Maine’s labor market recovered slightly in May, but the full extent of the blow to the state’s workforce in the past two months is obscured by inaccurate data used to tabulate the official unemployment rate.

The state’s estimated unemployment rate declined to 9.3 percent in May, dropping 1.3 percent from April, but it does not include tens of thousands of workers who were misclassified or not counted as unemployed in surveys used to determine the rate, state labor economists said.

If those workers were included, the number of people classified as not working in May would total more than 125,000. That would produce a true unemployment rate of roughly 18 percent, meaning nearly one out of five Maine workers was out of a job in May.

The official rate “is not fully reflecting the hardship that is occurring – we are aware of that,” Glenn Mills, an economist at the Maine Department of Labor, said during a conference call with reporters Friday. “There is more to the story than 9.3 percent.”

Maine employers created 14,300 jobs in May, the largest monthly gain on record. Most of the jobs were created in sectors such as leisure and hospitality that were hit hard by layoffs in March.

Jobs created by private employers were offset by a loss of more than 4,000 public sector jobs, mainly in state government, according to the department.

The employment situation remains dire, even with incremental recovery. Maine lost more than 90,000 jobs between February and May. Every sector, including health care, manufacturing, retail, professional services, wholesale trade, education and government, has lost jobs in the past three months.

Leisure and hospitality businesses – including hotels, restaurants and bars, which were some of the first businesses to shut down as the pandemic hit Maine – had half as many workers in May as they did in February, the department said.

It is unclear whether jobs created last month were primarily part- or full-time positions. Hospitality had the biggest gain, adding more than 6,000 jobs, and retail businesses added about 3,800 jobs.

Both those sectors tend to have many more part-time employees than other sectors and industries such as manufacturing, which primarily offers full-time jobs, Mills said.

“The biggest bounce-back is in hospitality, which has a high preponderance of part-time jobs,” he said. “So I’m guessing that there is a higher share of the bounce-back that is part time. I can speculate that, but I can’t prove it.”

Unemployment varies by region, although no Maine county had an official unemployment rate lower than 7 percent in May. Waldo County, at 7.6 percent, and Washington County at 7.7 percent, had the lowest unemployment rates in the state.

Southern Maine, where community spread of the virus delayed the reopening of businesses, had some of the highest jobless rates. Cumberland County recorded a 10.3 percent unemployment rate. York County was at 9.4 percent, similar to Penobscot and Androscoggin counties.

Western Maine had the highest jobless rates, with Franklin and Oxford counties just below 11 percent.

Maine’s official unemployment rate for May is lower than the 13 percent U.S. rate or the nearly 14 percent rate in New England, Mills said.

Maine had the lowest unemployment rate of any New England state, well below Massachusetts, Vermont, New Hampshire and Rhode Island, and slightly below Connecticut.

U.S. employers added 2.5 million jobs in May as states reopened their economies and employers used federal financial assistance to rehire staff. The same data issues complicated the national picture, and the U.S. Bureau of Labor Statistics reported the true unemployment rate was closer to 16 percent.

The pandemic has complicated data collection and likely resulted in under-reporting of jobless figures, Mills said. First, to be counted as unemployed, workers typically have to be actively looking for a job. In April and May that didn’t happen, so those workers were not counted, he said.

Roughly 31,000 workers have dropped out of the workforce since February, and labor economists suspect they should have been counted among the unemployed.

“Because so many people could not engage in work search, they were not counted in the labor force,” Mills said.

Another 32,600 workers were misclassified by survey-takers from the Bureau of Labor Statistics. Those workers were furloughed from their jobs but intend to return, Mills said. Instead of coding them as “temporarily unemployed,” they were instead classified “employed, not at work,” as they would be if they were on vacation or medical leave.

Publicly funded business aid, such as the Paycheck Protection Program, or PPP, likely supported job growth and staved off deeper job losses. The federal program offered forgivable loans to businesses to retain and rehire staff and pay some essential costs such as rent and utilities.

The funding helped many small employers in Maine avoid layoffs and pay costs as revenue dried up. Restrictions that some public-facing businesses such as restaurants cited as significant drawbacks to the program were relaxed under a new law passed this month.

Maine businesses received more than 25,700 forgivable loans worth $2.2 billion from the program between April and the end of May, according to the U.S. Small Business Administration.

“I’m sure PPP is a factor in the bounce-back this month, (but) the extent to which it is a factor is not clear,” Mills said.

The program was established with lightning speed, and there is no apparatus to count the number of jobs it saved or created, he added.

“There is reason to hope – I don’t predict – that PPP for next month will cause another gain in jobs,” he said. “I’m sure it was a factor in May and hopefully (will be) a factor in June.”


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