Government Handouts Represent a Growing Share of Maine Income: Study

Published August 1, 2007

More than half the personal income earned in Washington County, Maine comes from government, and only one of Maine’s 16 counties has a growing private-sector share of personal income, according to a new report from The Maine Heritage Policy Center.

“Maine’s Private Sector Share of Personal Income by County,” released May 24, “shows that the composition of personal income varies greatly between Maine counties, but the constant trend in all but one county is a shrinking private-sector share of personal income,” said study author J. Scott Moody, vice president of policy and chief economist for The Maine Heritage Policy Center.

“The most troubling finding from the analysis is that the government is now responsible for the majority of Washington County’s personal income,” Moody noted.

The trend has serious economic consequences, Moody warned.

“Unfortunately, there will be an economic price paid as the private-sector share continues to shrink, since only the private sector can create new income and wealth,” Moody said. “The public sector can only, at best, redistribute what already exists in the system,” through taxation or borrowing, Moody noted.

Declines Nearly Everywhere

The report examines data from 1969 to 2005. During that period, the private-sector share of personal income fell in 15 of Maine’s 16 counties. The lone Maine county with a growing private-sector share was York County.

Washington County had the smallest private-sector share of personal income. In 2005, Washington County officially became the first county in Maine to have a private-sector share below 50 percent.

The root of Washington County’s small private-sector share of personal income stems from a high level of personal current transfer receipts, which represented 35 percent of personal income in 2005. Current transfer receipts are government payments and subsidies to individuals, including retirement and disability insurance benefits, medical benefits, unemployment insurance compensation, and veterans benefits.

York County was the only one to buck the statewide trend. The private-sector share increased by 10 percent between 1969 and 2005, from 61.9 percent to 68.1 percent.

When asked what could be done to address the disturbing trend, Moody said, “By enacting policies broadly consistent with economic freedom, such as secure property rights, low taxes, and low regulations, Maine policymakers can boost the entrepreneurial environment. Such changes will help alleviate this negative personal income trend and ensure an increased standard of living for Mainers.”

Jason Fortin ([email protected]) is director of communications at The Maine Heritage Policy Center.

For more information …

“Maine’s Private Sector Share of Personal Income by County,” written by J. Scott Moody and released in May by The Maine Heritage Policy Center, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #21562.