Latest Data Show Robust Supports for Unemployed Marylanders Are Still Critical

There are still nearly 200,000 Marylanders who are out of work and economic recovery from the COVID-19 pandemic in the state still has a way to go. The April state employment data reinforces the need to continue expanded unemployment benefits and other economic supports to ensure out-of-work Marylanders can still afford the basics.

This week, Governor Hogan said he plans to end Maryland’s participation in federal pandemic unemployment programs July 3. These programs have been a vital lifeline to hundreds of thousands of Marylanders throughout the pandemic and have prevented the recession from becoming worse. Ending the state’s participation before these programs expire in September essentially means taking available federal relief funds out of unemployed Marylanders pockets. The governor should reverse this decision.

Maryland’s unemployment rate in April 2021 was 6.2%, unchanged from March. While below the peak of 9% one year ago, there are still far more people out of work than there were before the pandemic. The state’s pre-pandemic unemployment was 3.5% in March 2020.

In summary, we’re about halfway down the hill. Since the pandemic, unemployment has increased by 5.5 percentage points, and since then it’s fallen by 2.8 percentage points, to 6.2% where it lies as of April 2021, being 2.7 percentage points higher than what it was before the pandemic.

In addition to the unemployment rate, the labor force participation rate also took a notable hit from the pandemic. The labor force participation rate, simply put, is the percentage of the population that is either actively working or seeking work. As of late, health concerns about being exposed to the virus, coupled with the lack of childcare access among a multitude of other factors caused the labor force participation rate to drop significantly.

Notable points about the Labor Force Participation Rate:

• The pre-pandemic labor force participation rate (March 2020) was 69.1%
• Based on seasonally adjusted data, the MD labor force participation rate in April 2021 was 65.3%, just 0.1 percentage points above what is was the month prior.

Similar to unemployment, Maryland is a little less than halfway to making it back to the pre-pandemic labor force participation rate. Over the past few months the rate has increased minimally, but consistently, increasing between 0.1 and 0.2 each month since January 2021. For the State as a whole it seems that workers are slowly beginning to return to the labor force in search of jobs.

As time passes and more Marylanders are fully vaccinated, more people are deciding to return to work. Although there is a positive correlation between workforce participation and being vaccinated, there are a number of other factors that are keeping eligible Marylanders from employment. From April 28 to May 10 the Census reported that there were 1.7 million Maryland adults not employed during this period, of whom 900,000 were retired, disabled, or sick (not COVID-19).

Among the remaining 815,000 who aren’t employed:

• 29% were laid off or furloughed, or their employer temporarily closed or went out of business because of the pandemic
• 14% were caring for kids
• 5% either had COVID-19 or were caring for someone with COVID-19
• 3% were caring for an elderly person
• 2% didn’t have transportation to work

Unemployment benefits also continue to be a vital lifeline to Marylanders. According to the most recent Census survey:

• 200,000 Maryland workers received unemployment benefits in the last seven days; 65% of these workers are people of color and 54% are Black
• 53% of Maryland adults currently receiving unemployment benefits are caring for kids
• Among Maryland adults not employed, retired, or disabled, 17% sometimes or always didn’t have enough to eat
• Among Maryland adults who used unemployment benefits to meet spending needs, 32% sometimes or always didn’t have enough to eat
• Among Maryland adults who used unemployment benefits to meet spending needs, 39% were behind on their mortgage or rent
• Among Maryland adults who used unemployment benefits to meet spending needs, 70% report that it was somewhat or very difficult to pay for usual expenses during the pandemic

Governor Hogan has announced plans to end pandemic unemployment programs and reinstate work search requirements for people receiving unemployment. These additional barriers to accessing unemployment harm those who are still relying on these funds to keep a roof over their heads and food on the table. This is not only cruel to Marylanders who are already struggling – it will be detrimental to the state’s economic recovery, as people receiving unemployment payments are spending those funds in their communities.

There is some evidence suggesting there are short-term worker shortages in isolated sectors, particularly leisure and hospitality, according to recent national data. In Maryland, this sector lost 136,900 workers in the first month of the pandemic and has gradually risen to approximately 50,000 fewer workers than before the pandemic hit.

No matter what the state of the economy there are always a number of pockets and sectors in the workforce that are going to have labor shortages. There are a variety of factors affecting the recovery of restaurants and other businesses in the leisure and hospitality sector, including the ongoing concerns about being exposed to coronavirus, child care needs, or workers in that industry who have found other types of work after being laid off. Another reason is that employers are not offering wages high enough to attract workers, which Bureau of Labor Statistics data suggests is the case in Maryland:

• Average hourly earnings in the leisure and hospitality sector were $18.20 in April 2021, compared to $19.50 in Apr 2020 and $17.13 in Apr 2019. The 2020 number is skewed by a lot of low-wage job loss, but comparing 2021 to 2019 gives average annual growth of 3.1%.
• Comparing March 2021 to March 2020, leisure and hospitality wages grew 5.2% March 2020 to March 2021, exactly the same growth rate as the rate from March 2019 to March 2020

This data conveys that there is not much evidence that leisure and hospitality employers are bidding up wages in an attempt to compete for workers. To attract employees to return to a high-risk job, some Maryland employers may need to raise wages or use other measures to attract applicants.