In Maine Recent Economic Growth Did Not Raise All Boats

According to Census Bureau data released today, Mainers were not likely to be earning much more last year than when the last recession bottomed out in 2001. However, the number of uninsured Mainers appears to be declining. The income of the typical Maine household was slightly higher in 2007 than in 2001, but not high enough to reflect the expected difference between the bottom of a recession and a period of economic growth. 

 Nicole Witherbee of the Maine Center for Economic Policy has been analyzing these trends and says, “Despite the years of economic growth between 2001 and 2007, more Mainers are living in poverty now than at the bottom of the last recession. While median incomes in Maine grew slightly during this same time period it does not represent the level of growth we would expect to see. And now that the economy has weakened, things are likely to get more difficult for Maine households.”

 According to the U.S. Census American Community Survey, the poverty rate increased from 10.6 percent in 2001 to 12 percent in 2007.  Median income for Maine households increased from $44,671 in 2006 to $45,888 but did not reflect the level of gains typically associated with economic growth.

 The percentage of Mainers without health insurance declined during 2006 and 2007 relative to the end of the last recession in 2000 and 2001.  Using two year averages from the Current Population Survey, 9 percent of Mainers were uninsured in 2006-2007 compared to 10.3 percent of Mainers uninsured in 2000 -2001. “This is a tribute to Maine’s investment in heath care. We continue to be ahead of national figures in the proportion of our population with health coverage even when we lag in incomes”, said Witherbee.

  “The lack of a substantial increase in wages over the course of this past recovery, and our failure to reduce poverty, show that the benefits of economic growth haven’t been broadly shared” said John Fitzgerald, Economics Professor at Bowdoin College.

 If the economic downturn continues, as expected, Maine policymakers are likely to face tough decisions about how to balance the state’s budget.  They should avoid taking steps that would make it even harder for struggling families to get by.

 Over the longer term, Maine policymakers can take important steps to improve economic opportunity for those struggling to make ends meet, such as raising the state earned income tax credit (EITC) and making it refundable, growing participation in the property tax reinvestment program, strengthening cash assistance programs, expanding health insurance for working families, and making housing more affordable.

 As Congress heads back to Washington, the new data show that we face a number of challenges.  Our leaders can take immediate steps to begin addressing these problems by giving states higher matching funds for Medicaid, strengthening the Child Tax Credit and other federal policies that assist low-income families, and enacting a second economic stimulus bill that includes (among other things) energy assistance for low-income families this winter and extra weeks of jobless benefits for workers in states with especially high unemployment.