Maine’s Real Unemployment and Jobs Picture Reflects Continuing Challenges for Maine Workers

Over 90,000 Mainers are still struggling to find work according to data released Friday by the Bureau of Labor Statistics. A stubbornly large number of part-time workers who want more work but can’t find it is driving this trend.

The “U6” alternative measure of unemployment, which accounts for unemployed workers who have recently stopped looking for work and workers with part-time jobs who want more work but can’t find it, was 12.8% for the 12-month period ending on June 30th, 2014. The national rate was just slightly higher at 12.9%. While Maine’s rate is just below the national average, it continues to fall at a slower rate than the rest of the nation as a whole.

Maine’s U6 is the 19th highest in the nation, driven by 40,300 “involuntary” part-time workers: those who want more work but can’t find it. These workers account for 6.1% of Maine’s 663,400 employed workers—the sixth highest rate of involuntary part-time employment in the nation.

This comprehensive unemployment data is important to keep in mind in light of the normal monthly jobs data releases from the Maine Department of Labor and related press releases from the Governor’s Office.

The June jobs report, released two weeks ago, showed that overall Maine’s labor market is improving along with the nation as a whole. The state’s unemployment rate continued to decline. In June 2014 it was 5.5 percent compared to 5.7 percent in May and 6.7 percent in June 2013. Nationally, the unemployment rate in June was 6.1 percent compared to 6.3 percent in May and 7.5 percent a year ago.

The LePage administration has emphasized the fact that Maine’s unemployment rate has declined significantly over the past two years, claiming that its policies are responsible for the improvement. The reality though, is that Maine’s economy is thoroughly integrated with the national economy, and both Maine and the US unemployment rates have declined slowly since the end of the recession. As with the U6 measure, the US rate of decline in unemployment has been somewhat faster than in Maine, although the US rate also climbed to a higher level in the wake of the recession.

As noted previously by MECEP and the Boston Federal Reserve Bank among others, the standard unemployment rate fails to capture other important labor market trends. The monthly unemployment rate does not account for unemployed workers who have dropped out of the labor force due to a lack of jobs. For this reason, the employment-to-population ratio, which accounts for all workers as a share of the total adult population provides a useful alternative. By this measure, Maine’s labor market recovery looks better: Maine has experienced one of the largest increases in the employment-to-population ratio of any state, though it remains well below pre-recession levels. But digging deeper into the data again reveals concerns and suggests that the labor market recovery is far from complete: most of the increase in the employment-to-population ratio seems to be driven by older workers who have either reentered the workforce or are working longer, and those “involuntary” part-time workers described above. The employment rate for prime-working-age Mainers—those who are most likely to be raising families—didn’t improve at all from 2009 to 2013. On that measure, Maine’s recovery isn’t much different from the US.

What about job growth? Here too Maine is showing signs of improvement, but clearly lags the nation. Based on MECEP’s analysis of the June jobs report, Maine has recovered 63% of nonfarm payroll jobs lost during the recession. By comparison, the US has recovered 106% of jobs lost during the recession and New England has recovered 116%. Our job recovery ranks 42nd among the fifty states and Washington, DC. The job growth that is happening is disproportionately centered in Portland, with small-town and rural Maine gaining few new jobs.

Maine Job Watch - June - FINAL LARGE

As we’ve written before, for an accurate understanding of the real strength of Maine’s recovery, one must view the monthly jobs and unemployment statistics in the context of longer-term trends both in Maine and nationally. Last week’s release of quarterly data on comprehensive unemployment, including “involuntary” part-timers, is important in this respect. Overall, Maine continues to show signs of improvement along with the nation as a whole. But weak spots remain and a full recovery from the recession, which ended five years ago, remains elusive.