What is Maine’s Unemployment Rate?

What is Maine’s Unemployment Rate?

January 23, 2012 Posted by J. Scott Moody - 1 Comment

In a previous blog, I showed how Maine’s economic woes are more significantly affecting our younger workers. And while one commenter pointed out that this is not just a Maine phenomena, it is more of a concern in Maine because these folks are Maine’s young families who are raising the next generation of workers. Recent data from the U.S. Census Bureau shows that Maine’s net natural growth (births minus deaths) in 2011 was a mere 180 people.  Maine simply needs to work harder than other states to keep our young families.

However, even the unemployment rate by age chart is optimistic because it is based on the “standard” unemployment definition. Did you know that there are actually many different definitions of unemployment? The chart below shows the various “alternative unemployment rates” as published by the Maine Department of Labor (Excel File).

The green line, representing the “U-3” definition of unemployment, is the official unemployment rate you read about in the newspaper which hit a high of just over 8 percent in 2010. For a person to be counted in U-3 you have to be unemployed but actively seeking work.  Loosen the definition a bit, and the unemployment rate begins to explode.

U-4 includes U-3 but counts folks who have simply given up looking for work called “discouraged workers.” U-5 includes U-4 and folks that are able to work but haven’t done so in quite awhile. Finally, there is U-6 which includes U-5 and all the folks who are working part-time but would rather be working full-time.

Overall, you get a very different picture of Maine’s unemployment rate depending on which definition one uses. If you use the official, U-3, definition then unemployment does not look so bad and has leveled off in 2010 (more recent Maine unemployment rate data shows it now falling for 2011).

Yet, looking at U-6 you see that not only is unemployment rate nearly twice the U-3 rate, but also a pattern of continued growth in the unemployment rate into 2010 (albeit at a slower pace than pre-2009). This suggests U-6 might still be growing into 2011 though we won’t know for sure until the new data comes out. In any case, U-6 paints a more dismal unemployment picture than the official U-3 metric . . . just thought you should know.

Chart Showing Maine's Alternative Unemployment Rates 2003 to 2010