BINYAMIN Appelbaum at the New York Times has a new article arguing that measuring the recent economic recovery should focus on the number of employed rather than the unemployed. Specifically, rather than focusing on the unemployment rate (which can be misleading since it does not count discouraged workers who give up looking for a job and leave the laborforce), people should focus on the employment/population ratio.
Using the employment/population ratio, Appelbaum notes:
Employment rates have climbed above the post-recession nadir in every state, although the improvements are often quite small. In Mississippi, the employment rate is just 0.1 percent above its recent low.
It also shows that the recovery has a long way to go. Employment rates have rebounded in some states with strong growth, like Utah, Nebraska and Montana. But only three states — Maine, Texas and Utah — have retraced more than half their losses.
Regarding Maine, he notes the state’s economy has been rather unique during the recession:
(Maine is a curiosity. Its economy has expanded less since 2009 than any state’s except Connecticut. Conversely, North Dakota and South Dakota, two of the three states with the most growth over the same period, have seen little recovery in their employment rates — perhaps in part because their losses were relatively small.)
As Appelbaum notes, the decline for some states, such as Maine, were not as drastic as others, hence the recovery will likely be shallow. For instance, while having a higher job growth rate than Maine, Nevada’s labor market was harder hit following the 2008 Recession, and is still lagging Maine in terms of recovering jobs lost during the recession.
So, while Nevada is outperforming Maine in terms of job growth since the recession, on balance, the labormarket in Maine is performing better than Nevada’s.
(As an aside, this highlights why state-to-state comparisons are a little dicey because state economies are not heterogeneous. So, suggesting that Maine should be on par with the national average in job creation assumes that Maine’s economy is the same, or at least similar, as the other 49 economies in the country.)
This might explain part of the reason for Maine’s slow job growth numbers. The state’s labor market is still weak relative to where it was pre-recession, with labor market indicators for the prime age working cohort (25 – 54 year olds) and college graduates down from their pre-recession levels. Moreover, stagnant wages also suggest there is still plenty of slack in the state’s labor market.