June 19, 2020
FOR IMMEDIATE RELEASE: June 19, 2020
Nonfarm Payroll Jobs Increased 14,300, Unemployment Rate Decreased to 9.3 Percent in May
AUGUSTA - Workforce conditions began to recover in May from the effects of the COVID-19 pandemic. The monthly payroll and household surveys indicate:
There was a net gain of 14,300 nonfarm jobs, mostly in the sectors that had the sharpest job losses in the previous two months
The number of nonfarm jobs remains 90,200 lower than in February
The unemployment rate decreased to 9.3 percent
Unemployment estimates continue to understate the magnitude of job displacement that has occurred in the last three months
Seasonally Adjusted Estimates
Payroll Survey Estimates The number of nonfarm payroll jobs in Maine increased by 14,300 in May, the largest monthly gain on record. The private sector added 18,400 jobs, primarily in the leisure and hospitality, manufacturing, retail trade, and healthcare and social assistance sectors, each of which had sharp job losses in the previous two months. Private sector gains were partially offset by a decrease of 4,100 jobs in the public sector, mostly in state government.
The 547,100 nonfarm jobs in May was down 90,200 (14.1 percent) from February, before the pandemic began to appreciably impact the labor market. Excluding April, this was the lowest monthly job total since October, 1996. Job losses since February effected nearly every industry sector. In May there were 86 percent as many jobs as three months earlier. In the leisure and hospitality sector there were half as many jobs and in the information sector there were three quarters as many jobs (the information sector includes movie theaters).
Of the three metro areas in Maine, the Portland-South Portland area continued to the be most impacted by the downturn. Covering most of Cumberland and much of York counties, reopening of certain types of businesses was delayed from that of most other counties in the state. There were 84 percent as many jobs in the Portland metro in May as February, which was lower than the 87 percent in the remainder of the state (including the Lewiston-Auburn and Bangor metros).
Household Survey Estimates The unemployment rate decreased to 9.3 percent from a revised rate of 10.4 percent for April. The number of unemployed people decreased to 62,100 in May from a revised 68,800 in April. Both the number and rate of unemployment were the second highest on record for a month after April's highs. The U.S. unemployment rate estimate for May of 13.3 percent was down from 14.7 percent in April.
Unemployment estimates for April and May do not fully reflect the magnitude of job loss that has occurred, either in Maine or the U.S., for two reasons. The first is related to work search and availability to work. To be counted as unemployed, a person must have engaged in work search activities in the previous four weeks, and they must have been available for work. The pandemic prevented thousands of people who lost a job and wanted a new job from engaging in normal work search activities because of the stay at home order and because of personal safety concerns. If not for the fact that they could not engage in work search, nearly 31,000 more people would have been in Maines labor force and counted as unemployed. As the table above indicates, there has been a sharp rise in the number of people not in the labor force since February.
The second issue causing estimates to understate unemployment is misclassification of people who were temporarily laid off and who expect to return to their job. Those people should have been classified as "temporarily unemployed" by survey interviewers. The U.S. Bureau of Labor Statistics, which establishes the parameters of the survey, has indicated that about 32,600 more people in Maine were classified as employed, not at work than usually is the case in May. BLS acknowledges that those people should have been classified as temporarily unemployed.
The combined effect of these two issues is that the official estimate of the number of unemployed (62,100) is about half of the actual number of people who would be counted as unemployed if they could have engaged in work search or were not misclassified. The Maine Department of Labors Center for Workforce Research and Information has developed alternative estimates including those two additional groups in the count of unemployed for May. Adding these groups, the unofficial unemployment rate in Maine would be 18 percent and the national rate would be 19.7 percent.
Data from these surveys raises certain questions about how it is collected and produced, its accuracy, and how to reconcile seemingly different indications of workforce conditions. We have provided some context to this information in a blog post -https://www.maine.gov/labor/cwri/employmentsituationFAQ.pdf . Please contact us if you have questions or need clarification.
Regional Household Survey Estimates The May unemployment rate estimate for New England was 12.7 percent. Rates for other states in the region were 14.5 percent in New Hampshire, 12.7 percent in Vermont, 16.3 percent in Massachusetts, 16.3 percent in Rhode Island, and 9.4 percent in Connecticut.
Not Seasonally Adjusted Substate Estimates
Unemployment rates increased from a year ago throughout the state. Increases generally were the largest in the most densely populated counties and smallest in the least densely populated counties, with some exceptions. The regional differential in unemployment rates in May is lower than usual.
The not seasonally adjusted statewide unemployment rate estimate of 9.4 percent for May was up from 3.0 percent one year ago. Unemployment rates were lowest for Waldo (7.6 percent) and highest for Oxford (10.9 percent) counties. The largest over the year increase was in Cumberland and the smallest was in Aroostook. Rates were the highest on record for May in Cumberland, Hancock, Kennebec, Knox, Lincoln, Penobscot, Sagadahoc, and York counties. Highs for other counties were in 2009 or the early 1990s.
May unemployment rates were the highest on record in two of the three metro areas: Portland-South Portland (10.3 percent) and Bangor (9.1 percent). The 9.2 percent rate for Lewiston-Auburn was eclipsed in 1991.
June workforce estimates will be published Friday, July 17 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/laus1.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.
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
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 last four years. For May 2020 it is 1.6 percentage points.
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
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.