As the U.S. economy moves — apparently — into a steadier growth cycle, it is important for Maine policy makers to understand the ways Maine is — and is not — connected to the broader national economy. Probably the most important of these connections is the labor market. How did the so-called Great Recession of 2007-09 and its so-far anemic recovery hit the labor market in Maine compared to the nation as a whole? And what does this relative comparison tell us about our prospects for the future?

Between the end of 2007 and the end of 2009, Maine lost just over 29,000 jobs, amounting to just over 4 percent of our civilian labor force. The number of our unemployed jumped by nearly 25,000, an increase of over 74 percent. Clearly, this was a big hit. But it was not nearly as severe as the national drop. Over the same period, the U.S. as a whole lost over 8.2 million jobs, nearly 6 percent of the labor force, and the number of unemployed rose by nearly 7.5 million, nearly double the number just two years earlier.

Why did Maine escape less damaged from the economic cataclysm of the middle of the last decade than the nation as a whole? While comparing wounds and debating who suffered more may seem self-indulgent and counterproductive, it is, in this case, instructive and can help us better recognize the challenges we face in the future.

The major reason Maine escaped less scathed from the Great Recession is our much-maligned demographic imbalance. At the end of 2007, Maine’s labor force participation rate — the share of our population age 16 and older that was either employed or looking for work — stood at just over 66 percent, nearly identical to the U.S. rate. Over the two recession years, Maine’s participation rate fell just over 1 percent and has held relatively steady since then. For the nation as a whole, the participation rate fell more than 2 percent during the recession, and another 2.5 percent since “recovery” began.

In short, the phenomenon of people dropping out of the labor force — to go back to school or to just give up looking for a job — has been less true in Maine than in the rest of the country. Yes, we lost a lot of jobs during the recession, but those of us who didn’t, held on to them. And our labor force didn’t grow fast enough to add much to the unemployment problem.

But this demographic buffer threatens to work against us in the future. Consider the potentially employed as the fuel for our future recovery. If the national labor force participation rate in November 2013 had been what it was in December 2007, we would have more than 4.6 million people looking for jobs — a challenge to our education and training institutions, yes, but still the human basis for economic sustainability.

Apply the same logic to Maine, and we would have an additional 5,700 people looking for work, about the same number of people as now work for BIW or L.L. Bean. This too would be a challenge to our education and training institutions, but it is hardly the basis for maintaining our economic future. The demographic buffer that eased our pain during the recession now threatens to accentuate that pain in the future. Even if those of us reaching “traditional retirement age,” continue to work at double the current participation rate of the 65-plus age cohort, it won’t be sufficient to maintain, much less grow or improve, our economy. The hard fact is that Maine must attract more people to come here to work, not just to sightsee and retire.

Charles Lawton is chief economist for Planning Decisions Inc. He can be reached at:[email protected]

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