Maine’s recovery from the shockwave of layoffs in the early days of the coronavirus pandemic ground to a halt in November, while continued low participation in the labor force masked the full gravity of continued joblessness in the state.
A worsening rate of COVID-19 infection and seasonal layoffs are likely contributing factors to the flatlining of Maine’s job recovery rate. The state remained down nearly 50,000 jobs in November compared with February’s pre-pandemic numbers.
The state actually lost a net 500 jobs last month, according to a monthly employment report issued Friday by the Maine Department of Labor. The hospitality and leisure sector shed 900 jobs, which was partially offset by a gain of 500 jobs in financial services. Job numbers in other sectors changed little from October to November, the department reported.
Job recovery has slowed every month since a sharp uptick in June.
A surge of hiring was triggered when many businesses were allowed to reopen after enforced closures and restrictions in April and May, along with federal assistance including the Paycheck Protection Program, which offered forgivable loans to small businesses and nonprofits to cover payroll.
The trajectory of Maine’s job recovery mirrors the national trend, said Glenn Mills, deputy director of the Maine Center for Workforce Research and Information.
“Adjusted for population and labor force growth, Maine is doing about as well as the nation recovering from the spring shock caused by the virus,” he said.
Overall, Maine has recovered about 55,800 jobs since February’s pre-pandemic total, but that number is still down 48,700 jobs from February, the labor department said. The state’s total number of nonfarm payroll jobs in November was 588,600.
Dining, lodging and entertainment, the businesses with the worst job losses during the pandemic, have likely been hurt again by a recent coronavirus surge, Mills said. Restaurants in particular may have to conduct layoffs to manage reduced demand and the difficulty of winter outdoor dining.
“The fall surge appears to be impacting behavior, including fewer people venturing out to eat and fewer jobs in food services,” Mills said.
A continuing surge of COVID-19 infections, hospitalizations and deaths could further impact consumer behavior, and it is unclear how much it will affect holiday shopping locally, Mills added.
“It is clear that the economy cannot return to full health until the virus has been much more contained,” he said. “The distribution of vaccines that is underway certainly is an important part of the equation.”
The official unemployment rate dropped less than half a percentage point to 5 percent, the labor department reported. That rate does not take into account a dramatic drop in labor force participation. About 22,000 fewer Mainers were actively participating in the labor market compared with February. If those workers were still in the workforce and looking for a job, the unemployment rate would be closer to 8 percent, the department said.
A sputtering job recovery puts more emphasis on Congress to agree on a new stimulus package soon, said Michael Hillard, an economy professor at the University of Southern Maine.
“At the labor market level, there was a bounce-back in the summer – we got halfway back and we have been stalled there ever since,” Hillard said. “We are in for a tough three to six months. Congress looks like it is finally going to pass something, which will help, but will it help enough?”
Congressional leaders are negotiating details of a $900 billion relief bill that would extend federal unemployment programs into next year and add a supplemental weekly payment, give Americans stimulus checks, fund a new round of small business loans and support COVID-19 vaccine distribution.
But it does not include direct aid to state and local governments, a crucial way to prevent public sector job losses and shorten economic recovery, Hillard said.
A prolonged recovery would make it harder on people who have dropped out of the workforce to get back on a career track, he added. It also could damage the small businesses that survive but are burdened with debt or bad credit.
“There is a lot of insidious damage that does not show up by sector or in the jobs numbers,” Hillard said. “We could have the economy dragging for a couple years because of state and local losses that continue without federal aid. We could in fact not just flatline, but have some regression in the labor market and the level of economic activity for months.”