Donald Fry: A ‘Plan B’ needed for job creation in Baltimore region, state

By Donald C. Fry

How could the Baltimore region experience job losses in six of eight major employment sectors since 2008, yet rank in the top five for employment performance when compared to 19 other key competing U.S. regions?

The answer lies in our region’s only two job-growth industries over the last several years – the government sector and the educational and health services sector. Employment increases in these two sectors enabled Greater Baltimore to weather the recession better than most.

Each of these sectors, which together account for more than 36 percent of the jobs in the Baltimore region, experienced job growth while jobs in the region were declining in every other major industry category, according to U.S. Bureau of Labor Statistics data in the 2011 State of the Region Report released this week.

The report was compiled by the Greater Baltimore Committee and the Baltimore Metropolitan Council. It ranks the Baltimore region and 19 other competing regions on 112 benchmark indicators of business vitality, economic health and quality of life.

Overall, our region lost 1.6 percent of its jobs between 2008 and 2010 ranking Greater Baltimore fifth best – tied with the Indianapolis region – during a time when all regions studied for the report lost jobs.

Most fared considerably worse than the Baltimore region, with job erosion ranging between declines of 1.9 percent and 3.6 percent in the 14 regions that had greater percentage job losses than Baltimore.

The best performers – the Austin, Texas, and Washington, D.C. regions – each experienced 0.6 percent job losses. Pittsburgh and Boston, with job losses of 1.1 percent and 1.4 percent respectively, were the only other regions to outperform Baltimore between 2008 and 2010, according to the report.

The Baltimore region’s 2 percent growth in education and health services jobs and 1.4 percent growth in government jobs cushioned our region’s overall job losses.

It’s long been said that the “Eds, Meds, Feds and Beds” are the backbone of the Baltimore region’s economy, notes Dr. Daraius Irani, director of Towson University’s Regional Economic Studies Institute, who conducted the State of the Region data analysis.

“In the darkest period of the economic downturn, these sectors kept the region from falling further into the economic abyss,” Irani writes. However, he cites several looming challenges related to the significant federal impact on the region’s economy.

First, says Irani, is that our region may potentially be more vulnerable to fiscal belt tightening, particularly at the federal level, than competing regions.

“A disproportionate share of the region’s workforce is employed directly by the federal government and a large portion of the region’s small and medium-sized businesses are contracting with the federal government,” he cautions.

Secondly, while billions of dollars in federal grants have enabled our region’s universities to lead the nation in research and to achieve world rankings in numerous fields, the Baltimore region’s share of research-based commercialization lags behind other regions and states, Irani notes.

Maryland needs a “Plan B” for business growth beyond its traditional strength in government-related business, Irani contends.

Among many positive findings in the 2011 State of the Region Report, the region and Maryland clearly have an abundance of fundamental elements for robust business development, including a highly-educated workforce and superior technology resources. Maryland continues to rank third in the nation for capacity to thrive in the emerging economy, according to the widely-accepted Kauffman Foundation’s New Economy Index. But Maryland must vigorously build on its considerable strengths.

“Maryland is poised to move upward if policy makers remove the barriers to entry for new businesses and provide incentives that create a more welcoming business environment,” writes Irani. “Without movement toward the continued growth of a strong workforce and a breakdown of some barriers faced by new businesses, the road to recovery will be longer and more difficult.”

The new State of the Region Report underscores the fierceness of competition for job growth among regions and states in the U.S. Of eight major employment categories measured in the report, our region’s employment percentages are less than the national average in five of six categories that are not largely related to government.

Of course, Maryland should continue to cultivate its natural advantage that comes with having a large federal presence in the state. But as a matter of policy we must build on our strengths in technology, health, and business services in ways that promote job growth and economic development beyond government-related sectors.

To accomplish that, elected leaders must make strengthening our region’s and state’s competitiveness their top public policy priority. In doing so, they must keep in mind that the future success of Baltimore and Maryland will ultimately be gauged by a straightforward measure – job creation.

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