Boston Fed President Agrees: Many Mainers Still Struggling in Weak Labor Market

U6-by-state-for-report

Like MECEP, the Boston Federal Reserve Bank is looking deeper into Maine’s labor market statistics finding that employment prospects for Mainers are still nowhere near as good as they were before the recession.

Thanks to reporting from the Bangor Daily News’s Darren Fishell, we know that Boston Fed President Eric Rosengren is concerned about Maine’s large number of part-time workers who want more work but can’t find it and the lack of significant economic recovery outside of Greater Portland.

Rosengren pointed to a startlingly high number of Mainers working part-time who want more work but can’t find it. As covered in our recent analysis of Maine’s labor market recovery, of the 659,400 Mainers who had jobs in 2013, approximately 42,600 were part-timers unable to find full-time work. That’s the sixth highest rate of “involuntary part-time” employment in the nation. He also expressed concern that the number of these involuntary part-time workers hasn’t improved at all since the bottom of the recession. This confirms our analysis, which shows that Maine experienced the third-largest increase in involuntary part-time employment nationally from 2009 to 2013.

Rosengren also flagged Maine’s slow recovery in the most broadly-defined measure of unemployment: the “U6” unemployment rate, which accounts for involuntary part-time workers and unemployed workers who have recently given up their job search for any number of reasons. Maine’s U6 has improved little since the end of the recession, falling from 15% in 2009 to 14.1% in 2013.

Finally, he echoed MECEP’s analysis by noting that Maine’s economic recovery has been uneven across geography: the vast majority of job creation since the end of the recession has been located in the Greater Portland area.

President Rosengren’s remarks follow on the heels of Fed Chairman Janet Yellen, who recently raised similar concerns for the nation as a whole.

Data Note: Statistics on broadly-measured unemployment and involuntary part-time workers come from the Bureau of Labor Statistics’ “alternative measures of labor underutilization in the states”. They are released quarterly and present rolling four-quarter average. New data, presenting averages over the period from April 2013 through March 2014 (Q2 2013 through Q1 2014), are tentatively scheduled for release on Friday, April 25th.

What you should know about the Cutler property tax relief plan

Today, Eliot Cutler released a plan for providing property tax relief to Maine residents. The center piece is a dramatic increase in Maine’s homestead exemption program, elimination of revenue sharing as we know it, and a new approach to channeling revenue collected by the state to towns and cities.

The basic premise is that Mainers increasingly feel the bite of property tax increases and that our current three pronged approach to mitigating these increases – a modest homestead exemption, revenue sharing, and a program that provides targeted relief for low- and moderate-income Mainers – is no longer working.

What the Culter plan fails to acknowledge is that the primary reason these traditional approaches are falling short is because, with the exception of the homestead exemption, these programs have been gutted to pay for the 2011 income and estate tax cuts passed by the LePage administration and his legislative allies and to shore up critical services in the wake of a revenue collapse brought on by the Great Recession. Reforming a system that is inadequately funded to begin with amounts to little more than rearranging the deck chairs on a sinking ship.

This leads to my second concern with the Cutler plan. Rather than acknowledge why the current system is failing more and more Mainers, the proposal opts instead to address existing revenue shortfalls by increasing sales taxes in a variety of ways. Contrary to Cutler’s claim that Maine’s most regressive tax is the property tax, analysis (see p. 27) by Maine Revenue Services confirms that sales and excise taxes on consumers are the most regressive taxes. If tax fairness is truly a high priority then we should be looking instead to the income and estate tax and/or to closing the door on ineffective tax loopholes as a primary source of funding. If sales taxes are going to be increased or expanded to services, then those changes must be accompanied by an aggressive tax credit to offset the impact on low- and moderate-income residents. LD 1496, the sweeping tax reform proposal designed by Senator Woodbury last year, included such a credit.

I am further troubled that the only mention of the most targeted and effective way to provide property tax relief – the Property Tax Fairness Credit – is as a source of revenue to pay for the plan. While it is true that an expanded homestead exemption means that fewer people will claim the Property Tax Fairness Credit (PTFC) resulting in a savings for the program, we should use any additional revenue to bolster the existing PTFC for those who need it most. This includes renters who get little if any relief from the expanded homestead exemption and may face even higher rents if their landlords see property tax increases and pass on those costs to their tenants. It also includes families who lost more than two thirds of the property tax relief they received previously under the old Circuit Breaker program before it was eliminated and converted to the PTFC.

The Cutler plan puts some important ideas on the table that merit further consideration. Expanding the homestead exemption makes a lot of sense as a way to shift some of our tax burden to seasonal homeowners and encourage residency. The argument that the current revenue sharing program does little to export taxes or ensure that the wealthiest among us are paying their fair share is a sound one. However, the plan’s design does not consistently reflect Cutler’s expressed concern for tax fairness across income groups and for economically vulnerable groups of Mainers. We can grow Maine’s economy and secure adequate revenue to make the kinds of investments in Maine’s people and communities that will help us do so. The Cutler plan is a thoughtful and detailed starting point for conversation on how best to do this. This is a conversation we look forward to engaging in over the coming weeks and months.

Maine needs a research and development bond

Maine needs jobs and good jobs at that. Bonding to invest in research and development will result in more, better-paying jobs. Consider the story of two companies that must innovate to compete.

Acadia Harvest in Brunswick is learning how to grow fish indoors. Kenway Corporation of Augusta is a composite manufacturer. Acadia Harvest is a new company. Kenway has been making fiberglass in Maine for 50 years. Both recognized the need to test and develop new ideas that will allow them to compete in today’s global economy. Both turned to the University of Maine because of the institution’s quality research facilities, equipment, and scientists.

Acadia Harvest is working with the University’s Center for Cooperative Aquaculture Research in Franklin, Maine to commercialize new fish farming technologies, especially a way to recirculate water that conserves water and reduces waste. UMaine is helping research and test the science as well as supplying juvenile fish from its hatchery. When Acadia’s facility becomes operational, Maine will have a local source of restaurant-quality sea bass for home as well as for export.

Kenway’s challenge was to “scale up” its product to manufacture 100,000-pound submarine docking units for the US Navy. It had been making smaller, molded units, but to meet the Navy’s requirements, the company turned to the University’s Advanced Structures and Composites Center for help with research and testing. The result was a $4 million naval contract for the company.

Maine needs the research and development done by the University of Maine and others to help our businesses adapt and thrive in a changing global economy. According to the Maine Economic Growth Council’s Measures of Growth report, 80% of economic growth comes from innovation. And Maine is falling further behind in the competition for new products and technologies that will create new business growth. Maine ranks 41st in the nation, investing an amount equal to just 1% of our state GDP in research and development compared to 4.4% in New England and 3% in the US.

Maine also needs research and development investment to secure the skilled workers that businesses need to grow. Maine gains new residents to join our workforce when our research and development investment expands. Exciting new business enterprises and innovative technology advances will attract and keep skilled workers.

The legislature and governor need to make robust research and development funding a priority in this year’s bond package.

 

Be sure to watch MECEP’s State of the State program on Time Warner Cable’s Channel 9, Thursdays, April 17 and 24, at 10 AM, 2 PM, or 6:30 PM for more on research and development and these two companies.

Fed Chairman Yellen: The Recovery Still Feels Like a Recession

In case you needed more evidence that the labor market recovery in Maine and across the nation is still far from complete, Federal Reserve Board Chairman Janet Yellen has you covered:

But while there has been steady progress, there is also no doubt that the economy and the job market are not back to normal health….

The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics. At 6.7 percent, the national unemployment rate is still higher than it ever got during the 2001 recession. … It certainly feels like a recession to many younger workers, to older workers who lost long-term jobs, and to African Americans, who are facing a job market today that is nearly as tough as it was during the two downturns that preceded the Great Recession.

In some ways, the job market is tougher now than in any recession. The numbers of people who have been trying to find work for more than six months or more than a year are much higher today than they ever were since records began decades ago.

If you’ve already read today’s report from MECEP— “Maine’s Labor Market Recovery: Far From Complete”—most of this should sound familiar. Maine’s unemployment rate is still well above where it was before the recession and even during the recession of 2001. 30% of Maine’s 40,000-plus unemployed workers have been looking for a job for more than six months. That’s still more than twice the rate of long-term unemployment the state experienced prior to the Great Recession.

Yellen goes on to tell an anecdote about a woman named Vicki Lira, who “enjoys her part-time job serving food samples to customers at a grocery store but wishes she could get more hours.” As documented Maine has sixth largest number of these “involuntary” part-time workers in the nation, as a share of all employed workers.

Part-time-workers-for-report

It’s been almost five years since the official end of the Great Recession, but we are still a long way from a full recovery. But you don’t have to take our word for it.

Maine’s Jobs Report: A Bad Case of Déjà vu

Today the Bureau of Labor Statistics released its monthly jobs report and, like in his State of the State address, Governor LePage continues to tout a jobs record that is severely lacking.

In a release from the governor’s office, the subtitle reads, “15,000 private sector jobs created since 2011.” Once again, the governor would do well to keep these claims in perspective. Based on data the governor cites, Maine ranks 45th in private sector job growth among the 50 states and the District of Columbia and 48th in total job growth from January 2011 to January 2014. While it is true that this is a slight improvement from our previous 50th place ranking, the reality is that Maine has consistently hovered near the bottom of the pack when it comes to job growth.

The governor also continues to tout Maine’s continuing decline in unemployment and a rising employment-to-population ratio. On the surface these are good things, but they mask some pretty troubling trends. First, job growth in Portland, Bangor, and Lewiston-Auburn metropolitan areas is fueling the decline in unemployment. The governor’s own policies have left rural Maine in a lurch from cuts to revenue sharing and education that have resulted in job loss and increased property taxes to his continued resistance to issuing bonds to spur economic growth. Second, a disproportionate share of Mainers age 55 and over staying in the workforce is driving Maine’s rising employment-to-population ratio. Employment rates for residents between the ages of 25-54 – those most likely to be working and raising families – have not yet begun to recover from the recession. Finally, a more comprehensive measure of unemployment shows that the lack of good jobs is a problem for workers. Maine has the 6th highest percentage of part-time workers who want more work but can’t find it.

While the Governor may choose to ignore the facts of Maine’s poor jobs recovery when he touts his record, they are inescapable. Maine remains stuck in the back of the pack when it comes to jobs.

Community Eligibility Program can help hungry kids

No Kid HungryThis week we celebrate National School Breakfast Week.  The breakfast program began as a pilot program in 1966. Now, in the wake of the Great Recession, 11.6 million US children eat school breakfast each weekday morning.  Most Maine schools offer breakfast.  However, only 53% of eligible Maine children  are eating it. Community Eligibility, a new federal program, makes it easier for schools to serve breakfast by reducing paperwork and eliminating the stigma that only poor kids get free meals.

Eating breakfast is linked to improved student health and achievement

Were it not for school breakfast, many children would go hungry. And for low-income families, where food insecurity has increased significantly in Maine since the Great Recession, school breakfast is essential.  Statewide, 1 in 4 Maine children are food-insecure, meaning they are unsure when their next meal will be. Child hunger is particularly high in the western mountains and Washington County. 

Children who skip breakfast take in fewer nutrients over the rest of the day, and are more likely to be obese.  They are also more likely to demonstrate behavioral and emotional problems – unsurprising from kids with empty tummies.  Research also shows that school breakfast improves attendance and standardized test scores.

Community eligibility offers a way to reach all children who need breakfast

Community Eligibility is a part of the Healthy Hunger-Free Kids Act of 2010, and already has been implemented in nine states. The USDA will roll it out nationwide during the 2014-2015 school year. The policy allows schools to serve breakfast and lunch to all students, if 40% of a school’s student population qualifies for free or reduced lunch.

Community eligibility means that not only will children get two nutritious meals a day at school, but more children will benefit. Notably, the national pilot sites that have served breakfast to all students have experienced an increase in the number of low-income children eating breakfast. Schools offering breakfast to everyone reach more students because they can serve breakfast first period, or offer “grab and go” bags to eat between classes.

We have a great example in Maine. Some Portland schools protect low-income children from feeling embarrassed about accepting free breakfast by offering it to all children.

It’s great that Maine schools offer school breakfast, but we know that too many low-income children are not using it. Implementing community eligibility next year will require some set up at the outset. But in the long run, it will save staff time that would otherwise have been spent processing paper applications and swiping cards. Most importantly, community eligibility gives principals and teachers another tool to ensure that no Maine student faces a long, hungry day at school.

4.5 Years after the Recession, Low- and Middle-Income Families are Still Hurting (Retail Sales Edition)

Just last week, Walmart made headlines with a weak forecast for profits and sales at US stores. Low- and middle-income families are the core of Walmart’s customer base, and they are still struggling more than four-and-a-half years since the official end of the recession.

“The world’s largest retailer, which gets more than half its sales from groceries, on Thursday gave a disappointing full-year forecast. It blamed sharp cuts in food stamp benefits and higher payroll taxes that will hit disposable income for its core customers. Wal-Mart shares fell 2.2 percent in morning trading.”

Reuters, February 20, 2014

Retail sales data originating with Maine Revenue Services and compiled by the Governor’s Office of Policy and Management illustrate the broader story here in Maine. Statewide retail sales are growing, but not at stores where typical low- and middle-income Maine families make day-to-day purchases. Sales of building supplies and automobiles have experienced solid growth since the end of the recession, but sales at grocery stores and “general merchandise” stores like Walmart have not.

Retail-Sales-Feb-2014

Of course, many low- and middle-income families may be taking advantage of low interest rates to buy building supplies and automobiles on credit. But the stores where they make day-to-day out-of-pocket purchases have seen very little sales growth at all over the past four years. Remember, the figures shown in the chart above aren’t adjusted for inflation.

The recession ended more than four-and-a-half years ago, but we can add this to the mountain of evidence that low- and middle-income families are still hurting.

 

Older Mainers are Driving Maine’s Employment Recovery

 Maine’s older adults are driving Maine’s employment recovery from the recession. Not only do 55-and-older Mainers represent a disproportionately large share of Maine’s total population, they have increased their attachment to the labor force and employment faster than their peers in every other state over the past four years. As a result, they are responsible for most of the growth in Maine’s rate of employment over the past four years.

Maine’s employment rate is growing faster than the nation.

The employment/population ratio, or E-POP, is the percentage of the adult population who are employed. Unlike the official unemployment rate, which ignores unemployed workers who have stopped looking for a job, the E-POP allows for a fairly straight-forward comparison of the labor market recovery in different states without worrying about differences in the jobs search behavior of unemployed workers.

According to the E-POP, Maine’s recovery is clearly outpacing the nation.

EPOP-by-state-thru-Dec-2013

From the end of the recession in June, 2009, through December, 2013, Maine had the third largest increase in the employment-to-population ratio among states.

EPOP-by-state--index-since-jun-2009

But the increase in Maine’s E-POP is due mostly to increasing employment among older Mainers.

The E-POP for the 55-and-older population has increased more in Maine than any other state in the nation since 2009. Since this age group makes up 39% of Maine’s population—Maine has the second biggest cohort of 55-and-older adults in the nation—changes in the E-POP for this age group have an especially big impact on Maine’s overall employment picture. From 2009 to 2013, Maine’s 55-and-older population is responsible for most of the increase in Maine’s E-POP.

EPOP-55-older-by-state

 The E-POP for prime-working-age adults has not recovered from the recession.

On the other hand, the E-POP for prime-working-age adults (25-54 years old) has not recovered in Maine or in the US as a whole. Since Maine has the smallest cohort of prime-working-age adults in the nation—46.6% vs. the US average of 50.6%—the lack of employment growth for this age cohort isn’t dragging Maine’s total E-POP down as much as it is in the US as a whole.

EPOP-25-54-by-state

More of Maine’s young adults are finding employment too, but there aren’t very many of them.

Maine also led the nation from 2009-2013 in E-POP growth for younger adults age 16-24. But since this age group only makes up 13.9 percent of the state’s population—the fifth smallest cohort of young adults in the nation—it doesn’t have as big an effect on the overall rate of employment, especially in comparison to the US as a whole.

EPOP-16-24-by-state

The bottom line here is that Maine’s labor market recovery varies widely across age groups. Maine’s prime-working-age adults are still having trouble finding employment. This age group made up 47% of Maine’s adult population in 2013 and is recovering from the recession no faster than their counterparts in the rest of the country. Maine’s 55-and-older population, in contrast, which made up 39% of Maine’s adult population in 2013, has seen the largest increase in labor force participation and employment in the nation since the end of the recession.

The Truth about Governor LePage’s Own Jobs Claim

In Governor LePage’s recent State of the State address he touted his economic performance stating “Almost 13,000 new private-sector jobs have been created since we took office.”

Taken in isolation, this sounds pretty good. But compared with how other states have fared, Maine’s job creation performance leaves a lot to be desired. In fact, based on MECEP’s analysis of the most recent jobs data from the Bureau of Labor Statistics, Maine ranks 50th among states in private-sector job growth since 2011. Maine also ranks 50th in total job growth for the same period.

To be fair, Maine’s ranking will change with each month’s data release, but the pattern is well-established. We consistently rank at or near the bottom in terms of both private-sector job growth and total job growth.

We’ve been reluctant at MECEP to make a big deal of these numbers because of ongoing concerns about the underlying data. Until the Department of Labor revises the data appropriately (which happens on a yearly basis), citing the preliminary figures can be problematic as the Pew Center on the States discovered last year. That said, Governor LePage’s claims make the most recent figures fair game.

No matter how hard he tries to cherry-pick, the facts are inescapable. Maine’s economy remains stuck in neutral on Governor LePage’s watch. We’ve recovered less than 40% of the jobs lost since the beginning of the recession, while other states like Vermont have already returned to pre-recession employment levels. The comparison to Vermont is a telling one since demographic headwinds to growth are a convenient excuse for Maine’s anemic job creation record in recent years. But, even after adjusting for population change, Maine’s private sector job growth ranks 37th and total job growth ranks 41st. Vermont, which has seen the same rate of growth as Maine in its working age population since 2011 and has the 4th highest percentage of population age 55 and older (Maine is 2nd), ranks 10th in private sector job growth and 4th in total job growth.

Clearly the Governor has an interest in presenting his economic record in the best possible light. But relying on the jobs data to do so exposes him to the harsh reality that when it comes to growing jobs for Maine people, Governor LePage has Maine in the back of the pack.

State Policies Are Failing Maine’s Working Moms

In 2012, women headed one of every three low-income working families in Maine, according to a new report released today by the Working Poor Families Project.

These are women who are working, but still do not earn enough to meet their families’ needs. Maine’s economic policies are failing these low-income, female-headed households.

The report, “Low-Income Working Mothers and State Policy: Investing for a Better Economic Future,” lays out policies proven to ensure women can participate in the economy.

Yet for every policy the report offers, Maine’s governor and his allies in the legislature have done the opposite:

Expand health care benefits to low-income working families.

  • Vetoed and sustained.

Provide financial aid, especially for part-time attendance, to improve access to postsecondary education.

  • Cut.

Provide income support while single mothers earn their degree.

  • Capped.

Raise the minimum wage to bolster job quality.

  • Vetoed and sustained.

Invest in affordable, quality child care.

  • Cut.

Expand the state’s Earned Income Tax Credit (EITC).

  • No action.

According to the report, as of 2012, there were roughly 40,000 low-income working families in the Maine, of which 14,424 are headed by single women. Nearly 40% of those female heads of households have no post-secondary education.

The economy can work for our female heads of households. But the governor and legislature must put the policies in place that allow that to happen. So far, they have failed.

WPFP_Low Income Working Mothers Report_021014-infographic lge