Maine’s unemployment rate jumped to nearly 10 percent in July as the Mills’ administration joined a number of states applying for added federal benefits for jobless workers ordered by President Trump.

The state’s jobless rate increased by more than 3 percentage points to 9.9 percent from 6.7 percent in June, but state economists said July’s rate is more accurate than earlier unemployment figures, and that a lack of participation in the labor market prior to July had led to artificially low jobless rates for Maine.

“The unemployment rate this month for the first time actually is a pretty good indicator of the workforce hardship and job displacement that has occurred,” Maine Department of Labor economist Glenn Mills said in a call with reporters Friday.

Rising unemployment is typically a bad sign, but in this case it indicates greater activity in the labor market, Mills said. To be counted as unemployed, people must be willing to work and looking for a job. This spring, many workers temporarily dropped out of the labor market because it was impractical for them to look for work during the pandemic, or because they believed they would be called back to work by their employer.

Those complications caused a misclassification of workers in the household surveys used to compile the jobs report, which led to misleading unemployment rates.

“With more people back in the labor force, that makes for more unemployed people,” Mills said. “This is a very positive indication that people are feeling more comfortable going out looking for work, and employers are hiring.”

In the face of a historic labor crisis, Maine will apply for a Federal Emergency Management Agency grant to temporarily provide $300 in added benefits per week to those filing unemployment claims.

Trump established the Lost Wages Assistance program by an executive action this month after a $600-per-week benefit expired. Congress and the White House have failed to reach an agreement on legislation that would provide enhanced benefits over the long term.

If Maine’s grant application is approved, it would receive funding to cover extended benefits for three weeks and money on a weekly basis thereafter, if funding lasts. The program only has $44 billion of funding behind it.

It is unclear, however, when the funding will be available. The state labor department said it will need to establish a new system to distribute benefits, which could take at least three weeks to create.

“Our administration will do whatever we can to put money into the pockets of Maine people and get them through these difficult times, but it is clear that Congress and the (Trump) administration in Washington must step up and replace short-term measures like this with a serious and comprehensive coronavirus relief package that supports Maine families and small businesses,” Gov. Janet Mills said in a statement.

Maine added more than 10,000 jobs in July, nearly half in the leisure, hospitality and retail trade sectors. There were about 60,600 fewer jobs in the state than in February, before the pandemic disrupted the labor market, the department said.

“The increase in unemployment in July is due to a surge in labor force participation, which causes these estimates to more fully reflect the job displacement that has occurred as a result of the pandemic than estimates for the previous three months did,” the Maine Department of Labor said in a news release.

The number of jobs in nearly every sector remained below their level in February. Restaurants, hotels and other hospitality businesses, still had about one-third fewer jobs than before the pandemic hit, even at the height of Maine’s typically busy tourism season.

Unemployment is also higher in southern Maine, a part of the state that is densely populated with large clusters of hospitality and retail businesses, said Mills, the labor department economist. York and Cumberland counties, which typically have stronger economies than other parts of the state, are among the areas with the highest unemployment.

“I have never seen York and Cumberland county on the upper half of unemployment in our state,” he said.

Population density and higher rates of COVID-19 spread in southern Maine are likely factors in the high unemployment and sluggish recovery, he added.

“In the areas with more population density, it is simply a more challenging environment,” Mills said.

Western Maine, Somerset, Oxford and Franklin counties have the highest rates of unemployment, which is not unusual in summer, he said.

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