Payroll Job Gains Continued; Unemployment Estimates Understate Labor Market Hardship in August

September 18, 2020

FOR IMMEDIATE RELEASE: September 18, 2020

Payroll Job Gains Continued; Unemployment Estimates Understate Labor Market Hardship in August

AUGUSTA - Workforce conditions continued to recover in August from the effects of the COVID-19 pandemic. The monthly payroll and household surveys indicate:

• Nonfarm payroll jobs increased 6,100 in August
• 49,200 jobs have been recovered since the April low; the August total remained down 55,300 from February
• The unemployment rate continued to move erratically, decreasing to 6.9 percent
• Unemployment estimates for August do not reflect the level of job displacement that has occurred since before the pandemic

Seasonally Adjusted Estimates

Payroll Survey Estimates The number of nonfarm payroll jobs in Maine increased by 6,100 in August. The private sector added 6,000 jobs, primarily in the leisure and hospitality, healthcare and social assistance, professional and business services, and retail trade sectors as they continued to rebound from sharp declines in the spring. Jobs in the manufacturing sector decreased 1,000. The shipbuilders strike in Bath was resolved after the survey reference week, so a rebound in the number of manufacturing jobs is likely in September. The public sector added 100 jobs, mostly due to hiring of temporary workers by the federal government for the 2020 Census.

The 582,000 nonfarm jobs in August is up 49,200 from the April low, but remained 55,300 (8.7 percent) lower than in February before the pandemic began to impact the labor market. The number of jobs remained below the February level in every industry sector. The highest rates of job loss between February and August were in the leisure and hospitality, information, manufacturing, and private education sectors. The largest net job losses were in the leisure and hospitality, manufacturing, and healthcare and social assistance sectors.

The jobs recovery continued throughout the state in August. After sharper job losses in the spring, the number of jobs in the Portland-South Portland metro remained ten percent lower than in February. Jobs remained down seven percent in the Bangor metro, five percent in the Lewiston-Auburn metro, and nine percent in non-metro areas.

Household Survey Estimates The unemployment rate decreased from 9.9 percent for July to 6.9 percent for August. The number of unemployed decreased 21,900 from July to 46,900 for August. The decrease in unemployment was partly from an increase in employment, but mostly from a decrease in labor force participation. To be counted as unemployed a person must have engaged in work search and been available to work.

Labor force and unemployment estimates for Maine have moved erratically from month to month in the period the pandemic has impacted the labor market. The U.S Bureau of Labor Statistics controls the parameters of the Current Population Survey (known as the household survey) and the estimating methodology. They indicate that unusually low response rates combined with the small sample size have adversely impacted the quality of this data in recent months. This degree of monthly variability has never occurred before.

Unemployment estimates for August significantly understate the level of job displacement that has occurred in Maine. If labor force participation was as high in August as it was in February, Maine's unemployment rate would be 9.9 percent. Users should be cautious interpreting this data, which is subject to revisions each year. Indications about conditions in the spring and summer of 2020 are likely to look very different after annual revisions than they do today, with much less monthly variability.

U.S and New England Household Survey Estimates The U.S. unemployment rate of 8.4 percent was down from 10.2 percent for July and the New England rate of 9.2 percent was down from 12.7 percent. August rates for other states in the region were 6.5 percent in New Hampshire, 4.8 percent in Vermont, 11.3 percent in Massachusetts, 12.8 percent in Rhode Island, and 8.1 percent in Connecticut.

Not Seasonally Adjusted Substate Estimates

The not seasonally adjusted statewide unemployment rate estimate of 6.2 percent for August was up from 2.3 percent one year ago. Unemployment rates were lowest for Hancock County (5.4 percent) and highest for Oxford County (8.0 percent).

Among the three metro areas, the unemployment rate was above the statewide average in Portland-South Portland (6.3 percent), and Lewiston-Auburn (6.7 percent) and below the statewide average in Bangor (5.7 percent).

September workforce estimates will be published Tuesday, October 20 at 10 a.m. (Data Release Schedule) https://www.maine.gov/labor/cwri/releaseDates.html .

This release is available here - https://www.maine.gov/labor/cwri/news/release.html

Labor force and unemployment data is available here - https://www.maine.gov/labor/cwri/releaseDates.html

Nonfarm payroll jobs data is available here - https://www.maine.gov/labor/cwri/ces1.html

Monthly workforce estimates are cooperatively produced and released by the Maine Department of Labor, Center for Workforce Research and Information and the U.S. Department of Labor, Bureau of Labor Statistics.

Notes

1. Preliminary seasonally-adjusted labor force estimates, including rates (labor force participation, employment, and unemployment rates), and levels (labor force, employed, and unemployed) tend to move in a direction for several months and then reverse course. Those directional trends are largely driven by a smoothing procedure and may not indicate a change in underlying workforce conditions. Annual revisions (published in March each year) tend to moderate or eliminate those directional patterns. A comparison of 2019 preliminary and revised estimates of labor force and unemployment rates, as well as nonfarm payroll jobs, is available at https://www.maine.gov/labor/cwri/blogs/2019workforcedata_revisions.pdf

2. The 90 percent confidence interval for statewide unemployment rates has been 0.5 to 0.7 percentage points above or below the published estimate for most months over the four years before the pandemic. It has increased in recent months. For August 2020 it is 0.8 percentage points.

3. To assess job growth, we recommend looking at nonfarm jobs from the payroll survey rather than resident employment from the household survey. The payroll survey is larger, has smaller margins of error, and is subject to smaller revisions. A 2016 blog on the differences in accuracy of the two measures provides more context at www.maine.gov/labor/cwri/blogs/imprecise_data.pdf .

4. Nonfarm payroll jobs estimates tend to be volatile from month to month because there is variability in the sample of reporting employers and their representativeness for the universe of all employers. Additionally, seasonal adjustment is imperfect because weather, the beginning and ending of school semesters, holidays, and other events do not always occur with the same timing relative to the pay period that includes the 12th day of the month, which is the reference period. This sometimes exacerbates monthly volatility. Users should look to the trend over multiple months rather than the change from one specific month to another. Estimates for the period from October 2019 to September 2020 will be replaced with actual payroll data in March 2021. Those benchmark revisions are likely to show less volatility than preliminary estimates do.