Maine’s Dwindling Private Sector Economy

Read the full report | Personal income is an important economic measure of a state’s well-being. Higher levels of personal income mean that a state’s residents are able to buy more goods and services such as homes, cars, education and health care. Fundamentally, personal income comes from two sources: the private sector and the public sector. The distinction between these two sectors is important because only the private sector creates new income. The public sector can only redistribute income through taxes and spending.

In 2007, Maine’s private sector share of personal income was 67 percent and ranked as the 9th smallest in the country. However, the size of the private sector varies greatly by county. As shown in Chart 1 and Table 1, the county with the largest private sector in 2006 (the latest data available), was Lincoln county at 74 percent. At the other end of the spectrum, Washington and Kennebec counties had the smallest private sector shares at just 51 percent and 52.6 percent, respectively. Barely more than half of the income in these two counties comes from private sources!

Between 1969 and 2006, almost all of Maine’s counties saw their private sector shrink. The only exception was York County which grew to 68.4 percent in 2006 from 61.9 percent in 1969. This change is attributable to a decrease in Federal civilian and military compensation due to the closure of Pease Air Force Base across the border in New Hampshire.