Is Maine’s current job creation strategy “off base”?

February 10, 2016 by

Mark Sullivan blog 11-16-2015Analysis in a new report (State Job Creation Strategies Often Off Base) from our partners at the Center on Budget and Policy Priorities (CBPP) concludes that:

“To create jobs and build strong economies, states should focus on producing more home-grown entrepreneurs and on helping startups and young, fast-growing firms already located in the state to survive and to grow ― not on cutting taxes and trying to lure businesses from other states.”

Authors Michael Mazerov and Michael Leachman found that businesses already located or that start up within a state account for four-fifths of new jobs created in every US state. This should come as no surprise to us in Maine. Of the current 50 largest employers in Maine, 39 were “home-grown,” including LL Bean, Idexx Labs, New Balance Shoes, TD Bank, Unum, Hannaford, and Bath Iron Works.

Nationwide, only one to four percent of new jobs (depending on the state) result from businesses moving jobs from one state to another. Firms expanding from one state by opening a branch in another state account for less than one-sixth of new job creation.

Job Growth 2-10-2016

For years, Gov. Paul LePage and many of his supporters have advocated policies they argue will attract out of state businesses to relocate to or open branches in Maine. Massive corporate and income tax cuts are central to that job creation strategy.

But the CPBB research has found that such tax cuts are “largely irrelevant to owners of young, fast-growing firms because they generally have little taxable income.” Indeed, the analysis found such tax cuts counter-productive because they “take money away from schools, universities, and other public investments essential to producing the talented workforce that entrepreneurs require.”

If massive tax cuts are not the right formula for job creation, what is? Mazerov and Leachman submit a more effective alternative:

“Public investments that help build a skilled workforce and improve the quality of life for local residents are better bets ― successful entrepreneurs report these factors are key to where they founded their companies.”

The CBPP analysis suggests that Gov. LePage’s job creation strategy is not only “off base,” it promises to put Maine in jeopardy of losing the whole job creation ball game.

2 Responses to “Is Maine’s current job creation strategy “off base”?”
  1. […] should also consider policies that encourage a new manufacturing agenda and nurture Maine-grown small businesses. Like the problems associated with low-wage work, these solutions aren’t new or radical. Other […]

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