Maine Jobs Still Scarce Four Years after Recession

Today’s monthly jobs report brought predictable spin from Governor LePage, but a complete and honest assessment of the current state of Maine’s labor market doesn’t support his claims.

Job growth is too slow.

The nonfarm payroll jobs numbers through September, 2012—the most recent reliable data point[i]—show that Maine has only regained about a quarter of the jobs lost as a result of the recession. Meanwhile, our neighbors in Massachusetts and Vermont have recovered 80% and 60%, respectively. Maine still needs to add 15-20 thousand net jobs to get back to pre-recession levels.

According to today’s payroll job estimate for June, which is subject to large revision next year and should be considered a very rough estimate, Maine ranks 49th out of 50 states in job creation since Governor LePage took office. Some of that poor ranking is due to our lack of population growth, but as discussed below, lack of population growth is no excuse for lack of job growth when the economy isn’t operating at full capacity.

Over 100,000 workers are unemployed or underemployed.

The official unemployment rate for June 2013 was 6.8%, but what the jobs report from the Maine Department of Labor doesn’t show is the margin of error around that estimate, which is typically plus or minus 7 tenths of a percentage point at current levels of unemployment.[ii] In fact, the 6.8% unemployment rate in Maine in June 2013 is not statistically different (see Tables A and B at the link) from the US unemployment rate or the 7.3% rate it was a year ago.

What we do know is that the unemployment rate is a full 2 percentage points higher than it was before the recession. Four years after the end of the recession, that’s not good enough.

And broader measures of unemployment continue to reflect widespread hardship for workers. Maine has between 15 and 20 thousand workers who are unemployed and have looked for work sometime within the past 12 months. These workers are not counted as part of the labor force. Maine also has nearly 40,000 workers who are working part-time but want more work and can’t find it. Add these figures to the approximately 48,000 unemployed workers who are reflected in the official unemployment rate, and that means over 100,000 Mainers still can’t find work in the wake of the recession. That’s nothing to brag about.

The employment/population ratio is too low.

The employment/population ratio is a useful complement to the unemployment rate because changes in labor force participation don’t affect it. Maine’s employment/population ratio was 60.9% in June. That’s higher than it was in February, but it’s not clear if the rise over the past four months is statistically significant (it’s derived from the same small sample of households that’s used to calculate the unemployment rate- see footnote ii below). The coming months will show whether it is an artifact of the US Bureau of Labor Statistics’ estimation methodology or part of a longer-term trend.

What we do know is that Maine’s current employment/population ratio is well the below pre-recession level of 63%, and the state has about 6,000 fewer employed persons than it did before the recession. Four years since the end of the recession, that’s not good enough.

Again, lack of population growth is no excuse.

As I explained last month, Maine’s poor economic performance in recent years can’t be explained by our lack of population growth and aging population alone. Yes, Maine’s population has remained virtually flat over the past four years, and recent US Census Bureau population estimates that show Maine was one of just two states in the nation where deaths outnumbered births in 2012. However, growth in jobs and output are slower than in other states even after accounting for Maine’s lack of population growth.

Last month, we learned from the Bureau of Economic Analysis that economic activity in Maine grew slowly from 2011 to 2012. Maine’s inflation-adjusted per capita GDP in 2012 grew just 0.4% from 2011 (39th in the nation) and is at about the same level it was in the 2004-2007 period. By definition, cross-state comparisons of per capita economic growth account for differences in population growth. Maine still ranks in the bottom quarter of states.

Maine’s demographic situation also doesn’t explain why Maine’s jobs recovery is so weak. In September 2012, the latest month for which we have reliable payroll jobs data, Maine had a slightly larger population and about 20,000 fewer jobs than it did in September, 2007.

Maine’s lack of population growth will limit economic growth after we return to pre-recession levels of employment and the economy is operating at full capacity. Until that point, no one should be using it as an excuse for a weak job market and a lousy economy.

Stop the political grandstanding and start creating jobs.

Over 100,000 Mainers are out of work or unable to find full-time work. We’ve only recovered a quarter of the payroll jobs we lost as a result of the recession. The share of the population that’s employed is still well below what it was before the recession.

In this situation, Governor LePage should act and speak with humility and avoid political grandstanding and brazen attempts to claim Maine’s economy and job growth are better than they really are. He should be doing everything he can to create jobs. Instead, he has rejected hundreds of millions of federal health care dollars and the jobs that would come with them, delayed voter-approved borrowing for badly needed investments at a time when interest rates are at historic lows, and forced tax hikes, layoffs, and cuts to services in communities across the state.

[i] Estimates of the number of nonfarm payroll jobs are based on a sample of Maine businesses and government agencies. These estimates are unreliable until they are benchmarked to a complete count of jobs derived from unemployment insurance tax filings. The benchmarking happens annually, and the current end of the benchmarked payroll jobs data series is September, 2012.

[ii] The estimates of the unemployment rate, size of the labor force, and the employment/population ratio are based on a sample of about 2,200 Maine households and some complex statistical calculations and modeling.