Daily Catch

Leisure and hospitality sector suffering most among struggling Maine industries

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Since the beginning of the COVID-19 pandemic, the website MoneyGeek has been analyzing unemployment in state economies by sector and updating information on the number and percentage of jobs lost as new data becomes available. The number of jobs in Maine in the month of February 2020 is a good point of comparison to evaluate the impact of Governor Janet Mills’ lockdown of the state economy.

MoneyGeek estimates Maine’s peak COVID-19 unemployment will be about 32 percent, or about 208,000 jobs, reflecting a 170,000 increase from the 30,000 unemployed residents in February. According to the Maine Department of Labor, unemployment reached 10.6 percent in April. Unemployment statistics for the month of May will not be released until June 19.

Given the positive new jobs report released last Friday, MoneyGeek’s estimates are likely too high given their methodology of calculating temporary unemployment levels. However, April’s unemployment numbers likely will not represent Maine’s peak COVID-19 unemployment.

According to the Maine Department of Labor, unemployment reached a peak of 8.3 percent during the Great Recession. It is remarkable that the current unemployment levels in Maine are unprecedented in the last two decades in absolute numbers, as well as in percentage of the labor force.

The number of unemployed individuals in Maine during the 2008-09 financial crisis was close to 60,000. As seen in the numbers, economic restrictions in the last three months have been devastating for the job market in the state.

As far as economic impacts are concerned by sector of employment, the leisure and hospitality sector in Maine is the worst-hit. Since February 2020, 35,100 leisure and hospitality jobs have been lost statewide according to MoneyGeek. This amounts to a 59.4 percent wipeout of the jobs in this sector. The Maine Department of Labor says 42,600 jobs were lost in this sector between February and April.

This loss of leisure and hospitality jobs is understandable given that travel and vacation plans have been put on hold for many people due to the perceived risks of traveling, along with the Mills administration’s 14-day quarantine and alternative testing requirements.

The education and health services sector comes next in terms of job losses with 18,100 jobs lost, or an almost 14 percent decrease in employment since February. The trade, transportation, and utilities sector has lost 14,500 jobs which is a 12.6 percent decline since February.

All other industries have recorded a total drop of 26,500 in the number of employees, for a combined total of an estimated 94,200 jobs lost. The data were compiled by MoneyGeek using state and national figures furnished by the Bureau of Labor Statistics. All the numbers discussed above pertain only to the non-farming sectors, with no data being available currently for job losses in the farming sector.

Metropolitan and urban areas in Maine have already experienced heavy job losses and are projected to report more unemployment. MoneyGeek predicts a total of 66,700 job losses in the Greater Portland Area alone. The prediction for the Greater Lewiston Area is 17,100, and for Bangor, 21,800. Since these metropolitan regions of Maine employ the bulk of non-farming professionals, they are likely to be most affected by this downturn.

As of Tuesday, Maine has reported 2,495 confirmed cases of COVID-19 with 101 deaths related to the virus. Many small businesses have questioned the necessity of such a comprehensive lockdown when the economic repercussions appear to be quite severe as well. Governor Mills just announced yesterday a speedier reopening for businesses in Androscoggin, Cumberland and York counties, whose reopenings lagged behind the rest of the state.

Given recent changes to the state’s reopening plan, economic activity is expected to gradually emerge from its frozen state over the next three months. In September, the final decision will be made regarding lifting the lockdown completely, without any limits on businesses or the gathering of people.

If the lifting of restrictions continues at the current pace, and hopefully even accelerates, we can expect some of the jobs lost in Maine to be restored very soon.

About Lakshya Bharadwaj

Lakshya Bharadwaj graduated from Berea College in May 2019 with majors in Economics and Political Science and a minor in Math. He studied for a Master of Public Administration at Ohio State University for a year, but is currently taking a break and pursuing a Master of Financial Economics at University of Maine beginning in Fall 2020.

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