Tourism and Livable Wages in Maine?
Story posted February 28, 2001
Is Maine's low unemployment rate really the good news it seems to be?
In Maine, key figures in industry and government have touted the low unemployment rate as proof that the lives of Mainers are improving, and tourism is often heralded as a key job provider in the state. Adams-Catlin Professor of Economics David Vail has questioned whether the job creation and tourist dollars has really translated into better jobs for Maine workers. He spoke about the results of his research at a recent faculty seminar.
"Maine has turned into an amazing job creation machine," Vail said. But a closer look at the jobs and the rates of pay, shows that the jobs being created now, pay on average about $10,000 less than the jobs that were mainstays 10 years ago.
Vail and Wade Kavanaugh ’01, his student researcher, were concerned with how many workers were earning a livable wage, not just how many were employed, and the results show that changes are needed to provide more workers a livable wage.
The Center for Economic Policy, which published Vail and Kavanaugh's report, defines livable wage as 185% of the poverty level for a household with two earners — that was $10.01 an hour last year, as compared to the $5.15 an hour minimum wage.
There is good evidence that there is a growing wage disparity in Maine, the "quick and dirty reason," Vail said, is that a large proportion of the jobs being created are low-paying jobs in the service sector such as fast food workers, motel clerks and maids — tourism jobs.
By looking at 222 hourly tourism job offers in the Department of Labor's online job bank, Vail found that only 3% of them offered a livable wage, while 18% offered the minimum wage. (About 80% of tourism workers are hourly wage earners.)
The state government has embraced tourism. It claims that about 1/3 of a billion dollars comes into the state through sales and income taxes associated with tourism. Governor Angus King has been quoted as saying "We don't have traffic jams and cluttered views, we have magnificent vistas and clean air." But there is a darker side to tourism.
- Though tourism brings money into the state, only about 40% of the money is value-added income, Vail said. About 60% of that money is spent on items not produced in Maine.
- Those touting tourism claim that there is a multiplier effect for every dollar spent in the state, these effects aren't compatible with the full employment the state has.
- In addition to bringing in money, tourism costs: There are parking lots to build, police to hire, roads to maintain.
"There's a whole lot of downside, or cost, associated with it," Vail said.
Vail and the Center for Economic Policy make policy suggestions along three lines:
- More extensive and effective training of workers, including pre-season training.
- Using businesses that have found a way to pay their workers higher wages or cross-train them for several jobs as models for a way to improve the status of workers at other businesses.
- Strengthening labor policies, such as the minimum wage, the earned income credit and unemployment compensation so that low-wage workers have a better "safety net."
"The point, in a way its that the state presents tourism as a solution to many of its problems," Vail said. "It's clean, it's green, it's labor intensive." Because many consider it the holy grail of the state economy, there is a reluctance to look at the problem tourism presents.
Faculty Seminars are open to the College community and are Wednesdays atr 12:30 in Main Lounge, Moulton Union.
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