Understanding the Employment Situation in Maine
Originally Published May 22, 2020. Updated on June 19, 2020
On Friday June 19, the Center for Workforce Research and Information (CWRI) and U.S. Bureau of Labor Statistics (BLS) released May workforce estimates for Maine. These include estimates of the unemployment rate and the change in nonfarm payroll jobs. The COVID-19 pandemic caused unprecedented job loss in Maine and the nation, though nonfarm payroll jobs began to show signs of recovery in May. The pandemic has created significant data collection and estimation challenges. This document provides information on how these estimates are derived, what some of the challenges were for collection and estimation, and then answers some questions we expect to arise.
How this data is collected
The U.S. Bureau of Labor Statistics enters into cooperative agreements with state workforce agencies to collaboratively produce and disseminate workforce data. Two programs, Current Employment Statistics (CES) and Local Area Unemployment Statistics (LAUS), are designed to provide a monthly indication of workforce conditions and trends. Data from those programs is collected and produced through highly sophisticated surveying and modeling techniques. CES data comes from a survey of employer payrolls; statewide LAUS data comes from a survey of households.
The payroll survey provides estimates of the number of jobs in workplaces in many industries and in metropolitan areas. The household survey provides estimates of labor force status of residents of the state, including whether they are employed, unemployed, or not in the labor force. The payroll survey has a larger sample size and representation of all jobs than the household survey has of the population of the state. The payroll survey often provides a better indication of employment trends, but in any given month it may over- or understate the change in jobs, or even the direction of change in jobs. More information on CES is here. More information on LAUS is here.
Data collection challenges during the pandemic
The COVID-19 pandemic presented data collection challenges for both surveys. Response rates
to the payroll survey in May were lower compared to February. Some establishments did not
respond because they were closed, either temporarily or permanently, and others did not
respond because they could not or because they had other priorities during a challenging time.
BLS has attempted to estimate the magnitude of business closures during this period, but it is
clear that there will be substantial revisions to this data over the course of the next year as
more data emerges and the picture becomes clearer.
The challenge for the household survey has been determining the labor force status of many
people, especially those who recently lost employment. The COVID-19 pandemic has created
uncertainty among workers, especially among those who have recently lost employment with
expectations of returning to their previous place of employment and among interviewers
conducting the survey. In person interviews have been suspended temporarily; response rates
to the household survey have declined for three consecutive months. Two classification
challenges in the household survey are causing the number individuals being classified as
unemployed to be too low compared to the number of individuals that are not currently
employed but want a job.
Many individuals that were not at work during the reference week (both in May and April) were
classified as employed, but not at work. Many workers that have been displaced since mid-
March expect to return to their previous employer at some point in the future. These workers
should be counted as unemployed though many are being counted as employed because of
uncertainty on the part of the survey respondent or the interviewer. Under normal
circumstances, those who are absent from work (due to illness or on vacation for example) and
expecting to return to work are classified as employed in the household survey. Workers on
temporary lay off should be classified as unemployed; many are being misclassified as
employed, but not at work. While this type of misclassification problem occurs in the survey
data under normal circumstances, the prevalence of this specific type of misclassification has
dramatically increased during the pandemic. This is one reason why the number of unemployed
and the unemployment rate are not fully reflecting labor market disruptions.
Many workers that have been displaced since mid-March are being classified as out of the labor
force and therefore not being counted among the unemployed. The definition of
unemployment has long been that it includes those who were actively engaged in work search
in the previous month and were available for work, while retirees and others who did not look
for work are not in the labor force. The pandemic disrupted this situation by preventing people
who otherwise would have looked for work if not for personal safety concerns or stay-at-home
orders that were issued by many states. Furthermore, many people did not look for work
because they expect to return to their job. People meeting this description should have been
counted as unemployed, rather than not in the labor force. It appears that many of the survey
interviewers did not adequately take this into consideration, which caused the number of
people considered not in the labor force to rise too much and the number of people who were
unemployed not to rise enough. This was the case throughout the nation.
Timing of the surveys
The survey collects information on jobs and labor force status for the week or pay period that
includes the 12th day of the month. The reference week in the household survey was May 10-
16. The reference period in the payroll survey was the payroll period that included May 12.
Data revision
These data are not as accurate as many people believe. The 90 percent confidence interval for
the statewide seasonally-adjusted unemployment rate was plus or minus 2.0 percentage points
for April and plus or minus 1.6 percentage points for May. The 90 percent confidence interval
for the statewide seasonally-adjusted unemployment rate is usually plus or minus 0.7
percentage points from the published rate. Nonfarm jobs estimates can be off by 2,000 or more
for a month, even in periods of economic stability, as existed in 2018 and 2019. Earlier this year
we published a blog on annual revisions, which shows how much these data were revised for
the last two years. There is little doubt that revisions to 2020 data, which will be published in
early 2021, will be much more substantial.
Why do the indications of employment decline differ between the two surveys?
Nonfarm job estimates from the payroll survey and resident employment estimates from the
household survey generally move in the same direction over long periods of time. Over short
periods they may diverge in the rate of change, and sometimes even in direction of change.
Estimates from these surveys have different coverage and both have some margin of error.
Both series are subject to annual revisions, which incorporate more complete information that
tends to make them more correlated than preliminary data indicates.
The payroll survey counts the number of jobs in workplaces in the state, so it includes nonresidents
who work in the state, and it excludes residents who work in other states. As a count
of jobs, a person with two or three jobs appears two or three times in this data. The largest job
declines during the pandemic were in hospitality industries, which is the source of second or
supplementary jobs for many people. It is likely that more jobs were lost than people who lost
all employment.
Further, many individuals have been misclassified in the household survey as describe above.
Many individuals on lay off that are expecting to return to their previous employer and are
being counted as employed though they are not on their employer’s payroll. Workers meeting
this description should be counted as unemployed in the household survey.
The household survey counts employed residents of the state, regardless of what state they
work in. It does not include non-residents who work in Maine. A person is counted once, no
matter how many jobs they may have.
Why did the number of unemployed increase so much less than employment decreased?
The labor force is comprised of employed and unemployed people. Those considered to be
unemployed were engaged in work search during the month and were available for work. Other
jobless people such as retirees, full-time students, homemakers, inmates, and others who did
not search for work or were not available for work are not counted as unemployed – they are
not in the labor force.
Some individuals who have been displaced from employment are being counted as out of the
labor force rather than unemployed. The household survey found that labor force participation
in Maine decreased from 62.4 percent in February to 59.1 percent in April and increased slightly
to 59.6 percent in May. The 2.8 percentage point decrease is historically large for a three month
period of time. This indicates that many people who lost their job did not engage in work search
or were not available to work, so they were not counted as unemployed. Given the personal
safety concerns and stay-at-home order in Maine since the beginning of the pandemic, many
who lost a job and wanted a new job did not or could not search for work. If those barriers to
work were not present, close to 30,000 more people would have been counted as unemployed.
Also, we described how individuals on lay off expecting to return to work are being misclassified
as employed. Compared to average levels of misclassification that typically occurred prior the
pandemic, BLS estimates 32,600 individuals in May and 28,700 individuals in April were
misclassified in this way.
If we take into consideration the two misclassification problems described above, an estimated 62,200 additional individuals should have been classified as unemployed rather than employed
but not at work or out of the labor force. If these individuals had been instead counted as
unemployed in May, the resulting unemployment rate would have been 18 percent (the same
calculation yields a 19.7 percent unemployment rate for the U.S.).
It should be noted that these two calculations above are unofficial. The misclassification in the
household survey (counting too many people as employed, not at work rather than
unemployed) affects inputs that are used to produce LAUS estimates. At this time, it is not
known how the official LAUS estimates are impacted. The official state unemployment rate was
not estimated with adjusted inputs that account for misclassification.
If nonfarm jobs decreased at a faster rate than the nation since February, why did Maine’s
unemployment rate increase by so much less?
The change in nonfarm jobs comes from a survey of employer establishments. The
unemployment rate is derived from a survey of households. They have different coverage and
both involve some margin of error. Both are revised over time. Any divergence between them
often becomes smaller when they are revised based on more complete information.
Households in Maine reported a lower rate of employment loss compared to the national rate.
The two surveys differ in concept, coverage, and sample size. The employer survey is much
larger and tends to have a lower margin of error than the household survey.
Under normal circumstances, there are differences between estimates from the household and
the payroll survey. The COVID-19 pandemic lead to disruptions in data collection that could
have exacerbated these differences. Response rates in the household survey have declined for
three consecutive months. This can be problematic in a state with a small population as the
number of respondents to this survey is relatively low, typically around 500 households per
month. Responses to the payroll survey were also impacted by the pandemic. The Bureau of
Labor Statistics uses statistical models that do not expect such dramatic changes in such a short
period.
The Department of Labor reported over 159,000 initial claims for state unemployment
benefits in the 13 weeks since the middle of March. Why is the estimated number of
unemployed people so much lower?
The reference week for unemployment estimates is the second week of the month (May 10-
16). There were about 125,000 initial claims for regular state unemployment benefits between
the middle of March and the middle of May. That is closer to, but still substantially higher than the estimate of about 62,100 unemployed in May.
There are a number of reasons why the number of initial claims for unemployment benefits
differs from the number of unemployed people. Nonfarm payroll jobs increased by an
estimated 14,300 in May compared to April. Some individuals who filed an initial
unemployment claim have been rehired or found new employment.
As described above, many individuals who have recently lost employment are being classified
as out of the labor force rather than unemployed.
Since the pandemic began, the state of Maine (along with many other states throughout the
country) was targeted by fraudsters filing fictious claims for unemployment benefits. A large
volume of fraudulent claims was filed in the last two weeks of May specifically. These cases of
unemployment imposter fraud occur when a person's Personally Identifiable Information (PII) is
stolen from outside the unemployment system and used illegally to apply for unemployment
benefits. Past data breaches have allowed for PII to be used to file false claims on behalf of
many individuals who are still employed. Fraudsters are attempting to take advantage of the
high volume of claims being filed for unemployment throughout the country.
In the regular state unemployment insurance program, a person who is determined ineligible in
one quarter may be eligible in another. Because April began a new quarter, many people who
were deemed ineligible in March needed to file a new initial claim in April.
Additionally, rules for the Pandemic Unemployment Assistance program required that selfemployed
and others covered by this new program first be deemed ineligible for regular state
UI, so many of those people had initial claims in both programs. These and some other
technical issues caused the number of initial claims to exceed the number of people applying
for unemployment benefits.
Some people who made initial claims were called back to work or gained a new job. The
Paycheck Protection Program (PPP) in the CARES Act passed by Congress incentivized
employers through loan guarantees to call back to work those they had laid off. The PPP
program became effective weeks after many people had lost their job and applied for
unemployment benefits, so many people who initially applied for unemployment benefits
regained employment later. People who are on employer payrolls, whether they are working or
not, are considered to be employed.
Finally, unemployment benefits are for people who lost a job. Though unemployment usually
stems from job loss, those who left a job by choice, or who entered or reentered the labor force
by beginning work search or by becoming available to work also are counted as unemployed.
This information was prepared by:
Mark McInerney, the new Director of the Center for Workforce Research and Information. Mark has a PhD in economics from the University of Connecticut.
Glenn Mills, Deputy Director of CWRI. Glenn oversees CES and LAUS program activities, and he
has primary responsibility for analyzing and reporting on workforce conditions and trends in
Maine.
On Friday June 19, the Center for Workforce Research and Information (CWRI) and U.S. Bureau of Labor Statistics (BLS) released May workforce estimates for Maine. These include estimates of the unemployment rate and the change in nonfarm payroll jobs. The COVID-19 pandemic caused unprecedented job loss in Maine and the nation, though nonfarm payroll jobs began to show signs of recovery in May. The pandemic has created significant data collection and estimation challenges. This document provides information on how these estimates are derived, what some of the challenges were for collection and estimation, and then answers some questions we expect to arise.
How this data is collected
The U.S. Bureau of Labor Statistics enters into cooperative agreements with state workforce agencies to collaboratively produce and disseminate workforce data. Two programs, Current Employment Statistics (CES) and Local Area Unemployment Statistics (LAUS), are designed to provide a monthly indication of workforce conditions and trends. Data from those programs is collected and produced through highly sophisticated surveying and modeling techniques. CES data comes from a survey of employer payrolls; statewide LAUS data comes from a survey of households.
The payroll survey provides estimates of the number of jobs in workplaces in many industries and in metropolitan areas. The household survey provides estimates of labor force status of residents of the state, including whether they are employed, unemployed, or not in the labor force. The payroll survey has a larger sample size and representation of all jobs than the household survey has of the population of the state. The payroll survey often provides a better indication of employment trends, but in any given month it may over- or understate the change in jobs, or even the direction of change in jobs. More information on CES is here. More information on LAUS is here.
Data collection challenges during the pandemic
The COVID-19 pandemic presented data collection challenges for both surveys. Response rates
to the payroll survey in May were lower compared to February. Some establishments did not
respond because they were closed, either temporarily or permanently, and others did not
respond because they could not or because they had other priorities during a challenging time.
BLS has attempted to estimate the magnitude of business closures during this period, but it is
clear that there will be substantial revisions to this data over the course of the next year as
more data emerges and the picture becomes clearer.
The challenge for the household survey has been determining the labor force status of many
people, especially those who recently lost employment. The COVID-19 pandemic has created
uncertainty among workers, especially among those who have recently lost employment with
expectations of returning to their previous place of employment and among interviewers
conducting the survey. In person interviews have been suspended temporarily; response rates
to the household survey have declined for three consecutive months. Two classification
challenges in the household survey are causing the number individuals being classified as
unemployed to be too low compared to the number of individuals that are not currently
employed but want a job.
Many individuals that were not at work during the reference week (both in May and April) were
classified as employed, but not at work. Many workers that have been displaced since mid-
March expect to return to their previous employer at some point in the future. These workers
should be counted as unemployed though many are being counted as employed because of
uncertainty on the part of the survey respondent or the interviewer. Under normal
circumstances, those who are absent from work (due to illness or on vacation for example) and
expecting to return to work are classified as employed in the household survey. Workers on
temporary lay off should be classified as unemployed; many are being misclassified as
employed, but not at work. While this type of misclassification problem occurs in the survey
data under normal circumstances, the prevalence of this specific type of misclassification has
dramatically increased during the pandemic. This is one reason why the number of unemployed
and the unemployment rate are not fully reflecting labor market disruptions.
Many workers that have been displaced since mid-March are being classified as out of the labor
force and therefore not being counted among the unemployed. The definition of
unemployment has long been that it includes those who were actively engaged in work search
in the previous month and were available for work, while retirees and others who did not look
for work are not in the labor force. The pandemic disrupted this situation by preventing people
who otherwise would have looked for work if not for personal safety concerns or stay-at-home
orders that were issued by many states. Furthermore, many people did not look for work
because they expect to return to their job. People meeting this description should have been
counted as unemployed, rather than not in the labor force. It appears that many of the survey
interviewers did not adequately take this into consideration, which caused the number of
people considered not in the labor force to rise too much and the number of people who were
unemployed not to rise enough. This was the case throughout the nation.
Timing of the surveys
The survey collects information on jobs and labor force status for the week or pay period that
includes the 12th day of the month. The reference week in the household survey was May 10-
16. The reference period in the payroll survey was the payroll period that included May 12.
Data revision
These data are not as accurate as many people believe. The 90 percent confidence interval for
the statewide seasonally-adjusted unemployment rate was plus or minus 2.0 percentage points
for April and plus or minus 1.6 percentage points for May. The 90 percent confidence interval
for the statewide seasonally-adjusted unemployment rate is usually plus or minus 0.7
percentage points from the published rate. Nonfarm jobs estimates can be off by 2,000 or more
for a month, even in periods of economic stability, as existed in 2018 and 2019. Earlier this year
we published a blog on annual revisions, which shows how much these data were revised for
the last two years. There is little doubt that revisions to 2020 data, which will be published in
early 2021, will be much more substantial.
FAQ’s
Nonfarm job estimates from the payroll survey and resident employment estimates from the
household survey generally move in the same direction over long periods of time. Over short
periods they may diverge in the rate of change, and sometimes even in direction of change.
Estimates from these surveys have different coverage and both have some margin of error.
Both series are subject to annual revisions, which incorporate more complete information that
tends to make them more correlated than preliminary data indicates.
The payroll survey counts the number of jobs in workplaces in the state, so it includes nonresidents
who work in the state, and it excludes residents who work in other states. As a count
of jobs, a person with two or three jobs appears two or three times in this data. The largest job
declines during the pandemic were in hospitality industries, which is the source of second or
supplementary jobs for many people. It is likely that more jobs were lost than people who lost
all employment.
Further, many individuals have been misclassified in the household survey as describe above.
Many individuals on lay off that are expecting to return to their previous employer and are
being counted as employed though they are not on their employer’s payroll. Workers meeting
this description should be counted as unemployed in the household survey.
The household survey counts employed residents of the state, regardless of what state they
work in. It does not include non-residents who work in Maine. A person is counted once, no
matter how many jobs they may have.
Why did the number of unemployed increase so much less than employment decreased?
The labor force is comprised of employed and unemployed people. Those considered to be
unemployed were engaged in work search during the month and were available for work. Other
jobless people such as retirees, full-time students, homemakers, inmates, and others who did
not search for work or were not available for work are not counted as unemployed – they are
not in the labor force.
Some individuals who have been displaced from employment are being counted as out of the
labor force rather than unemployed. The household survey found that labor force participation
in Maine decreased from 62.4 percent in February to 59.1 percent in April and increased slightly
to 59.6 percent in May. The 2.8 percentage point decrease is historically large for a three month
period of time. This indicates that many people who lost their job did not engage in work search
or were not available to work, so they were not counted as unemployed. Given the personal
safety concerns and stay-at-home order in Maine since the beginning of the pandemic, many
who lost a job and wanted a new job did not or could not search for work. If those barriers to
work were not present, close to 30,000 more people would have been counted as unemployed.
Also, we described how individuals on lay off expecting to return to work are being misclassified
as employed. Compared to average levels of misclassification that typically occurred prior the
pandemic, BLS estimates 32,600 individuals in May and 28,700 individuals in April were
misclassified in this way.
If we take into consideration the two misclassification problems described above, an estimated 62,200 additional individuals should have been classified as unemployed rather than employed
but not at work or out of the labor force. If these individuals had been instead counted as
unemployed in May, the resulting unemployment rate would have been 18 percent (the same
calculation yields a 19.7 percent unemployment rate for the U.S.).
It should be noted that these two calculations above are unofficial. The misclassification in the
household survey (counting too many people as employed, not at work rather than
unemployed) affects inputs that are used to produce LAUS estimates. At this time, it is not
known how the official LAUS estimates are impacted. The official state unemployment rate was
not estimated with adjusted inputs that account for misclassification.
If nonfarm jobs decreased at a faster rate than the nation since February, why did Maine’s
unemployment rate increase by so much less?
The change in nonfarm jobs comes from a survey of employer establishments. The
unemployment rate is derived from a survey of households. They have different coverage and
both involve some margin of error. Both are revised over time. Any divergence between them
often becomes smaller when they are revised based on more complete information.
Households in Maine reported a lower rate of employment loss compared to the national rate.
The two surveys differ in concept, coverage, and sample size. The employer survey is much
larger and tends to have a lower margin of error than the household survey.
Under normal circumstances, there are differences between estimates from the household and
the payroll survey. The COVID-19 pandemic lead to disruptions in data collection that could
have exacerbated these differences. Response rates in the household survey have declined for
three consecutive months. This can be problematic in a state with a small population as the
number of respondents to this survey is relatively low, typically around 500 households per
month. Responses to the payroll survey were also impacted by the pandemic. The Bureau of
Labor Statistics uses statistical models that do not expect such dramatic changes in such a short
period.
The Department of Labor reported over 159,000 initial claims for state unemployment
benefits in the 13 weeks since the middle of March. Why is the estimated number of
unemployed people so much lower?
The reference week for unemployment estimates is the second week of the month (May 10-
16). There were about 125,000 initial claims for regular state unemployment benefits between
the middle of March and the middle of May. That is closer to, but still substantially higher than the estimate of about 62,100 unemployed in May.
There are a number of reasons why the number of initial claims for unemployment benefits
differs from the number of unemployed people. Nonfarm payroll jobs increased by an
estimated 14,300 in May compared to April. Some individuals who filed an initial
unemployment claim have been rehired or found new employment.
As described above, many individuals who have recently lost employment are being classified
as out of the labor force rather than unemployed.
Since the pandemic began, the state of Maine (along with many other states throughout the
country) was targeted by fraudsters filing fictious claims for unemployment benefits. A large
volume of fraudulent claims was filed in the last two weeks of May specifically. These cases of
unemployment imposter fraud occur when a person's Personally Identifiable Information (PII) is
stolen from outside the unemployment system and used illegally to apply for unemployment
benefits. Past data breaches have allowed for PII to be used to file false claims on behalf of
many individuals who are still employed. Fraudsters are attempting to take advantage of the
high volume of claims being filed for unemployment throughout the country.
In the regular state unemployment insurance program, a person who is determined ineligible in
one quarter may be eligible in another. Because April began a new quarter, many people who
were deemed ineligible in March needed to file a new initial claim in April.
Additionally, rules for the Pandemic Unemployment Assistance program required that selfemployed
and others covered by this new program first be deemed ineligible for regular state
UI, so many of those people had initial claims in both programs. These and some other
technical issues caused the number of initial claims to exceed the number of people applying
for unemployment benefits.
Some people who made initial claims were called back to work or gained a new job. The
Paycheck Protection Program (PPP) in the CARES Act passed by Congress incentivized
employers through loan guarantees to call back to work those they had laid off. The PPP
program became effective weeks after many people had lost their job and applied for
unemployment benefits, so many people who initially applied for unemployment benefits
regained employment later. People who are on employer payrolls, whether they are working or
not, are considered to be employed.
Finally, unemployment benefits are for people who lost a job. Though unemployment usually
stems from job loss, those who left a job by choice, or who entered or reentered the labor force
by beginning work search or by becoming available to work also are counted as unemployed.
This information was prepared by:
Mark McInerney, the new Director of the Center for Workforce Research and Information. Mark has a PhD in economics from the University of Connecticut.
Glenn Mills, Deputy Director of CWRI. Glenn oversees CES and LAUS program activities, and he
has primary responsibility for analyzing and reporting on workforce conditions and trends in
Maine.
