Maine’s long-flagging economy will maintain a steady pace of recovery in 2015 as it continues to gain jobs in the wake of the Great Recession of 2008, according to Charles Colgan, a professor at the University of Southern Maine’s Muskie School of Public Service and a former state economist.
However, the state economy faces significant challenges and will likely continue to lag behind the U.S. and the rest of New England, according to Colgan’s latest economic forecast.
“I think 2015 will be a fairly solid year for job gains in Maine,” Colgan said. “I don’t think we will be all the way back, but I think we will be most of the way back in 2015.”
Colgan’s forecast will be one of the presentations Thursday in Boston during the Fall Economic Outlook Conference hosted by the New England Economic Partnership.
Complicating Maine’s slow-but-steady recovery is the recent announcement of a paper mill closing in Bucksport and steeply climbing electricity costs for industry, Colgan said. While nearly 600 workers are expected to lose their jobs in December because of the Verso mill closure, the number of workers affected by it, including loggers and truck drivers, will be larger, Colgan said.
He predicted the state would be back to pre-recession employment levels by the middle of 2016.
However, jobs are unlikely to be in the manufacturing sector because much of the growth in employment will come from professional and business services, education, health care and tourism.
In his report, Colgan noted that positive signs for manufacturing come largely from the state’s ship- and boat-building industry.
Now Maine’s largest manufacturing industry, it “looks to be stable or growing for some time because of a good recovery in boat-building and continued success by Bath Iron Works in winning contracts from the Navy,” he wrote.
He noted that Maine recruited back from China the manufacture of Lincoln Logs, a positive if only symbolic sign for the state’s manufacturing sector.
Also on the somewhat bright side for workers is the state’s aging population. With a growing number of people leaving the workforce for retirement, the demand for employees will likely grow, along with higher wages to attract those workers.
“In many instances they are going to find it very difficult to find people, even though there are long-term unemployed and so on,” Colgan said.
The overall earnings for Maine workers still remain 5 to 7 percent lower than the New England average.
New England as a whole still faces many economic challenges, said Ross Gittell, the New England Economic Partnership’s forecast manager.
“The slow recovery makes it difficult for many individuals and families across the region to meet their needs and to invest in their future,” Gittell said. “This is especially true as income growth for the majority of residents has been weak or nonexistent.”
Colgan said state and local politicians get blamed for a poor economy and take credit for a recovering one, but in the short term lawmakers and the governor have very little control over the state’s economy.
Jobs and the economy, especially in the wake of the Verso closing, have been a top issue for candidates.
Republican Gov. Paul LePage and his challengers, Democratic U.S. Rep. Mike Michaud and independent Eliot Cutler, have highlighted Maine’s high electricity costs that are being blamed largely on inadequate natural-gas pipeline infrastructure in New England.
Colgan said Wednesday that access to natural gas is a key hurdle for all New England states when it comes to the price of electricity. But adding the infrastructure necessary to alleviate that would take at least five years.
“When you take into account the time it takes to plan and build a pipeline and then adjust that for having to deal with substantial political opposition to them, it takes quite a while,” Colgan said.
Even by 2016, New England would likely still be in the middle stages of solving the natural-gas inflow problems it is facing today, he said.