On Gov. Mills’ 10-Year Economic Plan
Senator Kimberley Rosen
Hello, I am Senator Kimberley Rosen and I represent District 8 in the Maine State Senate.
This past week, Governor Mills released her 10-year economic plan, and a key focus is to “Grow the annual average wage by 10%.” This is very disappointing, since it is a much slower rate of growth than our state has seen in recent years.
In fact, with the projected rate of inflation at 2% per year, Maine workers would lose 1% of their real income every year for the next decade.
According to the U.S. Bureau of Labor Statistics, using the same pool of data as the governor’s plan, workers in Maine have seen their wages grow by 12% in just the last four years. That is three times the growth rate in the governor’s 10-year goal.
In the last eight years, from 2010 when voters gave Republicans control of state government to 2018, the average annual wage of all Maine workers grew by 23%. That’s 2.9% per year on average. At that rate, the governor’s goal should be 30%, not ten.
It is possible, though it was not made clear in the plan, that Governor Mills intends to raise wages by 10% more than inflation over the next ten years. If so, this 3% per year goal is as unrealistic as the 1% per year goal is unambitious.
An “inflation adjusted” growth rate of 3% for private sector workers in Maine has happened only once in the last twenty years. To replicate that rate of increase over ten consecutive years would take an unprecedented, monumental effort that is simply not possible given the meager efforts outlined in the plan’s action steps.
The governor has made wages a key focus of her economic plan. As a former business owner, I know that putting the brakes on the growth of Maine wages makes no sense. I also know that offering empty promises leads to a lack of confidence in government among the businesses that make Maine’s economy work, grow, and prosper.
Key to the plan is the idea that we can convince more of the people who visit Maine to stay and take jobs here. But this notion is the opposite of what drives economic growth. Convincing more out of state tourists to decide to come live in Maine does not create new jobs or increase wages.
If 100,000 people from away moved to Maine tomorrow, it would not magically create more jobs at higher wages. Bringing new employers into Maine does those things.
An economic plan based on flawed assumptions will not bear the fruit Maine needs, and this plan lacks a big punch or a really major initiative that would get that job done. To bolster its economic viability Maine needs to make a compelling case that attracts more jobs and many more businesses.
Whatever influence the governor plans to bring to bear on wage growth in Maine, she might want to take a page from history and improve her odds.
In 2011, the Legislature passed the first major tax cut Maine had seen in a very long time. On the day that law took effect, Maine ranked 50th—dead last—in wage growth for all our workers in both the private and public sectors. Over the three year period that began at the end of 2012 and ran through the end of 2015, Maine led the nation in wage growth. The next closest state was a half percent behind.
If Governor Mills is serious about her stated goal of raising wages for Mainers at a rate faster than the nation as a whole, she should take a serious look at those years when the average wage for all Mainers, not just those in the private sector, grew by the 3% per year she has stated as her goal.
Also during that same period, state government saw large revenue surpluses every year. In all, the extra surplus revenue since 2011 has exceeded $800 million.
Since our economy has proven that it will provide far more in tax revenue than state government needs, and the last tax cut led to significantly increased wages for Maine workers, it only makes sense to cut taxes, leave more money in the pockets of Maine people and businesses, and keep our economy, including wage growth, on overdrive.
Again, I am Senator Kimberley Rosen wishing you and yours the happiest of holiday seasons and a happy and prosperous New Year.