In September, the dating committee — it has nothing to do with matchmaking — of the National Bureau of Economic Research declared that the Great Recession of 2008-09 officially ended in June 2009.

Their judgment is based on an extensive review of a wide variety of measures of economic activity, including inflation-adjusted production and income, employment, industrial production and wholesale-retail sales.

For most participants in the economy, this intricate parsing of data at a time of still falling employment is largely irrelevant, like a doctor worrying about cholesterol levels in a patient who is bleeding to death.

For this reason, it is useful to look at the business cycle as it has played out in Maine purely in terms of job gains and job losses.

For 89 months — from January 1983 through June 1990 — the Maine economy created 119,530 jobs, or 1,343 per month.

Then for nine months it slipped into recession and lost 8,192 jobs.

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In both the expansion and the contraction phases of this cycle, the state’s labor force (the total of those with jobs plus those actively looking for jobs) grew — by approximately 1,200 per month during the expansion phase and by approximately 1,700 per month during the nine-month downturn.

The next expansion phase ran for 119 months — from March 1991 to February 2001 — and saw the creation of 56,642 jobs, an average increase of 476 per month.

This was followed by another brief eight-month contraction running to October 2001 that saw the loss of 5,594 jobs.

In this cycle, the labor force continued to grow, but at a much lower rate — only 203 per month in the expansion phase and only 86 per month in the contraction phase.

Our next expansion phase ran 77 months — from October 2001 to March 2008. It saw the creation of 30,265 jobs, for an average of 393 per month, and an increase of 35,673 in the labor force, for an average of 463 per month.

In this phase, interestingly, the labor force grew more than employment. This was a reflection of Maine’s relative escape from the high-tech bust and a period of positive in-migration memorialized in the Brookings Report by the phrase that Americans were “voting with their feet” for Maine.

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Then came a bust Maine couldn’t escape.

Over the 29 months from March 2008 to August 2010, Maine lost 33,233 jobs, 3,000 more than we had gained in the entire 77 months of the previous expansion.

comparison, the eight-month contraction in 2001 lost about 10 percent of the jobs created in the prior expansion, and the nine-month contraction in 1990-91 lost about 7 percent of the jobs created in the prior expansion.

Clearly, the Great Recession is different — three to four times longer and 10 times greater in relative job loss.

Perhaps even more important has been the impact on our labor force.

In the previous two contractions, Maine’s labor force continued to grow — by more than 1,700 per month in 1991 and by 86 per month in 2001.

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Since March 2008, in contrast, 10,828 people have left Maine’s labor force. Some have retired, some have moved away, some have gone back to school — look at the exploding enrollment in our community colleges — and some have simply given up looking for jobs.

This, I am convinced, reveals our most pressing economic challenge.

This recession has gone on for so long, has touched so many people and has left us so weakened that it has left us less capable of recovery.

We’re like a patient whose illness has left him drained of the reserves previously used to get him back up and going.

If jobs do begin to appear again, we’re less ready to fill them. So many people have left the labor market that filling new jobs will be much harder than in 1992 and 2002.

Employment recovery in 2011 and subsequent years will not simply be calling back those who were laid off in 2008-10. Many just aren’t there, and many (if not most) don’t have the skills required for the jobs that could appear.

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And that’s why the key to this recovery is less about the unemployment rate and more about the labor force and the participation rate.

We must find ways to reach those who have left the state, those who have retired and those who have given up looking for work and link them to learning opportunities that will return them to the labor market.

That is the challenge facing Maine today. 

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at: clawton@maine.rr.com

 


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