But critics question data in 'report card'


April 16, 1992|By John H. Gormley Jr. | John H. Gormley Jr.,Staff Writer

It might come as something of a surprise to the thousands of Marylanders who lost their jobs during the current recession, but the state's economy is the second strongest in the nation,

according to an annual "report card" from the Corporation for Enterprise Development.

The ratings, released today, cheered state economic development officials. "We're gratified for the way they sized us up," said Mark Wasserman, secretary of the state's Department of Economic and Employment Development.

However, some academics and economic development professionals question the rosy picture of the Maryland economy painted by the report.

Michael A. Conte, director of the Center for Business and Economic Studies at the University of Baltimore, thinks the Enterprise Development report overstates the vigor of the state's economy.

"It paints too bright a picture of Maryland," he said. "We should have fallen [in the rankings], probably a lot in the last year."

According to the report, "Maryland is weathering the national recession better than other states and continues to enjoy good quality jobs and widely shared economic opportunities among its citizens."

After comparing data on the economies of all the states, Enterprise Development, a Washington-based non-profit economic development consulting business, gives grades in three categories: economic performance, business vitality and development capacity.

Maryland, which received all A's last year, got two A's and a B this year. Although short of perfect, that was still good enough for an "honor roll" report card matched by only three other states, Minnesota, Delaware and Utah. In economic performance, Maryland was rated No. 2 in the nation behind Nevada.

Charles W. McMillion, president of MBG, a Washington-based business information firm, has a very different view of the condition of the state's economy. He thinks the recession started earlier here, went deeper and lasted longer than in the rest of the nation. "Maryland is faring very badly in relation to other states," he said.

Statistics compiled by the federal Bureau of Labor Statistics indicate that the Northeast, including Maryland, was the region hardest hit by the recession. Maryland lost 3.4 percent of its jobs from 1990 to 1991, according to the bureau. Only the six New England states, New York and New Jersey fared worse.

Mr. McMillion noted that in recent years the Enterprise Development report has given Massachusetts good marks, even though that state's economy has been "a basket case since 1988."

"I just think it's nuttier than hell," he said of the grading system.

Enterprise Development's computation of economic performance is not based primarily on employment figures. The report card also takes into account such things as average annual incomes, poverty rates and health-care coverage.

The point, Enterprise Development says, is that the quality of jobs in a state is just as important as, perhaps more important than, the number of jobs. "We look at what the data show in terms of job quality and performance," said Bryant Moore, a program associate. That approach gives Maryland high grades, in part by recognizing the large number of high-paying jobs that the Maryland economy continues to generate.

In the economic performance section of the report, states also are ranked on some quality-of-life issues. Those rankings are provided as information but are not part of the scoring that goes into the grade, which is fortunate for Maryland, since it compared poorly with most other states on a number of those issues. For example, the state ranked 47th in air quality, 40th in infectious diseases, 30th in heart disease, and 25th in cancer cases and teen-age pregnancy.

Educational attainment also was included in the scoring as part of the grade for development capacity. The findings depicted bTC two distinct populations in the state, one well prepared for employment and one not.

The state's high school graduation rate ranked 47th, yet it ranked second in college education.

Despite the low high school graduation rate, Maryland received an A in development capacity, along with the warning: "The state is held back, however, by its human resources, where it is found lacking in basic skills of its work force."

Another reason for Maryland's high ranking is that data used in the report are not current and might not reflect the extent of the damage done locally by the recession.

None of the information used for the study covers all of 1991. Several sets of data run only through 1990, and at least one set -- income distribution -- is based on a comparison of 1987 with 1989.

The report itself acknowledges that the grades might not reflect the most recent changes in the economy. The executive summary of the report states that because of "lags" in the data, "changes in the economies which are dramatic by anecdote may appear slight in the report."

The Enterprise Development study was financed by private foundations and labor unions. The corporation's director of state and local development, Mitchell Horowitz, defended the report, which he says gives businesses a good idea of which states will provide them with the tools needed for success.

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