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Maine’s unemployment rate declined slightly in May after more than tripling amid the coronavirus pandemic, according to information released Friday by the state and federal labor departments, though the number doesn’t reflect the true extent of the hardship.
The rate declined to 9.3 percent, or by 1.3 percentage points. Cumberland, Franklin, Oxford and Somerset counties all had rates topping 10 percent. The Portland-South Portland area continued to be the most affected by the coronavirus-related downturn, with 84 percent as many jobs in May as there were in February.
Maine gained 14,300 nonfarm jobs, primarily in the leisure and hospitality, manufacturing, retail trade, and healthcare and social assistance sectors, each of which had sharp job losses in the previous two months. Some of those gains came as a result of a federal forgivable loan program that encouraged recipients to hire back all employees at the same pay rate as before they were laid off, the Maine labor department said.
The leisure and hospitality sector saw the biggest job increases, although that sector lost about half the number of jobs it had in February, before pandemic restrictions took hold in the state. The most recent data for April show that lodging and restaurant sales taxes, which reflect overall sales, were down a combined 62.5 percent compared to the year before, according to Maine Revenue Services data. Lodging alone was down 80.2 percent and restaurants were down 58 percent.
Despite the jobs gained in May, the number of nonfarm jobs remains 90,200 lower than in February, reflecting the devastating effect the coronavirus has had on the economy. The Maine labor department said the unemployment estimates continue to understate the magnitude of job loss in the past three months.
Mark McInerney, director of Maine’s Center for Workforce Research and Information, told reporters on a conference call that payroll estimates from May point to “a modest recovery.” He said 14 percent of net job losses occurring in March and April were recovered in May.
He cautioned that while the jobs gain may be the largest on record, it doesn’t tell the whole story about unemployment in the state.
The unemployment rate reflects unemployed people who searched for jobs and are available to work. It does not include retired people, full-time students, full-time homemakers and inmates who are either engaged in work search or available to work, said Glenn Mills, the state’s labor economist.
Mills said that in normal times, the unemployment rate accurately reflects the labor force, but the pandemic has disrupted data collection and the way people engage in searching for jobs to be counted as unemployed. Stay-at-home orders prevented people from searching for work or being available to work. From February to May, Maine’s labor force shrank by 31,000 people, he said.
Another issue is that people who are laid off and expect to go back to their jobs were classified by the U.S. Bureau of Labor Statistics as “employed, not at work,” which usually is a description given to those on vacation or maternity leave. They should have been classified as “temporarily unemployed” and counted in the unemployment rate, Mills said. So almost 32,000 people also weren’t counted in the unemployment data.
Adding those two categories of unemployed people means the unofficial number of unemployed in Maine is about 125,300. That translates into an 18 percent unemployment rate, about double the 9.3 percent reported Friday, he said.
“So this is a situation where the unemployment rate is not reflecting what’s actually occurring to an extent that I’ve never seen before,” Mills said.
The state’s several-year streak of low unemployment ended in April, when the jobless rate more than tripled to 10.6 percent compared with the 3.2 percent rate in March, which represented a record 39 consecutive months below 4 percent. The rate, which is the sharpest increase in any April on record, is preliminary and seasonally adjusted.
On Thursday, the Maine Department of Labor reported fewer new unemployment claims, some 5,900 new claims, for the week of June 7 to June 13.
The U.S. unemployment rate for May, released on June 5, declined to 13.3 percent compared to the 14.7 percent in April, which was the highest rate since the Great Depression. Last month, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade. But employment in government continued to decline sharply. The rate across New England is 12.7 percent. In all, 38 states and the District of Columbia reported lower unemployment rates in May.
Maine’s June workforce estimates will be published Friday, July 17.