Maine has the 10th lowest performing state economy in the U.S., standing in 42nd place out of the 50 states and Washington D.C., according to a study released Monday by personal-finance website WalletHub.
WalletHub’s “2023’s Best & Worst State Economies” evaluated the 50 states and D.C. across three key dimensions: economic activity, economic health, and innovation potential.
Here’s how the study ranked Maine’s economic performance along certain essential factors:
- 23rd – Annual change in GDP
- 43rd – Exports per capita
- 31st – Startup activity
- 36th – Percentage of jobs in high-tech industries
- 49th – Annual median household income
- 44th – Change in nonfarm payrolls
The study used 28 metrics, graded on a 100-point scale, to find each state’s weighted average across those three dimensions and to calculate its overall score and ranking.
Maine’s economic activity was analyzed using its yearly change in gross domestic product (GDP), its share of the fastest-growing firms, gross public debt as a percentage of GDP, exports per capita and startup activity.
The study assessed economic health through a total of 17 criteria, including unemployment and underemployment rates, median household income, the share of the state’s population in poverty and government surplus or deficit per capita.
Innovation potential was gauged by the state’s share of jobs in high-tech industries and STEM fields, independent inventor patents per 1,000 work-age population, research and development investment amount per total civilian population and as a share of GDP, and entrepreneurial activity.
Various economic experts provided commentary to WalletHub for their study in order to provide insight into the most effective ways for states to help their economies, such as how states can prevent “brain drain” by attracting and retaining skilled workers, and how to create a business-friendly regulatory and investment climate.
“Regarding state and local government, local economies benefit most from measures that promote new business development,” said Kent Jones, professor of economics at Babson College. “This means making sure regulations are not getting in the way unnecessarily.”
“Housing is a major issue, and often a barrier to getting workers to move to the area (this is especially true in Massachusetts and other high-cost real estate areas),” Jones added.
Dr. Kenneth Kickham, a political science professor at the University of Central Oklahoma also stressed the importance of housing availability for a state’s economic success.
“Housing seems to be the most powerful driver of decisions to relocate,” Kickham said, citing a report that shows a steep decline in people’s willingness to move to a new state or city for a job.
“A big reason in the instability in the real estate market, where housing inflation has been joined by rising interest rates to make moving prohibitively expensive for many highly skilled workers, despite their ability to land good jobs,” he said.
Maine, which ranks at the bottom in median household income, has been facing an affordable housing crisis in recent years that shows no signs of stopping.
According to Harvard University data from their 2022 “State of the Nation’s Housing” report, 41 percent of Maine tenants struggle to afford rent, with almost 20 percent being “severely cost burdened” by housing costs.
The Maine State Housing Authority (MaineHousing) says in their 2023 Outlook Report that from 2021 to 2022, the median single-family home sale price in Maine rose 13 percent to $334,000.
“Barring an economic event such as a recession, it is likely single-family home prices will continue to rise in Maine throughout 2023 due in large part to persistent low supply, especially in southern and coastal counties,” the report reads.