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Maine has emerged as an outlier among states with incomes outpacing the high inflation that has bogged down the country the past few years, according to a new report.
As average prices rose 20% nationally between 2019 and 2023, median household income in Maine rose 25% in that same timeframe, according to the State of Working Maine 2024 report released this week by the Maine Center for Economic Policy. The report also highlighted the dichotomy between continued demand for workers helping to drive up wages and households still struggling with costs like housing, food and health care in the aftermath of record inflation.
The report also found a narrowing of racial disparities in wages and unemployment rates. The earning and unemployment gap between Mainers of color and white Mainers still persists, but it has lessened in the years after the pandemic compared to the years prior.
“There’s a little bit of a misalignment about people’s general feelings about the economy and what we’re actually seeing in the macro level data,” said MECEP President Garrett Martin, adding that diving deeper into the data reveals more nuance into people’s particular experiences.
Strong labor market
The report found that Maine’s labor market is the strongest it has been in decades.
Unemployment has remained at or below 3% and there are an additional 19,000 people in payroll jobs, compared to before the pandemic. Workers are also in a position of power with two job openings for every unemployed worker in the state.
Because of the demand for workers, especially with Maine’s aging population, this can give employees more leverage for negotiating wages, explained James Myall, an economic policy analyst who wrote the report, during a webinar Wednesday afternoon.
That has helped the typical Maine worker experience wage growth that outpaced inflation. This has varied by income level and sector, though. For example, workers in the bottom 25% of the income distribution have seen hourly wages rise about 13% above inflation since the pandemic. Whereas the hospitality and health care support industries have seen some of the largest paycheck increases.
The report praised the state’s minimum wage law, which is indexed to the consumer price index, for helping to maintain a floor on wages for the lowest-paid workers and making sure those wages increase with the cost of living.
Narrowing of disparities
On average, Black, Indigenous and Latino Mainers earn less and face higher unemployment rates. However, the report found that the disparities between them and white Mainers has narrowed.
Compared to before the pandemic, the unemployment rate for Black and Latino Mainers has been cut by more than half.
Between 2022 and 2024, white Mainers had an unemployment rate of 2.9% while Black Mainers were at 5.2%. While that is still a gap, it is narrower than that seen from 2018 to 2020, when 3.2% of white Mainers were unemployed compared with 11.4% of Black Mainers.
However, gender gaps in pay, especially for women of color, remained largely persistent. Though women’s wages rose faster than men’s between 2019 and 2023, they still only made 85% of what men made.
Additionally, the report found that the pay gap between state workers and their private sector peers has likely widened in recent years. A 2020 report found that state workers were paid about 15% less than comparable workers. Some data suggests earnings for state workers has stayed flat since the year before that study, while private sector employees saw wages go up in that time.
It is a grimmer picture for local government and school district employees who saw annual earnings decrease when adjusted for inflation, the report found.
Difficulty paying for basic needs
Although inflation has cooled from its peak in 2022, the report found that almost one-third of Mainers report difficulty meeting basic spending needs. For example, around one in eight renters are behind on rent payments.
Rents have risen faster than the state’s increasing wages, so just under half of all renter households in the state were cost-burdened in 2023. This means they were spending more than 30% of their income on rent. While this is higher than recent pre-pandemic levels, it does not surpass what was seen in the wake of the Great Recession.
However, forcible evictions across the state are down from 2019.
With gouged grocery prices, food insecurity in Maine is still higher than before the pandemic. About one-third of Mainers say the high costs at supermarkets cause them to sometimes be unable to buy either enough food or the kinds they would like to buy.
Policy ideas
The report praised the minimum wage law for helping maintain a liveable wage, but the analysts note that more can be done.
Foremost, there are still workers who are not included in the state’s minimum wage law. One group of note is agricultural workers, who have historically been excluded from labor protections in the law. A bill was introduced last session to grant farm workers state minimum wage protections, but it drew criticism for its inclusion of other labor protections and was ultimately vetoed by Gov. Janet Mills.
The report suggests ending those exclusions, among other policy ideas such as requiring wage transparency in job applications. It also proposes requirements for large employers to disclose wage gaps within their organization.
To address the costs of housing and food, the report encouraged the state to continue free school meals and the new pilot project for a state rental assistance program. It also suggests expanding tax credits for Mainers with low incomes such as the earned income and child tax credits.
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