Maine’s economy faces a paradox that presents us both with a problem — a severe shortage of skilled workers — and a unique opportunity — thousands of “prime age” adults who are out of the workforce.

Maine’s unemployment continues at historic lows, but the persistence of unfilled job openings means lost potential wages, profits, taxes, and growth opportunities. Employers cannot find qualified job applicants and so established Maine companies choose to expand elsewhere, while prospective investors, scouting business locations, judge Maine unfavorably.

Maine’s low unemployment rate masks deeper problems, too, including the thousands of adult workers who remain out of the labor force because they lack the personal qualities and technical skills to qualify for high-demand jobs. Displaced worker stories are sadly familiar: retail employees ousted by online shopping, office staff replaced by information technology, and mill workers losing out to automation and plant closures. Other stories chronicle displaced workers’ “downward mobility” to lower quality jobs like custodians, store shelf stockers, and burger flippers.

Given Maine’s net out-migration and its aging population, these workforce-eligible adults represent an untapped potential to support economic growth and broader prosperity. But, re-integrating them into an economy with a shifting sector mix and rising skill demands requires new strategies and investments to raise skill levels and overcome social, psychological, and geographic obstacles.

SCALE AND SCOPE

What are the scale and scope of Maine’s displaced worker challenges? A few statistics and examples help paint the picture:

• One-fourth of Maine’s 20,000 officially unemployed this April had been out of work more than half a year. Rural unemployment is far higher than in metro regions, with Washington County’s 5 percent rate more than double Cumberland County’s.

• The actual number of Mainers either unemployed, involuntarily working part time, or discouraged from job seeking is twice the official unemployment level.

• Labor force participation among Maine adults ages 25 to 54 dropped from 87 percent in 2001 to 82 percent in 2017. That decline represents 30,000 more working-age Mainers not participating in the economy. In rural Somerset County only 58 percent of prime-age adults are in the workforce and many scrape by, combining safety net programs such as food stamps and disability insurance with unreported “gray market” activities.

• Most of the 30,000 jobs Maine lost in the Great Recession were in the male-dominant manufacturing and construction sectors. Many former family breadwinners exhausted unemployment benefits without finding new full-time jobs and never received appropriate counseling and training for jobs in the growing service sectors.

• In 2016, 21 percent of Maine men with less than a high school diploma were out of the workforce, compared to less than 6 percent of men with a college degree. A similar pattern holds for women.

• Among Mainers ages 25 to 54, “deaths of despair” surged between 2000 and 2015. The suicide rate rose 45 percent, accidental drug-related deaths increased by 577 percent, and deaths from alcohol-related illnesses 185 percent.

• Nationally, clinical depression is more than twice as common among unemployed people as among job holders. Nearly 1 in 5 people out of work a year or more suffer from depression. Hopelessness is part of their story. Seventy percent of those unemployed less than five weeks expect to find jobs within a month, but the figure drops to 29 percent for those jobless a year or more.

NEW OPPORTUNITIES

Of course, there is also some good news. With persistently tight labor markets and record job vacancies, some discouraged workers are finding new opportunities. The number dependent on Social Security Disability Insurance is also beginning to decline. However, Maine’s workforce strategy is poorly designed to take advantage of our unique full employment environment.

Technological innovation and globalization have eliminated millions of jobs since the 1980s, but policymakers have not fully appreciated the adverse impacts of lost career jobs on workers, families, and communities. Consequently, there is not a widespread understanding of the human resource investments and transitional supports needed to re-integrate workers. Narrowly targeted and underfunded job training programs with complicated eligibility criteria have yielded inadequate worker inclusion. They have also fallen far short in delivering the comprehensive services workers need to meet the challenges of moving to new industries, occupations and locations.

Most of all, the level and duration of income support, coupled with health insurance, that workers and their families need to survive long spells of unemployment have never been effectively integrated with job training programs, nationally or in Maine.

Our proposals for re-integrating thousands of Maine’s displaced workers into “good jobs” have two components: first and foremost, a strategy responding to the needs of today’s workers and employers; and second, a longer-term strategy for continuous skill upgrading, grounded in strategic information about emerging areas of job growth. Reactivating thousands of Maine workers, many sidelined for several years, requires coordinating investments, delivering comprehensive services, and building close public-private cooperation. We recommend the following three policy initiatives.

POLICY INITIATIVE

First, Maine’s next governor and Legislature should strongly prioritize the long-term unemployed and those out of the workforce for enrollment in state and federal workforce development programs.

This strategy must mobilize employers, state and regional workforce agencies, colleges and universities, adult education providers, and the social services network as partners to grow Maine’s labor supply by thousands of workers. Recruitment of program participants should build renewed self-confidence and enthusiasm by highlighting examples of attractive career opportunities and pathways to qualification.

Second, Maine’s Workforce Investment Board must take the lead, coordinating the work of service providers to design support systems that meet this population’s complex needs. Many workers long out of the labor market have serious “employability deficits.” They require more intense and innovative counseling than current job training programs offer, including personal, health and vocational guidance.

Maine workplaces have changed since the Great Recession, with shifting occupations, higher skill requirements, and new employment arrangements. Helping displaced workers prepare for these new realities will require public-private partnerships that offer a range of internships, on the job training, and apprenticeships — along with relevant classroom training.

Finally, successful job training and placement require adequate income support, health insurance, and relocation assistance.

A vast array of programs and resources are available to support the re-integration strategy. The big challenge is to mobilize and coordinate them effectively. Examples are federal Workforce Innovation and Opportunity Act programs, Pell grants, Maine adult education, vocational rehabilitation services, the Maine Community College System’s Quality Centers, and training linked to social services and housing programs.

The state’s Competitive Skills Scholarship Program specifically aims at low-skill workers, and several colleges and universities target special scholarship aid to unemployed workers. Tight labor markets have also induced many private employers to increase investments in job training and employee development. A larger investment is required, however, to return large numbers of displaced adult workers to gainful employment.

Third, as hinted above, employers must be partners in the effort to re-integrate displaced adult workers. They have a key role in designing public programs to ensure that participants’ motivation and skills will meet their needs. They must be prepared to take some risk by hiring the long-term unemployed and offering them internships, tryout employment, on the job training, and apprenticeships, where appropriate. Maine should consider establishing a job creation tax credit to incentivize hiring, up-skilling and retaining displaced workers.

Finally, workforce counselors need to support individual workers as they adjust to new employment conditions.

IN THE LONG TERM

Looking to the longer term, Maine’s continuing full employment gives us a unique opportunity to implement innovative measures to keep the state’s workforce at the forefront of changing skill needs. Maine should consider several initiatives that have been effective elsewhere:

• Frequent Department of Labor skill audits to anticipate which skill demands are likely to grow and decline over the coming five to 10 years.

• Individual training accounts, whereby employers and employees each contribute a small fraction of wages to finance investment in skill upgrades, including paid employee leaves of absence to sharpen skills and explore new career possibilities.

• A partial layoff plan to keep employees at work through cyclical or sectoral declines in labor demand. It would be funded in part by unemployment insurance benefits, combined with wages.

Finally, a few words on the benefit-cost calculus. In states like Minnesota and countries like Sweden that have made major investments to move displaced workers onto new career paths, up-front costs have been in the thousands of dollars per worker. But those investments have repaid society — and taxpayers — many times over as discouraged workers have moved from dependence on safety net programs to being productive employees — and taxpayers.

Perhaps most importantly, gainful employment has helped them re-capture their sense of purpose, self-reliance and self-worth.

We hope that these proposals, fully fleshed out, will inspire Maine’s next governor and Legislature.

David Vail is the Adams-Catlin Professor of Economics Emeritus at Bowdoin College. He was a founding board member of the Maine Center for Economic Policy. John Dorrer is a labor economists who served as the Center for Workforce Research and Information within the Maine Departmet of Labor.

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