Nationally, recent news from the labor market has been positive. Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate remained steady at 4.7 percent. The number of people not in the labor force – people who had given up even looking for a job – has fallen slightly. Average earnings for the year were up nearly 3 percent.
Similarly encouraging news is evident in Maine. According to quarterly census of employment and wages data, the state’s total payroll employment growth accelerated in 2014 over 2013 and again in 2015 over 2014. If seasonal patterns hold true (Maine’s employment totals always peak in July and August), this acceleration of employment growth will hold true for 2016 over 2015.
A similar but more rapid pattern holds true for Cumberland County. Here, employment growth was 0.8 percent in 2014, 1.4 percent in 2015, and is likely to be 1.4 percent or more in 2016. All of these numbers are stunningly slow compared with historical averages and fall far below national growth rates, which have recently exceeded 2 percent.
But even in these dire times, the law of supply and demand seems not to have been repealed. An apparent beneficial effect of this slow growth in the number of people employed has been an increase in wages. In 2012, average weekly wages in Maine rose 1.5 percent. In subsequent years, that rate accelerated to 1.8 percent, then to 3.0 percent, then to 3.3 percent, then to 3.9 percent. In Cumberland County, the acceleration was even greater – 2.1 percent to 2.9 percent to 3.4 percent to 5.1 percent.
Both of these rates of acceleration exceeded the national rate, with the result that average weekly wages in Maine rose from 77.5 percent of the national average to nearly 80 percent. For Cumberland County, the comparable increase was from 89.7 percent of the national average to nearly 92 percent.
The rising demand for labor in Maine is driving up its value. This fact poses the immediate question, “OK, so what? What do rising wages in the labor market have to do with anything else?”
For anyone interested in increasing prosperity in the state – both for those hoping to find jobs and for everyone else – the answer is “a lot!”
The health of the labor market depends on the health of the housing market, and on the quality of our educational institutions, and on our state’s reputation in the rest of the world. If we cannot continue to supply the labor market with a steady flow of at least trainable candidates for jobs, or offer a range of housing options (in terms of both price and location), or demonstrate that our educational institutions (from pre-K to post-doctoral) provide a wide variety of quality learning experiences for a wide range of topics and in segments that are affordable to a wide range of households, and if we cannot demonstrate that our communities are safe, friendly, welcoming places for job holders to live, congregate and play, it won’t matter that wages are rising. If any of these non-labor-market factors – housing, education, community and reputation – are inadequate to draw the candidates our employers – both current and (we hope) new – need to fill the positions required to grow their companies, they will close or choose to grow elsewhere. Neither our labor market nor our economy can be seen in any useful way as isolated problems to be solved on their own while someone else solves other problems. We are the problem – the whole messy collection of us all.
We can say, “I can’t afford to solve this problem, forget it, I have more pressing problems to deal with.”
Each of us in our own little cocoons can say the same thing. And the only result will be greater isolation and greater inequality (as some of us solve our personal problems for ourselves), and the majority are left to watch things fall apart.
The good news in our labor market is really a call to take a larger view, to see that there are streaks of light on the horizon, but that they will continue to brighten and spread only if we connect them to the far larger and intricate network of social connections that make us operate as a collective, as a town, as a state.
Until we can understand and act on the belief that the health of our entire body can never be better than the health of our sickest part, we will only continue to squabble and watch our opportunities fade away.
Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:
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