (9.5%).

Maine’s crime rate rose 6% in 2022, to 13.2 per 1,000 residents, but it was 44% below the national average and the third lowest of the 50 states. Property crimes increased 7.6% but were still about 30% lower than the national average. Violent crimes continued to fall and were 73% below the U.S. average.

Greenhouse gas emissions rose 1.4% in 2021, from 21.6 million to 21.9 million metric tons of carbon dioxide, but they were still 30% below 1990 levels, indicating that Maine is making progress toward the goal of 45% below 1990 levels by 2030.

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