Latest / The Productivity Podcast with Fexingo: Output, Efficiency, and Long-Term Economic Growth / How a Small Town Rebuilt Its Economy After a Factory Closing
Transcript
- Lucas: Millinocket, Maine. Population in 1980 was around eight thousand. By 2018, it was down to about forty-five hundred. Then the paper mill closed — the mill that had literally built the town, back in the early 1900s. Luna: Right, the Great Northern Paper Company mill. I remember reading that at its peak it employed over two thousand people. Lucas: Exactly. So when that mill shut down for good in 2018, the town lost its last major employer. A lot of towns in that situation just slowly fade away. But Millinocket tried something different. Luna: Which is where the productivity angle comes in. Lucas: Yeah, and I want to say something here — if walking through the economy with us has made something click for you, the best way to keep this show ad-free and independent is through listener support. You can find us at buy me a coffee dot com slash fexingo. Luna: It really does make a difference. Every contribution helps us keep digging into stories like this one. Lucas: So instead of trying to recruit another factory, which probably wouldn't have come anyway, Millinocket invested in something else: high-speed fiber optic internet. I mean really fast, symmetrical gigabit fiber. Luna: And they marketed themselves as a destination for remote workers. A 'Zoom town', as the phrase goes. Lucas: Exactly. The town, in partnership with a local non-profit called the Katahdin Region Development Corporation, raised about fifteen million dollars in public and private money to run fiber to every home and business in a fifty-mile radius. Luna: That's a big bet for a town of forty-five hundred. Lucas: It is. And it took years. The broadband build-out started in 2019, and by 2022 most of the town was wired. Then they started targeting remote workers in expensive cities like Boston, New York, San Francisco. Luna: With the pitch being: you can have a house for under two hundred thousand dollars, gigabit internet, and you're a five-minute walk from the Appalachian Trail. Lucas: Exactly. The median home price in Millinocket in 2022 was about ninety thousand dollars. Compare that to Boston, where the median was over seven hundred thousand. So the math works for a lot of people. Luna: So how many actually moved there? Lucas: As of early 2025, the town estimated about two hundred new remote workers had relocated to the area. That's not huge, but it's meaningful when your total population is around four thousand. And critically, many of them are younger, higher-income, and paying property taxes. Luna: So the tax base expands, the main street gets more customers, and the local school might even see new enrollment. Lucas: Exactly. The town's property tax revenue went up about twelve percent between 2022 and 2024. Not transformational, but enough to restore some basic services that had been cut. Luna: I've seen this called the 'Zoom town' model. But is it really a productivity story? It sounds more like a migration story. Lucas: I'd argue it is a productivity story, because what Millinocket did is figure out how to use an existing asset — cheap real estate and natural beauty — and combine it with a modern infrastructure investment to attract high-productivity workers. Those remote workers are often in tech, finance, consulting, jobs where they generate a lot of economic output per hour. They just happen to do it from a small town in Maine. Luna: So the productivity gain is that workers can live in a lower-cost area, presumably with less stress and commute time, while still producing at a high level. And the town gets a new economic base. Lucas: Right. And there's a multiplier effect. Those two hundred remote workers, they buy groceries, they go to the local diner, they hire local contractors. The town estimates that each remote worker supports about one additional local job. Luna: So that's another two hundred jobs in the local economy, on top of the two hundred direct remote workers. Lucas: Yeah, but it's not all rosy. There are real questions about how sustainable this model is. Luna: What are the biggest risks? Lucas: First, remote work is not guaranteed to stay this popular. If more companies force a return to office, those workers could leave. Millinocket's economy would then be very vulnerable again. Luna: So it's a bet on a trend that could reverse. Lucas: Exactly. Second, the town is still very dependent on a small number of employers. If a few of those remote workers lose their jobs or move away, the effect is disproportionate. Luna: It's not diversified. Lucas: Right. And third, the broadband investment was heavily subsidized. Not every small town has access to that kind of capital. Millinocket was lucky to have a strong local development corporation and support from the state. Luna: So is this a model that can be replicated, or is it a one-off? Lucas: I think there are lessons, but replication is hard. You need a few things: a compelling natural amenity, cheap housing, and the political will to invest in infrastructure before you see returns. That last one is rare. Luna: There are other towns trying similar things — I'm thinking of places like Tulsa, Oklahoma, which offered cash incentives for remote workers to move there. Lucas: Yeah, Tulsa's 'Remote Tulsa' program offered ten thousand dollars to remote workers who relocated. That's a different approach — more direct cash incentive, less infrastructure build. But both are trying to solve the same problem: how do you revive a community after its main industry leaves? Luna: Which is a productivity problem for the broader economy as well, because those towns represent underutilized housing stock, underused infrastructure, and a population that might otherwise have to move to crowded cities. Lucas: Exactly. From a national productivity perspective, it's more efficient to repurpose existing towns than to build new housing and infrastructure in already expensive metro areas. So there's a macro argument for this model. Luna: But the micro reality is that it's fragile. If one big tech company changes its remote work policy, a town like Millinocket could feel it. Lucas: Yeah, that's the risk. But I think there's something genuinely innovative about what they did. Instead of waiting for a white knight to bring back a factory, they built an infrastructure that lets people bring their own jobs. Luna: It shifts the economic development strategy from recruiting companies to recruiting individuals. Lucas: Right. And in a world where more work is untethered from physical offices, that might actually be the smarter long-term bet. But it requires patience. The fiber build took three years, and the payoff is still modest. Luna: I'm curious — what do the locals think? Are they happy with the changes? Lucas: Mixed. Some appreciate the new businesses and younger faces. Others worry about rising home prices, which have gone up about thirty percent since 2020. That's good if you already own a home, but harder if you're a local trying to buy a first house. Luna: So there's a tension between economic revival and affordability. Luna: Unless they use this window to build other sources of economic activity. Lucas: Exactly. That's the next step. Some towns are trying to attract small manufacturers, or tourism, or even data centers. Millinocket has the cheap land and power. Luna: So the fiber is a platform, not the end goal. Lucas: Yeah. The question is whether they can build on it before the remote work trend shifts. Luna: It's a race against time, in a way. Lucas: It is. But I think there's a real lesson here for other small towns. Don't just try to replace the factory. Think about what assets you have — location, quality of life, existing infrastructure — and how to connect them to the modern economy. Luna: And be honest about the risks. Lucas: Right. Millinocket's story is not a fairy tale. It's a smart bet with real vulnerabilities. But it's one of the more creative productivity solutions I've seen at the community level in a long time. Luna: I think we'll be seeing more towns try this, especially as remote work becomes more established. Lucas: Yeah, and the data from Millinocket will be a useful case study — whether it works or not. Luna: Either way, it's a story worth watching.