Maine’s unemployment rate fell to 6.2 percent in January and has been declining significantly faster than rates in the rest of New England, but the brightening picture masks a problem that could stifle Maine’s economic growth, said one of the state’s leading economists.
According to the federal Bureau of Labor Statistics, Maine’s unemployment rate in January, adjusted for seasonal variations, fell to 6.2 percent, from 7.0 percent in January 2013. That figure is the lowest for the first month of any year since 2008, just before the country started its slide into a deep recession.
New England’s unemployment rate was 6.7 percent in January. Although that was down from 7.1 percent in January 2013, the jobless rate for the region did not drop as sharply as Maine’s. The region’s jobless rate is elevated by continuing economic problems in Rhode Island, where the unemployment rate in January was 9.2 percent.
The national unemployment rate for January was 6.6 percent.
Charles Colgan, an economist and chairman of the Community Planning and Development Program at the University of Southern Maine’s Muskie School of Public Service, said the state’s lower jobless figures are as much a result of slow growth in the labor force as brisk hiring.
About 7,000 Mainers found jobs in the 12 months before Jan. 31, almost as many as during the pre-recession years of the mid-2000s. But, Colgan noted, the labor force – those working or actively looking for work – grew by less than 1,600 during those 12 months.
Maine’s labor force grew faster before the recession. It jumped by nearly 9,000 people from January 2005 to January 2006, and by 7,000 people the next year, before falling as the recession took hold in 2008.
In the past two years, Maine’s labor force has grown by fewer than 2,000 workers.
Although solid job growth with slow growth in the labor force reduces the unemployment rate, Colgan said, half of that equation bodes ill for the state’s future economic vitality.
“We’re going to see unemployment rates at 4 percent, but that’s going to reflect the tighter labor market,” he said.
Employers that want to expand or relocate are more likely to do so in a state where the labor force is growing rapidly, he said, so they can be sure of having an ample supply of workers. If Maine doesn’t have a growing labor pool, employers already in the state will have to pay higher wages to draw workers from elsewhere.
That also hinders the growth of companies, because even a thriving business will have to scale back expansion plans if it costs more to attract talented new workers.
Caroline Kendall, director of marketing for Liquid Wireless, a mobile-device marketing firm in Portland owned by the magazine and sweepstakes giant Publishers Clearing House, said it is relatively easy to attract employees from Maine colleges because they already have an appreciation for the state.
For potential hires who haven’t been in Maine, selling them on the state takes a little more work. “We have to show them the possibility,” she said.
While it has become a little easier to draw workers to Portland in recent years, given the city’s growing reputation for livability and its vibrant food scene, too many Mainers still leave the state for college and don’t come back, she said.
“We have to bust that trend,” Kendall said. “I don’t want to be the call center capital of the United States.”
Colgan said a low unemployment rate, if caused by slow growth in the labor force, actually is a sign of a sluggish economy.
He noted that the last time Maine had an unemployment rate consistently below 5 percent was in the late 1980s. But people were flocking to the state then, and a rapid increase in new businesses and companies moving to or expanding in Maine was more than enough to offset strong growth in the labor force.
Although the current unemployment picture is improving, the state has yet to recover all of the jobs it lost during the recession. Overall employment in January was 665,701, compared with 670,353 in January 2007.
The Bureau of Labor Statistics’ figures show that southern Maine still is driving much of the state’s economic growth.
Portland’s unemployment rate was 5.4 percent in January, down from 6.9 percent a year earlier, and it added about 6,500 jobs during that time. Lewiston-Auburn’s unemployment rate was 6.1 percent, down from 7.8 percent a year earlier. Bangor’s jobless rate fell to 6.3 percent, from 7.7 percent in January 2013.
Metropolitan area statistics are not seasonally adjusted, so they are often subject to sharper swings because they don’t account for normal seasonal variations in the labor force and employment.
Edward D. Murphy can be contacted at 791-6465 or at: