What must Maine do to grow? In short, invest in its people and invest in what sets it apart from everyplace else.
At least that’s the consensus following a BDN-sponsored survey that asked the public, then a group of experts, to choose the most effective steps Maine could take to grow its economy.
The November 2014 survey attracted 2,066 responses from the public, which narrowed a list of 20 initiatives that had been proposed for Maine over the years down to 10. From those, 46 experts chose the five most important steps to get Maine’s economy moving.
1. Improve quality of Maine workforce.
2. Focus on entrepreneurs and innovators.
3. Improve K-12 education.
4. Reform higher education.
5. Protect Maine’s quality of place.
What stands out about the crowd-sourced list is that it emphasizes long-term investments in Maine people that require sustained focus — not exactly Maine’s strong suit. Essentially, while many politicians have pitched economic growth plans that hinge on cutting taxes, the conventional wisdom collected from more than 2,100 Maine survey respondents is that growth actually depends foremost on investing in people.
Typically, as the U.S. economy falls into recession, the Federal Reserve has the tools of monetary policy to deploy — namely, the ability to lower interest rates — in an effort to make credit available and stimulate economic activity, which, in turn, lowers the unemployment rate.
But since the U.S. officially entered recovery mode in June 2009, the unemployment rate — though it’s roughly half what it was at its October 2009 peak — lingers above where it has been during other recovery periods. (Maine’s unemployment rate in December 2014, 5.5 percent, is still 0.7 percentage points higher than it was at the start of the recession, in December 2007.)
“So my reading of the evidence is that much of what we have observed over the past five years reflects structural changes in the economy that would have been difficult for monetary policy to offset,” Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said during a June 2014 speech at Lynchburg College in Virginia.
With no more monetary policy tools to deploy, the answers lie in public policies that promote investment in human capital, Lacker argued in his speech, called “Investing in People as an Economic Growth Strategy.”
“Workforce development should be thought of as more than just a short-term treatment — it also can work as a long-term vaccine that makes workers more resilient to changing labor market conditions,” he said.
And when more workers are equipped with the skills employers need — or the skills they need to start their own businesses — the effects multiply in an economy.
In Lacker’s mind, our schools need to more effectively convey information to students about their options after high school — there’s college, but that’s not the only path forward — and offer students an honest assessment of their skill levels. A college-ready student — particularly a low-income student without college-educated parents — needs to know that the cost of college, when financial aid is figured in, isn’t necessarily insurmountable, so she doesn’t give up. A student who’s not quite ready for college but might thrive in a community college needs to know in advance that his math skills aren’t yet college-level so he doesn’t enroll, take out loans, then drop out — essentially losing the investment he’s made.
As for quality of place, that’s clearly part of the equation for keeping people who can contribute to Maine’s economic growth in the state and attracting others.
The public and the experts notably rejected some initiatives from the larger survey list that would have relied more heavily on one-time policy changes, such as tax breaks to entice big businesses to locate in Maine and paid maternity leave.
And those five initiatives don’t encompass everything Maine’s economy needs. But they represent an economy’s building blocks.