WHILE the evidence of a skills gap in Maine remains questionable at best, the state does face longer-term structural problems regarding its aging population. While the aging population is not the primary problem with the current state of Maine’s economy and labor market, these long-term problems cannot be ignored either. In order to replace the state’s aging population down the road, the state will have to both retain its younger population while attracting workers from other states.
As Richard Florida noted recently at Citylab.com, larger metro areas have the edge in retaining and attracting young, skilled labor. Among the reasons Florida found for metros being magnets for young, skilled labor were wages. So, on the issue of wages, where do Maine’s three metro areas stack up to the other metro areas in New England?
While wages are typically higher in denser metro areas, the cost of living, which erodes the value of those wages, also tends to be higher in those areas. As a result, adjusting wages for cost of living gives a clearer picture of which metro area is the best in which to make a living, financially speaking.
To see how Maine’s metro areas stack up, I used average per job wage and salary data for each of the New England Metropolitan Statistical Areas (MSA) from the Bureau of Economic Analysis (BEA), and used the BEA’s regional price parity (RPP) to calculate the real wages of each MSA. The RPP measures “geographic differences in the price levels of consumption goods and services relative to the national average, and the PCE price index measures national price changes over time.”
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While the state’s three metro areas are lagging in terms of real wages, the Portland-South Portland-Biddeford is somewhat competitive to the other MSAs. However, every other state in New England has at least one MSA with a higher real wage than Maine, suggesting there are more viable economic opportunities elsewhere in New England for young, skilled labor to head for.
Interestingly, despite being in the middle of the pack for real wages relative to other MSAs, the Portland-South Portland-Biddeford area had the largest increase in domestic migration for college degree holders in New England. Florida examined the changes in domestic migration from 2011 – 2012 in various New England metro areas (a somewhat different set of geographic locations than the MSAs used in the wage data above). The Portland-South Portland-Biddeford MSA drew 2,003 college grads that year, slightly ahead of Manchester-Nashua MSA with 1,755. Lewiston-Auburn increased by 510, while Bangor decreased by 1,392. The only other New England metro areas to experience increases in domestic migration of college degree holdersSpringfield (293), Barnstable Town (524), and Worcester (106).
While this might point to the Portland area’s ability to attract workers from out of state, it is more like that much of this migration is likely intra-state migration rather than young workers coming from other parts of New England and the U.S. The Florida data does not differentiate between inter- and intra-state migration, but there are reasons to assume the Portland area experienced mostly the latter. As highlighted this past May, 4 out of every 5 jobs created during the recovery have been in the Portland area, meaning Mainers are moving from the state’s rural sections to the Portland area to find work. Also, according to Census data, in 2012 Maine’s net inter-state migration was roughly -11,000 further suggesting that net migration gains in Portland and Lewiston are the result of intra-state migration.