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The unemployment rate in Maryland is now the lowest in the country at 1.7% in October. Most would think that is good news, but there is a downside to it. Businesses and several industries are struggling to fill vacancies. WBAL-TV looks into how that’s possible.

It’s an ironic twist of fortune that has many people racking their brains for an answer and shaking their heads in disbelief. Flaunt, a successful locally owned hair salon in Hampden, wants to expand but is running into an unexpected problem.

“It’s been hard for me to find qualified stylists to hire,” said the owner of Flaunt Salon, Lindsey Hall. “I kind of go in and out putting out applications, and I don’t hear anything, or I will get just a bunch of people who are not going to fit.”

Flaunt is experiencing the consequences of the state’s low unemployment rate. At 1.7%, the lowest in the country, economists refer to the phenomenon as “skimp-flation” — doing more with less and scaling back to stay afloat.

“The labor participation rate went down during (COVID-19) and has never recovered to the pre (COVID-19) levels,” chief economist at the Regional Economic Studies Institute (RESI) Daraius Irani said. “It is causing some stresses in the labor market; many firms are finding it difficult to hire workers.”

Towson area businesses are also feeling the hiring pinch. Everyone is asking the same question.

“Where are all the workers before (COVID-19) and where have they gone? We can’t figure it out,” said Nancy Hafford, the executive director of the Towson Chamber of Commerce.

Economists point to people simply dropping out of the workforce, retirements, going back to school, or moving to areas that are less expensive to live and working from home. Business leaders see a worker’s market.

“I’ve seen people manipulating employers, saying ‘I will only come in and work for you if I work part time,'” Hafford said.

The medical field, hit hard by COVID-19, is struggling even more because of the low unemployment rate. According to the Maryland Hospital Association, one in five nursing positions is vacant. The turnover rates among registered nurses, licensed practice nurses and nursing assistants range between 26 and 41%.

The Maryland Hospital Association issued this statement:

“The state’s lower unemployment figures, while a welcome indicator of economic recovery, do not capture the unique struggles faced by the health care field, particularly in the recruitment and retention of qualified personnel.”

“It’s been difficult in a sense we get a lot of walk-ins, so if we don’t have stylists to accommodate them, we have to turn business away,” Hall said.

Irani predicts that, with no short-term solution, there may be more interest in investing in artificial intelligence-driven automation as a substitute for human labor.