Maine’s unemployment rate increased in July amid surge in labor force participation

Fri, 08/21/2020 - 11:15am

    AUGUSTA – Workforce conditions continued to recover in July from the effects of the COVID-19 pandemic, according to a news release from the Maine Deptartment of LAbor

    The monthly payroll and household surveys indicate:

    Nonfarm payroll jobs increased 10,100 in July

    43,900 jobs have been recovered since the April low; the July total remained down 60,600 from February

    The unemployment rate increased to 9.9 percent

    Labor force participation increased to pre-pandemic levels

    Seasonally Adjusted Estimates

    Payroll Survey Estimates – The number of nonfarm payroll jobs in Maine increased by 10,100 in July. The private sector added 4,300 jobs, primarily in the leisure and hospitality and retail trade sectors as they continued to rebound from sharp declines in the spring. Jobs in the manufacturing sector decreased 3,500, primarily due to the shipbuilders strike in Bath.

    The public sector added 5,800 jobs. Federal government jobs increased 1,100 as the U.S. Census Bureau added temporary workers for the 2020 Census. Local governments added 4,700 jobs. This partly reflects seasonal hiring for certain functions that was not offset by decreases in education staffing, which occurred early this year when schools closed in the spring.

    The 576,700 nonfarm jobs in July remained 60,600 (9.5 percent) lower than in February, before the pandemic began to impact the labor market. The number of jobs remained below the February level in every industry sector, though construction is close to full recovery. The highest rates of job loss between February and July were in the leisure and hospitality, information, private education, and manufacturing sectors. The largest net job losses were in the leisure and hospitality, manufacturing, and healthcare and social assistance sectors.

    The jobs recovery continued throughout the state in July. After sharper job losses in the spring, the number of jobs in the Portland-South Portland metro remained 11 percent lower than in February. Jobs remained down eight percent in the Bangor metro, six percent in the Lewiston-Auburn metro, and ten percent in non-metro areas.

    Household Survey Estimates 

    The unemployment rate increased to 9.9 percent from a revised rate of 6.7 percent for June. The 68,900 unemployed was up 23,900 from the revised June estimate.

    The increase in unemployment in July is due to a surge in labor force participation, which causes these estimates to more fully reflect the job displacement that has occurred as a result of the pandemic than estimates for the previous three months did. Between April and July the labor force increased by 39,000 after decreasing 36,000 between February and April.

    This magnitude of both decrease and increase in the labor force in just a few months is without precedent. This occurred because people who lost jobs in March and April could not engage in normal work search activities because of the stay at home order and safety concerns. Gradual relaxation of the order and greater comfort with the situation brought people back into the labor force over the last three months, especially in July. (The labor force is comprised of employed and unemployed people. Unemployed people are those who searched for work and were available to work. People who are not employed are not considered to be unemployed if they did not search for work or were not available to work. This includes retired people, homemakers, inmates, some who are disabled, and many students.)

    The other issue that caused unemployment to be understated in recent months was misclassification of many laid off people as “employed, not at work” rather than as “temporarily unemployed” as they should be if they expect to return to their job. There was much less misclassification in July than in the previous three months. The U.S. Bureau of Labor Statistics estimates that more appropriate classification of those who expect to return to their job would increase Maine’s unemployment rate by 0.9 percentage points to 10.8 percent and the U.S. rate 0.8 points to 11 percent.

    U.S and New England Household Survey Estimates

    The U.S. unemployment rate of 10.2 percent was down from 11.1 percent for June and the New England rate of 12.7 percent was down from 13.4 percent. July rates for other states in the region were 8.1 percent in New Hampshire, 8.3 percent in Vermont, 16.1 percent in Massachusetts, 11.2 percent in Rhode Island, and 10.2 percent in Connecticut.

    Not Seasonally Adjusted Substate Estimates

    Unemployment rates increased from a year ago throughout the state. Increases generally were the largest in the most densely populated counties and smallest in the least densely populated, with some exceptions.

    The not seasonally adjusted statewide unemployment rate estimate of 9.4 percent for July was up from 2.7 percent one year ago. Unemployment rates were lowest for Hancock, Kennebec, Lincoln, Sagadahoc, and Waldo County (8.4 percent) and highest for Oxford County (11.8 percent).

    Rates were the highest on record for July in twelve counties: Androscoggin, Cumberland, Franklin, Hancock, Kennebec, Knox, Lincoln, Oxford, Penobscot, Sagadahoc, Waldo, and York. Highs for the remaining four counties were in 1994 or 2009.

    July unemployment rates were the highest on record in all three metro areas of the state: Portland-South Portland (9.8 percent), Bangor (8.7 percent), and Lewiston-Auburn (10.0 percent).

    August workforce estimates will be published Friday, September 18 at 10 a.m.