It’s no secret that Maine is facing a critical workforce shortage.
A 2022 survey of Maine businesses conducted by the Maine State Chamber of Commerce and the Maine Development Foundation found availability of entry level workers was their top concern. Other issues that directly impact the pocketbooks of Maine workers — including affordable housing, energy costs, and the cost of health care — were more frequently indicated as barriers to business success than concerns about state taxes and lowering the cost of doing business. As the Maine Economic Growth Council wrote: “Maine’s economy cannot flourish, and cannot create the opportunities Maine people desire, unless our workforce is large and skilled enough to support growing businesses.”
To meet the demand for workers, Maine needs to both assist existing residents in getting into the labor force, and to attract new workers to the state. Economic research and recent survey data show investments that help workers balance their work and personal responsibilities can significantly improve labor force participation. For example, 24,000 previously employed Maine workers cite a lack of access to child care as the primary reason they are not currently in the labor force.
In response to the challenges facing Maine’s economy, Gov. Janet Mills is proposing a new program, the Dirigo Business Incentive Program, at an estimated cost of $54.5 million per year. Unfortunately, this proposal badly misses the mark at addressing our state’s most pressing needs.
The program gives businesses tax credits for making capital investments and providing worker training, which on its face can seem like a good thing. Increasing capital investment and worker skills can improve economic productivity. But time and time again, research has shown tax giveaways like this are ineffective and reward businesses for things they may have done anyway.
The Dirigo tax credit is likely to have the greatest benefit for large businesses with more employees, or businesses that already have the wealth or access to funds to make large capital investments, perpetuating wealth inequality.
Small Maine businesses will likely receive little, if any, benefits compared with large, wealthy corporations. What’s more, this tax credit only requires two-and-a-half work days of training in return for a $2,000 credit per worker, which is simply an inadequate amount of training to meet the need for skilled labor. And it narrowly targets a handful of male-dominated sectors, excluding health care and child care which face the most dire workforce shortages and primarily employ women. Policies like this don’t narrow inequities, they widen them.
This session, lawmakers are considering several effective policies to support working families so Mainers can get back to work and stay in the labor force. With the funds proposed for the Dirigo tax credit, Maine could instead lift thousands of children out of poverty by increasing and modernizing the state’s child tax credit, improving kids’ long-term prospects of leading healthier, more prosperous lives and promoting student achievement and workforce participation. Maine could fund the startup costs for a paid family and medical leave program, helping Mainers stay in and return to the workforce. Maine could expand access to affordable child care, allowing workers with children to return to jobs without spending more than they earn on day care.
Investing in Maine’s economy is an important goal. The livelihood and future of Maine workers and families depends on it. But many Mainers simply do not have the tools they need to successfully participate in the workforce or opportunities they deserve to live a good life.
Let’s start our efforts to strengthen Maine’s economy there.
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