In Northern New England, a dramatically tighter labor market and low unemployment rate is changing the hiring landscape for the region’s employers. Falling unemployment claims mirrored by lower labor participation rates reveal numbers that haven’t been seen in the region for several years. The trend promises to have lingering implications for employers and job seekers alike as forward-thinking businesses make efforts to adapt.
Unemployment Rate Drops
According to the Department of Labor, the unemployment rate in Maine is at its lowest point since 2002 after dipping to 4.1% in November. This rate is down dramatically from last year’s 5.5%, and well below the nationwide rate of 5.0%, which dropped from 5.8% in 2014.
This follows news of a September 2015 unemployment rate that reached its lowest point in more than eight years. Sagadahoc County enjoyed the lowest unemployment rate at 3.0% in November, the latest figures reporting, a change from 4.2% one year prior, followed by 3.1% for Cumberland County, down from 4.1%. While Somerset and Washington Counties have higher rates, (5.3% and 5.6% respectively), they also saw changes of 1.9 and 2 points lower than last year.
In New Hampshire, the most recent unemployment rate figures were even lower than in Maine, though its year-over-year change was less dramatic. New Hampshire’s seasonally adjusted unemployment rate for November 2015 was 3.2%, a drop from 2014’s 4.0%. This was also strikingly low compared with the nation, with the Southeast part of the state leading the ranks with the lowest percentage of unemployment claims.
While a drop in unemployed worker numbers can seem like economic prosperity on the surface, it’s important to keep in mind that labor participation rates – those actually looking for work – has dropped in Maine as well. A recent report from Maine Center for Economic Policy indicates that while baby boomers entering retirement contribute to the trend, there is less participation across segments – not just those of retirement age – including those aged 25-35, and those aged 35-44, which represent the core labor market. Such numbers highlight the state’s decreasing population and its challenge to retain and attract workers.
In New Hampshire, the labor force has decreased as well, by 0.5% from November 2014 to November 2015, with the most dramatic labor force decreases in Coos County. This is in light of a steady participation rates for the U.S. during the last months of 2015.
If these figures startled labor market forecasters, the story was not news to area employers. Many hiring managers have already experienced the dearth of qualified candidates, prompting CEOs to anticipate the squeeze on their bottom lines.
Preparing for a Tightening Labor Market
In light of this continuing trend, many businesses in the region may face the reality of rising wages and increasing competition. “As businesses prepare their 2016 budgets and projections, it would be prudent to plan for this potential cost increase,” said Mark Maness, CFO at Bonney Staffing, in a recent article, “Falling Unemployment Claims to Jump Start Wage Growth?“, addressing the implications of falling unemployment claims. For employers in Maine and New England, Maness suggests, it’s time for businesses to adjust projections to accommodate rising wages and make efforts to hold on to valuable employees, or risk falling behind as competition heats up.
In the current climate, being proactive about creating sustainable business practices is imperative, said Maness. In addition to budgeting for higher pay for new employees, he suggests that businesses take advantage of a cyclical or project-oriented workforce. He also recommends that hiring managers be meticulous about hiring competent, well-suited employees from the get-go to curb costly turnover.
For employees and job seekers, the trend may translate into more robust options. A tight job market means some employers will be willing to sweeten the pie with higher wages or more competitive packages in order to attract qualified candidates. In addition, employees seeking to make the change to a new career will find more employers offering on-the-job training. Employees previously prevented from competing for desirable positions because their skills and experience left some boxes unchecked may find a leg up with employers widening their reach and loosening once-stringent job requirements as they adapt to market trends in 2016.