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Workforce Trends &Outlook in Maine

Glenn MillsChief Economist

Center for Workforce ResearchMaine Department of Laborwww.maine.gov/labor/cwri

[email protected] 207-621-5192

Presented to

Innovation, Development, EconomicAdvancement & Business Committee

February 12, 2019

Conditions & Trends

The unemployment rate is historically low,below 4% for a record 37 consecutive months

Unemployment rates are lowest along the south coast and highest in the north, continuing a longstanding pattern

Unemployment Rates, December 2018

The unemployment rate is one of six measures of labor “underutilization.” 5 of 6 are the lowest on

record and lower than national averages.

0%

2%

4%

6%

8%

10%

12%

14%

16%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Perc

ent

Alternative Measures of Labor Undertilization - Maine

U-6, U-5 plus part time for economic reasons

U-5, U-4 plus marginally attached workers

U-4, U-3 plus discouraged workers

U-3, Unemployment Rate

U-2, Job losers & tempory job completers

U-1, Persons unemployed 15 weeks or longer

The tightening labor market drove inflation-adjusted average wages up over the last four years at the

fastest rate in nearly two decades

$37,000

$39,000

$41,000

$43,000

$45,00019

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

18

4-Q

uart

er A

vera

ge W

age

(in 2

018Q

2 $)

The number of people earning less than $10 per hour declined sharply over the last five years, reflecting more competitive labor

market conditions…and in 2018, the minimum wage increase

20,000

40,000

60,000

80,000

100,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Minimum Wage $7.50/hour $9/hr $10/hr

Num

ber o

f Ear

ners

by

Hour

ly W

age

in T

heir

Prim

ary

Job

$20 or more

$15 to 19.99

$12 to 14.99

$10 to 11.99

Less than $10

This represents the 53% of workers who are paid at hourly rates in their primary job. The 47% who are paid salary, commissioner, or through other arrangements are not included.

The average wage per job in Maine has remained close to 80% of the national average for many years…

70%

75%

80%

85%

90%

95%

100%20

05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Mai

ne %

of U

.S.

…But median earnings of residents of the state are near 95% of national rates. The seasonal nature of summer

hospitality jobs pushes Maine’s jobs average down.(Many hospitality jobs are held by non-residents or are not the primary

source of earnings for residents.)

70%

75%

80%

85%

90%

95%

100%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Mai

ne %

of U

.S.

Average Wage per JobMedian Earnings of Full-Time, Year-Round WorkersMedian Earnings, All Wokers (Regardless of Work Schedule)

5 counties have more jobs today than in 2001, all at least partially along the I-95 corridor; 5 counties have at least 7%

fewer jobs, all along the northeast or northwest rim

80%

85%

90%

95%

100%

105%

110%

115%20

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

18

Inde

x: 2

001

= 10

0%

YorkCumberlandAndroscogginKennebecWaldoMaineKnoxPenobscotHancockLincolnSagadahocPiscataquisOxfordAroostookFranklinWashingtonSomerset

2018 figures areestimates based onthree quarters of data

Over the last three decades job growth was concentrated in healthcare, professional services, and hospitality; manufacturing

jobs declined sharply before stabilizing since 2010

25

40

55

70

85

100

115

130

145

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Jobs

by

Sect

or (in

Tho

usan

ds)

All Other Sectors

Trade & Transportation

Health Care & Social Assistance

Government

Leisure & Hospitality

Professional & Business Svcs

Manufacturing

Job growth has been concentrated in urban areas largely because the sectors that are growing, by their nature, are concentrated there – especially healthcare and professional services.

Long Term Demographic Trends

After rising for generations, the population inMaine did not change much in the last decade

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

Popu

latio

n

Continuing a long term trend, the population increased in the south, didn’t change much in central and mid-coast regions, and decreased in north of the state since 2010.

(The change in total population is the balance of natural change and net migration, though totals by county don’t exactly add up for technical reasons.)

The primary factor slowing population growth is fewer births. Rising numbers of deaths due to more seniors is also a factor. Maine has had negative natural change 7 of the last 8 years.

8,000

12,000

16,000

20,000

24,00019

50

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

Birt

hs &

Dea

ths P

er Y

ear

BirthsDeaths

Birth rates in Maine are lower than thenation and much of the advanced worldBi

rths

per

1,0

00 p

opul

atio

n

Only Cumberland and Androscoggin counties have had significant natural increase since 2010.

-4,000

0

4,000

8,000

12,000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

Net

Cha

nge

from

Prio

r Yea

r

Net Migration (Moved In - Out)Natural Change (Births - Deaths)

The second factor that slowed population growth in the last decade was little net in-migration from 2009 to 2015. That has picked up the last three years, which will need to be sustained.

Migration since 2010 has been uneven across the state. Seven counties, mostly in the north, had a net outflow of nearly 7,800 people; nine counties had a net inflow of 21,500 people, 75% of which was in York and Cumberland counties.

We went from young to middle-aged, on the verge of a massive wave of retirements, in 50 years…the length of a career

0

4,000

8,000

12,000

16,000

20,000

24,000

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84

Popu

latio

n by

Yea

r of A

ge

1970 2020

The national population structure is more balanced, with somewhat more young people who will enter the labor

force than who will retire in the next two decades…

0.0%

0.5%

1.0%

1.5%

2.0%

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80

% o

f Pop

ulat

ion

by Y

ear o

f Age

, 201

6

U.S.Maine

Future laborforce leavers

Future laborforce entrants

Maine’s median age increased 56% since1970 to the highest in the nation

25

30

35

40

45

1940 1950 1960 1970 1980 1990 2000 2010 2017

Med

ian

Age

United StatesMaine

Workforce Outlook to 2026

Media coverage of our workforce forecastto 2026 described a grim situation

“Department of Labor predicts that the state will have virtually zero growth in jobs”

“Maine’s economy will struggle to tread water”

“…companies will not invest if they don’t think they will be able to hire workers and workers don’t move to a place where there are no jobs (which) means that the state will have few options available to change the cycle.”

Department of Labor “projects with a shortage of young workers, the Mainers who live and work here now will stay on the job longer.”

“The report is the latest evidence that Maine is on a path to long-term economic stagnation…and young Mainers leaving the state for better opportunities elsewhere.”

“Mainers will be working well into what had been retirement years.”

“…most of the jobs created over the next five years will be in low-wage or high-wage (jobs).”

The labor market is more dynamicthan those interpretations portray

There is a constant flow of people into and out of the labor force over time: young people reach working-age, older people retire, some take time out of labor force to gain an education or work credential or to raise children, and then return to work. Others advance their job knowledge, skills, and qualifications that allow them to move up the career ladder. Some people relocate to another community for a better job or for other reasons.

Notions of stagnation and lack of opportunity miss what is actually happening. There will be very large numbers of job openings each year to replace those who will be retiring. There is every reason to believe that wages will continue to rise as a result of continued low unemployment and competition for staff.

There will be more older people working, not necessarily because they have to, but simply because there will be more older people. The nature of many jobs is less physical than it once was, so it is easier to stay engaged in work than it once was.

The 25 to 54 age group that has the highest rates of labor force participation peaked in the early 2000s. The 15 to 74 group, which includes nearly all working people, is peaking

and will gradually subside over the next decade.

250,000

400,000

550,000

700,000

850,000

1,000,000

1950 1960 1970 1980 1990 2000 2010 2020 2030

Popu

latio

n

15-7420-6425-54

As a result, we expect little labor force changethrough 2026, continuing the recent trend

250,000

350,000

450,000

550,000

650,000

750,00019

47

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

2017

2022

2026

Civ

ilian

Lab

or F

orce

Baby boomers entering workforce

Baby boomers exiting workforce1930s depression

& World War II birth dearth

Growth is often portrayed as a key to rising prosperity. That is not necessarily the case. Wage growth in Maine accelerated when unemployment became very low and the labor force was not expanding, because the hiring and retention environment became more competitive. Closing the earnings gap with the nation should help to attract working-age people to the state to help to sustain the size of our labor force.

Human resource challenges should lead to innovations in the production of goods and delivery of services that lead to high rates of productivity. Since rising productivity is the key to higher standards of living, there are positive aspects to our constrained labor supply.

The mix of jobs by occupation will continue to gradually shift

-6,000

-4,000

-2,000

0

2,000

4,000

Offi

ce &

Adm

inist

rativ

e Su

ppor

t

Sale

s & R

elat

ed

Food

Pre

para

tion

& S

ervi

ng R

elat

ed

Man

agem

ent

Heal

thca

re P

ract

ition

ers &

Tec

hnic

al

Tran

spor

tatio

n &

Mat

eria

l Mov

ing

Educ

atio

n, T

rain

ing

& L

ibra

ry

Prod

uctio

n

Cons

truc

tion

& E

xtra

ctio

n

Pers

onal

Car

e &

Ser

vice

Inst

alla

tion,

Mai

nten

ance

& R

epai

r

Prop

erty

Cle

anin

g &

Mai

nten

ance

Busin

ess &

Fin

anci

al O

pera

tions

Heal

thca

re S

uppo

rt

Com

mun

ity &

Soc

ial S

ervi

ce

Com

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athe

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, Des

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Ent

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Med

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l

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ocia

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encePr

ojec

ted

Job

Chan

ge, 2

016

to 2

026

Occupational Group

An aging population will continue to drive demand for healthcare jobs

The mix of jobs by occupation will continue to gradually shift

-6,000

-4,000

-2,000

0

2,000

4,000

Offi

ce &

Adm

inist

rativ

e Su

ppor

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Sale

s & R

elat

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n, T

rain

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Inst

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& R

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Mai

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& S

ocia

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encePr

ojec

ted

Job

Chan

ge, 2

016

to 2

026

Occupational Group

Automation and information technology will continue to reduce the number of jobs in occupations that generally perform routine or repetitive tasks

The changes in the occupational jobstructure will continue be modest

0

20,000

40,000

60,000

80,000

100,000O

ffice

& A

dmin

istra

tive

Supp

ort

Sale

s & R

elat

ed

Food

Pre

para

tion

& S

ervi

ng…

Man

agem

ent

Heal

thca

re P

ract

ition

ers &

…

Tran

spor

tatio

n &

Mat

eria

l Mov

ing

Educ

atio

n, T

rain

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& L

ibra

ry

Prod

uctio

n

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tion

& E

xtra

ctio

n

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onal

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e &

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Inst

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tion,

Mai

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& R

epai

r

Prop

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Mai

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, Des

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…

Arch

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, Phy

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& S

ocia

l Sci

enceJo

bs in

201

6 an

d Pr

ojec

ted

2026

Occupational Group

20162026

Even in occupations expected to have fewer jobs, there will be significant numbers of job openings because the number leaving

the labor force will be larger than the reduction in jobs

0

2,000

4,000

6,000

8,000

10,000O

ffice

& A

dmin

istra

tive

Supp

ort

Sale

s & R

elat

ed

Food

Pre

para

tion

& S

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ng…

Man

agem

ent

Heal

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re P

ract

ition

ers &

…

Tran

spor

tatio

n &

Mat

eria

l…

Educ

atio

n, T

rain

ing

& L

ibra

ry

Prod

uctio

n

Cons

truc

tion

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n

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onal

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e &

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&…

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l

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, Phy

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ocia

l Sci

enceProj

ecte

d Jo

b O

peni

ngs

Per Y

ear

Occupational Group

Growth is expected to continue to be concentrated in occupations that require post-secondary education…

-8,000

-4,000

0

4,000

No

form

al e

duca

tiona

lcr

eden

tial

High

scho

ol d

iplo

ma

oreq

uiva

lent

Som

e co

llege

, no

degr

ee

Post

seco

ndar

y no

n-de

gree

awar

d

Asso

ciat

e's d

egre

e

Bach

elor

's de

gree

Mas

ter's

deg

ree

Doct

oral

or p

rofe

ssio

nal

degr

ee

Proj

ecte

dJo

bCh

ange

Betw

een

2016

and

2026

Usual Education Requirement

…Though the distribution of jobs is expected to change only marginally and most jobs do not require post-secondary ed…

0

50,000

100,000

150,000

200,000

250,000N

o fo

rmal

edu

catio

nal

cred

entia

l

High

scho

ol d

iplo

ma

oreq

uiva

lent

Som

e co

llege

, no

degr

ee

Post

seco

ndar

y no

n-de

gree

awar

d

Asso

ciat

e's d

egre

e

Bach

elor

's de

gree

Mas

ter's

deg

ree

Doct

oral

or p

rofe

ssio

nal

degr

ee

Jobs

Usual Education Requirement

2016 2026

…And there will be many more job openings in occupations that do not require post-secondary education

0

5,000

10,000

15,000

20,000

25,000

30,000

No

form

al e

duca

tiona

lcr

eden

tial

High

scho

ol d

iplo

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ter's

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ree

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or p

rofe

ssio

nal

degr

eeProj

ecte

d Av

erag

e An

nual

Job

Ope

ning

s

Usual Education Requirement

Growth is expected to continue to be concentrated in occupations that pay at the upper and lower ends of the

earnings spectrum, with somewhat fewer middle wage jobs…

-7,500

-5,000

-2,500

0

2,500

5,000

<$14.50 $14.50-23.99 $24+

Proj

ecte

d Jo

b Ch

ange

Bet

wee

n 20

16 a

nd

2026

by

2017

Med

ian

Hou

rly W

age

Hourly Wage Bracket

…Though the distribution of jobs by median wage is only expected to change marginally with the largest share in the middle

0

50,000

100,000

150,000

200,000

250,000

<$14.50 $14.50-23.99 $24+

Jobs

by

Med

ian

Hou

rly W

age

in 2

017

Hourly Wage Bracket

2016 2026

The number of STEM jobs is expected to riseoffset by declining numbers of non-STEM jobs…

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

STEM Occupations Non-STEM Occupations

Proj

ecte

d Jo

b Ch

ange

, 201

6 to

202

6

…Though jobs in STEM occupation are expected to risefrom just 11 to 12 percent of employment

0

100,000

200,000

300,000

400,000

500,000

600,000

2016 2026

Jobs

STEM Occupations

Non-STEM Occupations

STEM jobs tend to be described as a homogeneous group –they are not. 56% are in healthcare occupations and 16% in

computer and math occupations. Not all are growing.

Management

Computer & Mathematical

Architecture & Engineering

ScienceEducation

Healthcare Practitioners &

Technical

Sales

0

20,000

40,000

60,000

80,000

Jobs