What is Maine’s Unemployment Rate? Updated


A few months back I posted on a disturbing trend showing Mainers were dropping out of the labor force which makes Maine’s unemployment rate look smaller than it actually is.  Unfortunately, that trend has worsened.

Between January 2009 and June 2009, Maine’s labor force has shrunk in each month for a total loss of 9,258 people.  A few more months of this and Maine will likely break a few records.  First, the 5-month consecutive decline ties the record set between June-October 2000 (data goes back to 1976); however, the labor force only declined by 3,527.  This record is in sight.

Second, in absolute losses, the current record was set between April and July 1991 with a decline in the labor force of 11,280 (the labor force was smaller then so this was a more significant decline than the same absolute decline would be today).  This record will be harder to top.

Adjusting for the declining labor force, Maine’s “shadow unemployment rate” is 14 percent higher than the reported rate–9.7 percent versus 8.5 percent (click “continue reading” to view chart).  More distressing, the shadow rate is higher than the national unemployment rate of 9.5 percent.  Since January, 2009, Maine’s shadow rate has tracked the national unemployment rate.  The lower reported rate is an illusion.

This leads to the inevitable question: “where are these people going?”  In the best case scenario, these folks are waiting on the sidelines waiting for the job market to improve before jumping back in.  In the medium case, these folks are taking early retirement but, hopefully, are still living in the state.  In the worst case, these folks are fleeing the state to greener pastures.  As I reported here, Maine is already a net out-migrant state for two years running.  My gut says its likely a mixture of the last two.