Commentary

Mills’ ‘Back to Work’ program not helping Maine’s stagnant unemployment rate

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The unemployment rate in Maine remained stuck at 4.8% for the fifth straight month, according to recent report from the Maine Department of Labor (MDOL)

Despite adding 3,000 jobs last month, the state’s jobless rate has remained the same, and though it is below the national average of 5.9%, it is likely an understatement of real unemployment in Maine. The metric doesn’t count Mainers who are unemployed but have stopped looking for work.

Maine’s labor force participation rate now sits at 60.2%, up 1 percent from this time last year but down 2.4% from February 2020.

In line with MDOL’s release, the Bangor Daily News reported, “If Maine’s labor force participation rate stood at its pre-pandemic level, another 26,400 Mainers would be counted as jobless and the unemployment rate could be as high as 8.4 percent, according to state labor officials.”

It’s worth noting that peak pandemic unemployment in Maine was 9.1% in April 2020. In 13 months, tens of thousands of people have left the labor force altogether. Had they not, our state’s unemployment rate would be a measly 0.7% better than it was at its worst time during the pandemic. 

The above graph, from the St. Louis Federal Reserve Bank, shows the stagnant unemployment rate over time, which is now still significantly higher than that of January 2020.

Mainers who left the workforce during the pandemic have not returned due to several reasons.

The first is that child care still remains a barrier for some. School is not in session, and hundreds of child care facilities across the state remain closed as the state still limps its way out of the pandemic. Parents need a place for their kids to go if they’re going to work, and for many, that just isn’t an option at the moment. 

Despite more funding for the sector, the Mills administration has committed no meaningful action to quickly reduce barriers for local child care centers or family care providers. It remains a costly, over-regulated industry in Maine and the administration has not taken real action to immediately expand child care capacity and accessibility.

They are not acting to eliminate this barrier to Maine families, and so parents are staying home with their kids.

Secondly, the enhanced unemployment insurance extended through March’s American Rescue Plan Act remains an incentive for many to stay home.

Paying out incredibly lucrative benefits, the program is keeping some of those who may otherwise be working at home. In response to the labor shortage, Gov. Janet Mills implemented a back-to-work program in June with generous bonuses to incentivize workers to get off unemployment and start a new job. Because she did not opt out of the enhanced federal benefits, though, basic math could forecast the failure of the program.

The original plan offered bonuses between $1000 to $1500 for individuals who work a new job for eight straight weeks. Neither is larger than the sum an individual can receive by remaining on federal pandemic benefits, however, which is an additional $300 per week – in addition to state unemployment benefits – until early September. 

The governor’s back-to-work program, though it had potential, has been a failure thus far. 

Though a complex issue with several underlying causes, the unemployment problem in Maine remains a situation that can and must be addressed. The Mills administration has taken little meaningful action to enable Mainers to get back to work after the pandemic, and we continue to see stagnant unemployment as a result.

About Nick Linder

Nicholas Linder, of Cincinnati, is a communications Intern for Maine Policy Institute. He is going into his second year of studying finance and public policy analysis at The Ohio State University. On campus, he is involved with Students Consulting for Nonprofit Organizations and Business for Good.

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