Donald Fry: Maryland’s job growth data delivers a sobering business climate reality check

By Donald C. Fry

Economist Anirban Basu needed only two words last week to describe, for members of Maryland Economic Development Association (MEDA), his assessment of Maryland’s post-recession job creation performance: “extremely disappointing.”

Among other things, Basu noted that Maryland’s employment growth between April 2010 and April 2011 ranks seventh-worst in the nation.

In a presentation entitled “Your 19th Nervous Breakdown,” the inimitable Basu, CEO of Sage Policy Group, delivered a sobering reality check on June 6 to more than 200 economic developers and business representatives from across the state who had gathered in Cambridge for MEDA’s 2011 Annual Conference.

The good news was that Maryland added 13,330 jobs in five industry sectors during the 12-month period prior to April. The bad news was that our state also lost 12,000 jobs in other industry sectors. Maryland’s net job gain of 1,300 during that period ranked the 44th among the 50 states, Basu reported.

Maryland’s net job growth rate of 0.1 percent since April 2010 is dramatically less than the nation’s own underwhelming 1.0 percent job growth pace during the same period, according to Basu’s data.

How did this happen? The state experienced job growth in professional, business, educational and health services; trade transportation and utilities, and leisure and hospitality sectors. But offsetting employment declines occurred in construction, government, manufacturing, financial, and information sectors.

These numbers raise a compelling question: how can Maryland’s job growth be so sluggish when, as Basu put it, Maryland is being “gifted” with thousands of federal jobs through Base Realignment and Closure and the consolidation of federal cyber security resources here.

Part of the answer may lurk in the government employment statistics for Maryland. Despite the BRAC influx, and an increase in the share of federal jobs in Maryland from 5.25 percent in 2009 to more than 5.6 percent in 2010, overall government jobs in Maryland declined by 3,100 between April 2010 and April 2011, according to data presented by Basu..

Meanwhile, Basu warned that the current fiscal pressures to decrease federal spending could be a “sword of Damocles” hanging over Maryland’s economic future.

This underscores what we all know, but have to remind ourselves from time to time – we can’t rely on government jobs to drive our economy. A healthy and competitive private sector is the only thing that will ultimately power Maryland to the other side of this recession.

Ironically, Maryland’s below-average job growth in 2010 is contrasted by a growth in state gross domestic product, which exceeded the national average. Maryland’s 2.9 percent GDP growth in 2010 was greater than the national average of 2.6 percent. Maryland’ GDP growth ranked fourth among seven mid-Atlantic states last year, according the U.S. Bureau of Economic Analysis.

GDP growth in West Virginia (4.0 percent), North Carolina (3.4 percent), and Pennsylvania (3.0 percent) exceeded that in Maryland. Our state ranked above Virginia (2.5 percent), New Jersey (2.5 percent), and Delaware (1.3 percent).

But the long-term sluggish job growth in Maryland remains troubling.

This has to reinforce, for elected leaders, that creating a competitive business environment that generates jobs and economic growth must remain Maryland’s top public policy priority for the foreseeable future.

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