State’s jobless statistics disputed Self-employed added to bolster jobs figures

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BANGOR – Maine’s low unemployment rate – promoted as an indication that the state is creating jobs faster than some states – factors in a group of workers that other state averages do not: the self-employed.

In June, Maine’s unemployment rate was 4.1 percent compared to 5.6 percent nationally.

Critics of counting self-employed individuals say the state Department of Labor is presenting a much rosier employment picture than it is in actuality.

They say people who occasionally fix cars in their garages to provide for their families, for example, may call themselves self-employed only because it sounds better than saying they cannot find a job with a regular paycheck – a job that typically is counted by labor departments.

But supporters of counting the self-employed say the addition is a reflection of Mainers’ ingenuity, that the downtrodden will find ways to pick themselves up from adversity.

Proponents say that the “creative economy” being touted heavily by Gov. John Baldacci is being fueled not just by artisans but by innovators, too.

In the first six months of this year, Maine has gained 7,700 new self-employed individuals compared to the same period last year, according to Dana Evans, an analyst with the state Labor Department’s Labor Market Information Services.

That’s almost double the gain of 4,000 nonfarm wage and salary positions created during the same period at businesses that pass out regular paychecks and offer fringe benefits such as health care and 401(k) plans.

These jobs are the ones primarily counted by the federal Bureau of Labor Standards and state labor departments.

An all-time high

Overall, the state has gained the number of nonfarm wage and salary jobs it lost when the national economy went into a recession three years ago, Laura Fortman, commissioner of the Department of Labor, said in a statement released Monday.

“Gains in nonfarm wage and salary jobs, combined with an increase in self-employment, have resulted in the total number of Maine residents employed reaching an all-time high in May and June, surpassing 670,000,” Fortman said.

The gains have been in health care and social assistance, retail trade, leisure and hospitality services, government and construction.

More than 65,600 people in Maine are self-employed, and “that could be from somebody hauling gravel to somebody starting a consulting business,” Evans said.

“I wouldn’t treat the numbers as absolutes,” he said. “We’re more interested in trends. Basically, I’m looking at these as trends – where’s the job growth coming from – and it’s coming from both [conventional jobs and self-employment].”

Counting the self-employed is done a number of ways, from a notification to the labor department by people who have exhausted their unemployment benefits to people who have filed a notice with Maine Revenue Services for business tax purposes.

Evans said the self-employed individual is a person who, like other workers at traditional jobs, is collecting pay and not unemployment benefits.

Figures questioned

John Hanson, director of the Bureau of Labor Education at the University of Maine, said Tuesday it’s misleading for the state to lump increases in the number of self-employed with gains in traditional job sectors.

He said the classification of self-employed people is hard to define and not a reliable indicator of economic strength.

“I’m disappointed that they’re changing the figures,” Hanson said. “We’re supposed to be talking about the number of people gainfully employed in wage-and-hour jobs. They could be folding in people making jams on their kitchen stoves just to get by.”

Hanson said self-employed individuals who run successful businesses and earn consistent paychecks already are counted in the other more traditional job sectors.

But most self-employed people are not the same as those who have an idea for a product and service and hope to build a job-creating business around it, he said. Instead, they’re desperate for quick cash and there are no other jobs.

“I know people create businesses and that’s wonderful,” Hanson said. “But it’s not because their creative juices are flowing. It’s because they have no alternative”

Christopher St. John, executive director of the Maine Center for Economic Policy, said it’s a badge of honor for people to say they’re self-employed even though they may be individuals who have exhausted their unemployment benefits and are doing odd jobs to make financial ends meet.

“It is terrific that Maine people are as entrepreneurial as they are, to make due under difficult circumstances,” St. John said. “But many of these people are calling themselves self-employed because they like to call themselves that.”

A good job

But David Clough, director of the Maine branch of the National Federation of Independent Businesses, said self-employment should not be entirely discredited.

“Sometimes the self-employment turns into a good job for them,” he said. “Sometimes it puts them in a holding pattern until they can find a job. It does mean people are working one way or the other and are contributing to the economy one way or the other.”

For Chris Nickerson of Hermon, a former Eastern Fine Paper Co. worker, self-employment is a form of rescue from the uncertainty of whether he would ever be laid off again if he found another job.

Nickerson has started a business called “The Gravel Doctor,” which restores gravel-paved driveways. He has had 18 calls since he placed an advertisement last week.

“I had made my mind up that I didn’t want to be put in the same situation again,” Nickerson said. “As much as possible, I want to control my own destiny.”