Maine’s job recovery stalled in September amid a spike in the number of COVID-19 cases, hospitalizations and deaths in the state.

Nonfarm jobs fell by 3,000 over the month, according to early seasonally adjusted estimates the Maine Department of Labor issued Friday. Maine’s unemployment rate in September was virtually unchanged from the previous month at 4.8 percent.

There were 6,500 fewer jobs in Maine in September than in July, the pandemic-era peak for Maine’s workforce, the department reported. The workforce is the number of people who either have a job or are looking for one.

During the pandemic, labor market recovery has had an inverse relationship to the prevalence of coronavirus, said state labor economist Glenn Mills.

Maine added thousands of jobs in the spring and summer of 2020, before job recovery stalled during a surge of infections last fall and winter. The same pattern repeated during a spring wave, followed by the recent surge of infections fueled by the virus’ delta variant.

“When there is a surge, there is a flattening of jobs in Maine,” Mills said in an interview. “The effect is clear on the labor market now.”

The biggest shares of job losses last month were in education, manufacturing, professional and business services, health care, and social assistance. Overall, Maine had 28,000 fewer jobs than immediately before the pandemic, the labor department reported.

September’s job losses occurred at the same time tens of thousands of Mainers lost access to federal unemployment benefits, including an extra $300 a week. Some conservative politicians and economists blamed those benefits for holding people back from taking thousands of open jobs, though researchers consistently found unemployment pay did not seriously prevent people from looking for work.

In states that cut off the $300 check, the workforce has risen no more than it has in the states that maintained the payment. That federal aid, along with two jobless aid programs that served gig workers and the long-term unemployed, ended nationally on Sept. 6. Yet America’s overall workforce actually shrank that month, The Associated Press reported.

“Policymakers were pinning too many hopes on ending unemployment insurance as a labor market boost,” Fiona Greig, managing director of the JPMorgan Chase Institute, which used JPMorgan bank account data to study the issue, told AP. “The work disincentive effects were clearly small.”

Labor shortages have persisted longer than many economists expected, deepening a mystery at the heart of the job market. Companies are eager to add workers and have posted a near-record number of available jobs. Yet unemployment remains elevated. The economy still has 5 million fewer jobs than it did before the pandemic, and job growth slowed in August and September.

“I think we can finally put that theory to bed,” said Arthur Phillips, a policy analyst at the Maine Center for Economic Policy, about the idea that generous unemployment aid kept jobless people out of the workforce. “Data from 26 states that got rid of supplemental benefits before the September cutoff … national data from September and Maine data from September point to a very negligible impact on employment.”

Instead, familiar factors – inadequate child care, health concerns and a mismatch between available jobs and workers’ skillsets or access to employment – are preventing a full labor market rebound.

About a third of workers surveyed by the Maine Department of Labor in July said a lack of jobs fitting their skills was the biggest barrier to returning to the workforce. Almost 30 percent of the 2,600 respondents said wages were insufficient to cover expenses, and 15 percent said they had no child care.

“Investing in child care supply and affordability and taking every opportunity to gain the skills workers say they need are big-picture ways to grow the Maine economy and get people back to work,” Phillips said.

The headwinds facing Maine’s labor market recovery are more complicated than just generous unemployment benefits, said Dana Connors, CEO of the Maine State Chamber of Commerce.

“One of the things that puts us in a challenging place is that we had a workforce challenge before the pandemic, but the pandemic exacerbated it and made it so much worse,” he said.

Each viral wave sets the recovery back again, even as vaccination rates rise in the state and economic demand blossoms, such as in the tourism industry, Connors said. Businesses are making do by offering higher wages, better benefits and more flexible schedules, but there are few easy solutions, he added.

“There is a tendency for all of us to look for a single factor and a single reason, but there are a multitude of factors that go into the rise and fall of employment and the situation we find ourselves in,” Connors said. “The truth of the matter is, we are experiencing an unusual time in our lives in an unusual crisis.”


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