Donald Fry: New jobs data is sending Maryland a message

By Donald C. Fry

Maryland’s employment data for May, recently released by the federal Bureau of Labor Statistics, has to be disheartening for state elected leaders who pledged to focus on “jobs, jobs, jobs” before the last election.

It’s doubly frustrating for business advocates, myself included, who have been urging Governor Martin O’Malley and state lawmakers to make job creation and economic growth their top post-election priority.

Maryland lost 19,600 jobs in the 12 months between May 2010 and May 2011, according to the latest federal data. Twenty-two states, including three in the mid-Atlantic region, added jobs during the same period. Maryland ranked last for job growth among our mid-Atlantic competitors. Pennsylvania, Virginia and West Virginia all registered job gains. North Carolina, Delaware and New Jersey suffered employment losses that were fewer than Maryland’s.

This latest round of data underscores that, from a jobs standpoint, Maryland can hardly be said to have fully emerged from the recession. For me, the statistics also yield some vexing observations. For starters, over the last 24 months Maryland has experienced a net loss of almost 40,000 jobs. This is not the sustained jobs rebound that our state needs.

Possibly the most disconcerting element of Maryland’s jobs erosion is that it is occurring even as thousands of new BRAC-related jobs are coming to Maryland. Rather than experience a gain as a result of BRAC, we are losing jobs – even in the government sector, which experienced the largest numerical employment decrease among our state’s industry sectors in the last 12 months. Since May 2010, government jobs in Maryland have decreased by 9,900 – a 2 percent decline, according to the new federal data.

Maryland’s construction industry, which suffered a 4.6 percent employment decline of 6,700 jobs, was the hardest-hit sector during the last 12 months in terms of percentage job losses. Other sectors in our state that experienced job declines include manufacturing, which lost 2,400 jobs; trade, transportation and utilities, which lost 2,200 jobs, and the leisure and hospitality sector, which lost 1,900 jobs, the data show.

Only two major industry sectors in Maryland experienced job gains since May 2010 – professional and business services, which gained 4,600 jobs, and education and health services, which gained 1,100 jobs.

This kind of data drives home a compelling reality – major work relating to business climate remains to be done in order to position our state for economic competitiveness in the post-recession economy.

During the past year, the Greater Baltimore Committee and other business advocates have urged state leaders to move away from the notion that Maryland’s significant assets – including quality education institutions, highly-trained workforce, research and technology resources and high quality of life – are enough by themselves to nurture growth of existing businesses and to attract new ones to locate here.

Last year, the GBC distilled months of focus groups with Maryland business leaders and economic development experts into a report that detailed eight core pillars for economic growth and job creation in Maryland.

To his credit, Governor O’Malley has publicly praised the GBC report, “Gaining the Competitive Edge,” and has begun to work on initiatives that reflect the core pillars.

For example, during the General Assembly session, the governor pushed for his “Invest Maryland” initiative to generate a pool of investment capital within state agencies for growing the state’s life sciences and technology business sectors. Substantive and strategic state investments in business growth are among the core pillars.

Meanwhile, Governor O’Malley recently announced “Maryland Made Easy” and “Fast Track” initiatives aimed at cutting bureaucratic red tape, and simplifying and streamlining business licensing and permitting processes – key elements of the core pillar for “streamlined, stable, and predictable” regulatory policies.

This initiative is just getting started. Currently only some projects qualify for the state’s new “Fast Track” expediting process. It’s important for state agencies to eventually grasp the concept that, in a state that competes well for business, fast-tracking must be the rule, not the exception. But this is an encouraging beginning.

The governor’s leadership is an essential prerequisite, but in order to significantly strengthen Maryland’s business climate, two more things must happen.

First, state lawmakers must join the governor in a commitment to ending what has been a long-standing disconnect between the business community and state government over what constitutes a competitive business climate.

The General Assembly made progress earlier this year by passing the Invest Maryland legislation and opting not to move the state’s corporate tax system to a combined reporting method. But state lawmakers as a whole continue to be lukewarm to tax credits that are highly effective in nurturing business growth. And they continue to condone depleted funding for the state’s transportation infrastructure – a core pillar of a superior business climate. Others can’t resist engaging in an annual exercise of seeking to resurrect a “millionaires” tax, which directly contradicts the notion of a “fair and competitive” tax structure – another core pillar.

Second, the governor and lawmakers together must move beyond enacting a smattering of tactical initiatives and agree on, and fully embrace, basic principles for strengthening our state’s business competitiveness. Then they must together convert the principles into a more comprehensive strategy for strengthening Maryland’s business climate.

The jobs data for our state over the past two years, while clearly disappointing to elected leaders and business advocates alike, is nevertheless sending us an important message: Something is happening here.

The framework in which states compete for business growth is evolving. Fundamental, developing trends are shaping the post-recession economy. And they relate directly to business climate and the private-sector, which is the ultimate driver of economic sustainability and a high quality of life. The competition is stiffening

It’s critical that Maryland’s government leaders recognize these trends and act decisively and strategically to strengthen our state’s competiveness as a business location and its capacity for job growth.

 

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