Gov. Janet Mills (D) is set to deliver her annual State of the State address Tuesday evening. The speech, her communications team advised the media beforehand, will focus on climate change and gun control. But here’s a look at a few numbers and trends that actually reveal the State of the State.
After five years, Maine’s housing situation is dire. A combination of legal and illegal immigration, both exacerbated by the government lockdowns, supercharged demand for residences in Maine. At the same time, the supply of new housing remained choked. LD 2003, the major bipartisan law that aimed to encourage more housing by changing municipal zoning rules, has yet to pan out.
From January 2019 to the most recently available numbers, the stock of available housing, as measured by the number of active listings in Maine, has declined significantly. At the beginning of Mills’ first term, there were 7,670 houses on the market. In October, that number was 3,834.
At the same time the stock of available housing has declined, the median price of a home has exploded, especially in southern Maine. Here’s the chart of median home cost in Cumberland County.
At a little less than $650,000 for a home, the median Maine household in Cumberland County now costs 8.6x the median household income in 2022-2023, as opposed to 5.6x the median household income in 2019 (see below). Homes in Cumberland County have always been more expensive than the rest of the state, but they’re now far beyond the means of most families living north of Lewiston.
The mismatch between housing demand and housing supply doesn’t look like it’s going to change anytime soon, either. Whereas the national trend for new privately-owned housing starts is up since Jan. 2019, the trend in Maine is basically flat.
From 2019 to 2022, Maine’s median household income rose from $66,550 to $75,160. But that nominal growth is deceiving, because in real, inflation-adjusted terms, Mainers have seen their purchasing power decline due to rising prices and a devalued U.S. Dollar.
According to the U.S. Department of Labor’s Inflation Calculator, a Maine family making $66,550 in 2019 would need to make $81,181 in Nov. 2023 in order to have the same purchasing power. In other words, if you’re household income only rose from $66,550 to $75,160, you’re actually earning less — and if your family take-home pay increased to $81,181, you’re barely treading water. There’s also a fair argument to be made that the U.S. DOL’s inflation numbers underestimate the actual increase in the cost of living, especially considering Maine has the second highest electricity prices in the country.
As a comparison, here’s what the growth of real household median incomes looked like under Gov. Paul LePage (2010-2019):
Just for fun, here’s 2010 to 2020. As you can see, something happened from 2010 to 2019 that caused real median incomes to trend upward. Then, suddenly, something happened in 2019 that reversed the increase in incomes.
On a related note: As real median incomes have decreased sharply, the cost of housing and utilities has increased, meaning Mainers are getting squeezed from both sides.
In one category, Gov. Mills beats the pants off all previous Pine Tree State governors: tax collections. According to the St. Louis Fed, the dollar amount of taxes collected in Maine set a new state record in Q2 2019 ($1.401 bn), Q2 2020 ($1.408 bn), Q2 2021 ($1.789 bn), Q4 2021 ($1.831 bn), and Q2 ($2.155 bn).
For context, the biggest tax collection quarter under Gov. Angus King was Q2 2002 at $957M. Under Gov. Paul LePage, quarterly tax collections never exceeded $1.4 bn.
The increase in tax collections is attributable both to inflation as well as the large amount of dollars injected into Maine during the government lockdowns. As that “stimmy” money gets spent, a portion is skimmed off in taxes and returned to government coffers. And as the cost of gas, Little Debbie’s, and other goods and services increases, so to does the amount paid to the Maine Revenue Service.
When looking at an economic portrait of Maine, Gov. Mills and her supporters will rightly tout Maine’s historically low unemployment rate. For decades, this rate has been a strong indicator of economic health. Mills entered office with the jobless rate at 3.1 percent and, after a brief spike during the government lockdowns, the rate now sits at 2.8 percent.
However (and this is a big “however”…), the unemployment rate by itself doesn’t tell the whole story. For that, you’ll have to consider the workforce participation rate, which is a measure of how many working age Mainers are actually working. The reason for this is that an unemployed person who is not actively seeking work isn’t counted in the official unemployment rate in the chart above.
Here’s what Maine’s workforce participation rate looks like historically and since Jan. 2019.
The workforce participation data points to a problem that the low unemployment rate doesn’t reveal. Namely, that tens of thousands of working age Mainers left the workforce during the government lockdowns and have yet to return. This could be early retirements nudged along by the lockdowns, workers who shifted into gig work or black market jobs (growing or processing marijuana, perhaps?), or workers who opted to rely on government benefits rather than work full-time.
Although Maine’s workforce participation rate began to improve during 2023, the rate is still under 60 percent, and the last time that small a proportion of working-age Mainers were actually working was March of 1978 (Jimmy Carter was president…).
Enjoy the speech!