Maine workforce conditions through September 2012

Presented to theConsensus Economic Forecasting Commission

October 25, 2012

Glenn MillsChief Economist

Center for Workforce ResearchMaine Dept. of Labor

Glenn.mills@maine.gov 207-621-5192

Indications from the Survey of

Households

The U.S. unemployment rate continues to trend lower; Maine’s rate has trended higher in 2012. Are conditions getting worse here while improving for the nation? NO!

The U.S. unemployment rate has declined because of lower labor force participation. In Maine, participation has not declined near as much as the nation. (Jobless people not actively looking for work are not counted as unemployed –

they are out of the labor force).

Because fewer Maine people have left the labor force, comparing our unemployment rate to the nation is not very

instructive. Employment to population ratios provide a better indication of relative conditions. The share of

employed people remains higher here.

If U.S. labor force participation matched Maine’s the national unemployment rate in September would have been

9.8%. If Maine participation were as low as the nation our unemployment rate would have been 5.5%.

U.S. Maine

Current Labor Force Participation Rate 63.6% 65.0%

Official Unemployment Rate 7.8% 7.6%

Unemployment rates under alternative participation scenarios:

65% (current for Maine) 9.8% 7.6%

63.6% (current for U.S.) 7.8% 5.5%

Unemployment Rate Estimates for September 2012 for Alternative Labor Force Participation Scenarios

Unrealistically high employment estimates in the second half of 2011 have corrected back to more reasonable levels.

(Data revisions to be published in March 2013 will likely eliminate the employment surge and plunge reflected in estimates from

summer 2011 to summer 2012.)

Indications of Nonfarm Jobs

from the Employer

Payroll Survey

Early indications are that nonfarm payroll jobs estimates are likely to be revised up. In the 12 months through

June payroll jobs reported through quarterly unemployment insurance tax filings were up 6,800.

Private sector job growth is being partially offset by declines in state and local government

Other Indicators

Maine’s median income falls in 2011, while poverty rate increases

New numbers released Thursday by the U.S. Census Bureau suggest Maine struggled through a stagnant economy in 2011, showing a decline in median household income and an increase in the number of people living below the poverty line.

Maine’s median household income in 2011 decreased 2.2 percent, from $47,069 in 2010 to $46,033, according to 2011 estimates from the American Community Survey, an annual nationwide survey that provides demographic data between the decennial census reports.

Recent News Account Following Release ofMedian Household Income Estimates:

The “decline” in median household income (to $46,033 in 2011) in Maine was only because previous year estimates were revised higher. The 2010 figure was revised up $1,250 to $47,069. If not for that upward revision the news story would have been that income was up marginally in 2011, which makes sense based on the job situation.

The Census Bureau data revisions went back several years. Median household income estimates for Maine were revised up nearly $1,700 for 2008. The fact that there was such a large revision to an estimate for four years ago speaks to the unreliability of the estimates. Users should be wary of drawing conclusions based on preliminary estimates for most government data series.

More Complete Context Not Includedin Census Bureau News Release:

The gradual rise in jobs has not yet translated to rising total wages paid (adjusted for inflation)

Recent job performance vs. the February forecast

Appendix

Recent trends in payroll jobs with likely revisions for certain industry sectors

Highlights:•The healthcare, professional & business services, and education sectors are at or near all-time highs and adding jobs.•Casinos are contributing to leisure & hospitality job growth.•Construction jobs are up moderately from very low levels.•Manufacturing, retail, and finance jobs have stabilized.•State and local governments continue to shed jobs.