Editor’s note: The following commentary appeared on thedailyrecord.com on March 16, 2017.
There’s a lot of merit to the proposed legislation submitted by Governor Larry Hogan and making its way through the Maryland General Assembly that would provide tax incentives to businesses that increase manufacturing jobs in economically distressed jurisdictions.
A similar proposal died last year in the General Assembly. But the Hogan administration spent some time since examining the concerns expressed by existing manufacturing companies and revamped the legislative proposal to address those competitive issues. Recognizing the manufacturing potential for Baltimore and its current economic status, the city was also added to the list of jurisdictions where the tax breaks would be available.
Tax incentives in the legislation include an income tax credit for existing manufacturers in the qualifying jurisdictions that increase employment. The companies that qualify for the program can receive the tax break for 10 consecutive years.
The addition of Baltimore to the “More Jobs for Marylanders Program” is significant. Businesses in the manufacturing industry often offer entry-level jobs that, with proper training and hard work, can lead to career pathways and higher-paying positions as workers advance in their knowledge and skills.
Such career pathway jobs are desperately needed in Baltimore, which struggles with pockets of extreme poverty and high unemployment in some neighborhoods. Specifically, the unemployment rate among African American males in the city aged 20 to 24 is 37 percent, according to the American Community Survey (2011-2013). By contrast, unemployment for white males in the same age group in the city is 10 percent, the survey found.
Baltimore already has a number of strategic assets in place that, along with the tax benefits, would present the city as a highly attractive manufacturing location, including access to a number of vital distribution hubs and links that appeal to manufacturers for their business operations:
- The Port of Baltimore, which offers a deep-water channel and modern, efficient cranes that can load and unload products from the giant new cargo ships that are becoming standard among the shipping lines.
- Baltimore-Washington International Thurgood Marshall Airport, where a number of major air cargo providers operate.
- Proximity to Interstates 95, 83 and 70 for distribution by highway to key markets to the north, south and west.
- Two Class I rail lines that can handle cargo traffic.
Adding even more appeal to Baltimore for manufacturing businesses are the two new major land parcels being redeveloped for commercial operations – Port Covington in South Baltimore and Tradepoint Atlantic near the port. Both properties are well positioned geographically for manufacturing operations, especially those needing access to rail, water and interstate road systems.
Ideally, should the legislation be adopted, the state and city would work with businesses that pursue the tax program to ensure Baltimore residents from high unemployment neighborhoods have the opportunity to apply for the new jobs, are placed in nonprofit or private sector workforce training programs or are directed to work-skill programs offered through local community colleges and workforce development organizations.
Not a panacea
All this is not to say that the manufacturing jobs tax credit legislation is a panacea to end poverty and unemployment in the city.
The governor’s manufacturing tax credit proposal is an additional tool that is worthy of passage to place the state, city and economically distressed communities in a posture to lure additional manufacturing jobs, one of the fastest growing industry sectors in our state. It might also align with policy proposals being bantered about in the Trump administration to make good on a campaign promise to increase manufacturing jobs in the U.S.
The manufacturing industry overall, and certainly in Maryland, has changed during the past two decades. The manufacturing sector (which gets lumped in with construction, logging and mining by data collectors) has lost more than 104,000 jobs statewide since 1990, according to a state analysis examining the proposed legislation. By comparison, since 1990, jobs in education, health care and other sectors grew by more than 432,000, according to the same analysts.
However, it should not be overlooked that from December 2015 to December 2016, Maryland added 2,000 manufacturing jobs, a gain that placed it No. 7 among states nationwide, according to the Department of Commerce.
The major drivers leading a transformation of the manufacturing sector are advanced digital technologies, customer needs and increased productivity. These dynamics are leading to what some are dubbing a “new industrial revolution.”
Modern-day manufacturing operations are high-tech and in need of a diverse, skilled workforce drawn to designing and making goods and products. No longer are steel and cars the products the industry churns out in the state or Baltimore. Instead, the sector includes a diverse array of business lines, from defense contractors to bio-pharmaceutical makers to pre-fabricated homebuilders. In fact, computer and electronic product manufacturing is now the leading industry subsector with more than 17,000 jobs statewide, according to the Department of Commerce.
In a 2016 report by the Greater Baltimore Committee and Associated Black Charities, “STEM: Middle-Skill Career Pathways in the Baltimore Region,” advanced manufacturing was identified as one of six industry sectors that offer significant job growth and career development potential.
The report found that entry-level wages in the advanced manufacturing sector ranged from $12 to $15 per hour and those with training or certifications who qualified for middle-skill jobs earned up to $20 per hour.
For those who stay the course and make a career in the industry, wages can be substantial. The average wage in the manufacturing sector is $73,370, according to the Maryland Department of Commerce
The bottom line: Manufacturing appears to be an economic growth industry and the opportunity exists for Baltimore and the State of Maryland to take advantage of this job creation trend.
Donald C. Fry is President and CEO of the Greater Baltimore Committee. He is a frequent contributor to The Daily Record.