Let’s explore unemployment in Maine, which as of December was 7.3 percent or 50,800 people.
That means the total number of nonfarm jobs eligible for calculation is 592,700. We have 1.3 million people in Maine, so that leaves a lot to consider when determining what this really tells us.
Let’s get this into some context:
- Seven of 10 of our top 50 ‘all ownership type’ employers in Maine are government sponsored, healthcare or heavily reliant on government contracts. These include the DOD, USPS and the University of Maine. Unless major government cuts are made these are not likely to be among those seeking employment anytime soon.
- Maine has more than 100,000 small businesses that have no employees as defined by unemployment eligibility and thus are not counted in unemployment since they do not pay unemployment tax. What is their status and how are they fairing?
- We have roughly 270,000 children under 18, whom are typically are not counted. (If they are 16 or older, had been working full time, are laid off from a company paying into unemployment and are actively seeking work they could be counted.
- We have 205,000 people over age 65 and more than 170,000 of them are on social security. So they can’t be added to the unemployed ranks.
Maybe this is adding up – 1.3 million people of which 592,700 are eligible, 270,000 children, 205,000 over age 65, at least 100,000 are self-employed business owners. That leaves about 150,000 unaccounted for. That number could easily be made up of those working for the military and publicly funded employers, more self-employed than calculated, and those no longer looking for work and thus not counted.
So is having 50,000 unemployed that bad? Let’s consider Cumberland County, with the lowest rate in the state at 5.9 percent or 9,216 people. For comparison, Somerset is the worst with 10.5 percent but only 2,500 people out of work. Cumberland County, however, still has relatively high home prices with only a 2 percent decline in price from 2008 to 2009 while most other regions saw a drop of 10 percent or more. Given that this serves as a leading indicator of its economic health, then the unemployment hasn’t bothered the Cumberland County economy much.
Let’s also look at a few economic facts: UPS and FedEx set records with vast numbers of packages shipped during the holidays. Spending was up, stores enjoyed a strong Christmas season. Meanwhile, all we hear is that nobody has any money.
What is at work here?
Can we have all of these people unemployed and so many on government support, and also have the economy improve and those employed feel able to spend? Yes, when the government is fueling the tanks of corporations and banks with cheap money, when interest rates sit historically low and when the nature of our employment is service based. Because of those conditions, we can actually do all right with high unemployment.
But can it continue?
No, because it is like a grand Ponzi scheme where taxes on businesses and workers must continue to grow as debts pile up and the long-term costs to service the debt continue to eat ever-larger portions of tax receipts.
Nor can the borrowing continue. Thus the problem of unemployment for Mainers at this time isn’t really the number of unemployed Mainers. It is a combination of all of the factors making us feel like we are doing OK temporarily. But what happens when interests rates rise, and food and oil prices climb beyond the current high levels? Unemployment is likely to increase.
All that said, unemployment on a stand-alone basis – and as it stands in Maine today – is not yet a significant factor for anyone but those who are actually unemployed. The cost burden of supporting unemployment benefits is a factor, but it has not crossed over to unmanageable as of yet. I place serious caution to the wind as we tread lightly on very shaky economic footing and minor shakes could send the problem spiraling.
Joshua Hayward has worked as a financial strategist for 19 years and can be heard Monday Mornings at 7 on the George Hale & Ric Tyler Show, 103.9 FM Bangor, 101.3 FM, Augusta. He can be reached at firstname.lastname@example.org