More Job Losses are Expected in Maine as the Recession is Going On
JOBLOSSES
Bangor Daily News
Guanlei Ren
Boston University Washington News Service
December 08, 2008
WASHINGTON—For Michael Lynch, a junior at the University of Southern Maine, it’s a tough time to be looking for a job. But it could be worse if he lived in some state other than Maine.
As bad as the recession-driven employment picture is in Maine, it’s slightly better than in the nation as a whole—though that may not be much of a consolation for someone seeking a job.
Lynch is a full-time musical theater student. Starting this summer, when he transferred to the university’s Portland campus, he had been looking for part-time jobs. Until a month ago, he didn’t get one.
“It’s pretty hard to get jobs in Maine,” Lynch said. Because of the bad economy, several of his friends who are also students couldn’t find part-time jobs as well. He said that a lot of people in Maine spend two hours each way commuting to Boston to work.
Like Lynch, people find that it is getting harder to find either part-time or full-time jobs not only in Maine but also the whole country.
In November, the nation shed 533,000 jobs and the unemployment rate rose to 6.7 percent, a 15-year high, up two-tenths of a percentage point from October, the Bureau of Labor Statistics reported Dec. 5. The jobless rate is likely to peak at 8.5 to 9 percent sometime late next year, many economists have predicted.
For now, the picture is a little bit brighter in Maine, where the October jobless rate was 5.7 percent, better than the national rate but still the worst since September 1995.
“The national slowdown is definitely affecting folks in Maine,” said Adam Fisher, spokesman for the Maine Department of Labor. “We know that more people are losing their jobs.”
According to the department’s Center for Workforce Research and Information, Maine had a net loss of 5,600 nonfarm jobs through October since the current recession began a year ago.
“The unemployment rate is rising over the last year in virtually all the states,” said Glenn Mills, director of economic research at the center. “The downturn is affecting Maine as well as other regions.” Unemployment insurance claims have been up significantly in recent months.
According to Mills, the largest job losses in Maine since last December were in the construction, retail trade and accommodations and food services sectors, which lost 2,100, 2,100 and 1,600 job losses respectively.
Mills said job losses “were impacted by a range of factors, especially the housing crisis and high gas prices and poor weather in the summer, which moderated tourism from usual levels.”
A middle-high end restaurant owner who didn’t want to identify herself or her business said her customer loss was very significant and her profit was down roughly 30 percent. . People tended, she said, to flock to McDonald’s.
One of her customers, a building contractor, already has lost in December four contracts , the restaurant owner said.
“The economy is slowing down,” said assistant professor Karen Buhr at the University of Maine. “There is not as much of a demand for new things to build, new offices, new stores or new houses.”
“The housing crisis is hurting Maine uniquely,” Fisher said. “We produce a lot of the building materials.”
People are also having difficulty borrowing money in the face of the credit crunch, Buhr said. “If people don’t have a lot of extra money or they are less certain about how stable their jobs might be, they might be less likely to go out and buy a lot of extra things.” That, in turn, leads to more job losses in retail trade.
Freedom Power Equipment runs a sales and repair service for lawn and garden equipment in Bangor. Bob Cousins, the manager of the company, said “more people are fixing their older equipment to make it last than they are replacing them.” His company does a big repair business and, he said, it has been quite busy this year while sales of new equipment have slowed. Although the sales have been fair this year, “we could see a drop,” Cousins said.
“I think everything in the whole country is feeling [the recession,]” he said. “Our suppliers that we buy from have cut back on inventories that they keep.” As some plants closed their business and some manufacturers reduced their products, Cousins has found some things hard to get.
The six-employee company hasn’t had to lay off any workers so far, Cousins said, and he hopes there’ll be no layoffs in the future. “But we don’t know what’s going to happen,” he said. “What I think is happening is the cost of everything we deal with is making it very hard to make a profit.”
The Maine Consensus Economic Forecasting Commission recently revised its outlook for next year, predicting that the average unemployment rate in Maine is expected to climb to 6.1 percent and that 4,300 wage and salary jobs will be lost. Job losses will still be concentrated in the construction, manufacturing, trade and leisure and hospitality sectors, the commission said.
There are a few economic bright spots. From last December, 1,500 job gains were recorded in the professional and business sectors and 900 more in education and health services, according to the Center for Workforce Research and Information’s Mills. Those job gains are also expected to continue in the next year, according to the forecasting commission.
Compared with states with a “high concentration of industries that are doing poorly,” such as Michigan and Ohio, both heavily dependent on auto manufacturing, “we are not performing extremely well, but not as badly,” Mills said.
Piscataquis County, in central Maine, had the highest unemployment rate in the state in October, 9.1 percent, well above the national average. Other counties, such as Franklin, Oxford, Somerset and Washington, also have jobless rates greater than the national rate.
Mills explained that much of that region is sparsely populated, heavily forested and has a higher than average concentration of jobs in forest products industries – logging, paper manufacturing, sawmills – and other industries in decline or adversely affected by the falloff in construction and the general economic downturn.
As to the current recession, Buhr said: “I hope it’s shorter rather than longer. I really don’t know how long it will go.”
The recession and the rising jobless rate are challenges not only for the federal government but also for the state. Lowering taxes is probably a way to solve the problem, Buhr said. But that, she added, would mean less revenue for government to spend to meet these economic challenges.
“It’s a tradeoff,” Buhr said, and governments will have to find the right balance. “There isn’t a perfect answer.”
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