Economic hazards loom in county, experts say Excessive regulation, pending job cuts cited

January 24, 1996|By James M. Coram | James M. Coram,SUN STAFF

Howard County continues to be a bright spot in Maryland's economy but storm clouds loom on the horizon, a panel of financial experts told county business leaders yesterday.

Bureaucratic red tape, expected unemployment and regional arrogance toward business are signs of danger, according to economists Michael A. Conte and Mahlon Straszheim and business journalist Knight A. Kiplinger.

The three addressed a crowd of 94 business executives and elected officials attending a county Economic Authority forum on the local economy, held at the Johns Hopkins University Applied Physics Laboratory in Scaggsville.

Mr. Conte, a University of Baltimore economist, said that Howard -- with the third-lowest unemployment rate in the state -- is one of the state's brightest economic performers. But residential growth is outpacing business growth -- a worrisome trend, he said.

The county is adding jobs faster than the state average, he said, but most of that growth is coming from companies that provide residential services: furniture stores, retail stores, wholesale stores and restaurants.

"That puts a strain on government because it will collect fewer taxes" as those companies traditionally pay lower wages than other businesses, he said.

Dwindling construction -- which in the past was a vital factor in Howard's economy -- is another worry because it is not likely to rebound soon due to the amount of vacant office space in the county, he said.

Mr. Straszheim, a University of Maryland economist, called Howard "the most vibrant part of the state," but said the next 10 to 18 months are going to be difficult.

Downsizing -- the elimination of tens of thousands of jobs in government and private industry in Howard and neighboring counties -- is causing consumers, "who are already carrying huge debt," to lose confidence and curtail purchases, he said.

In particular, federal cutbacks expected to eliminate 20,000 high-paying jobs in the area over the next three to four years will

dampen consumer attitudes, spending

and the housing market, he said.

In the past, the federal government used to be one the best places for displaced workers to find jobs, he said, but no longer.

"Generalists who have worked for the government for 20 years are going to have a very hard time in the labor market," he said.

Mr. Straszheim also expects an increasing number of bankers and insurance industry workers to lose their jobs to corporate mergers and downsizing. He predicts that many nurses will become unemployed and expects physicians to see cuts of up to 25 percent in their incomes due to health care cost-cutting measures.

County Executive Charles I. Ecker told the crowd that the county would have to be a better friend to business.

Toward that end, he said that from now on, the county will take no more than 30 days to process nonresidential site plans -- except for those with extraordinary problems such as wetlands issues.

The county executive had promised in his state of the county address a year ago "to review the county's rules, regulations and requirements to see what can be changed to be more business friendly."

Mr. Kiplinger said that the region must do more to improve its perceived business climate.

"This is a high cost region" in which to do business, said Mr. Kiplinger, who edits Kiplinger's Personal Finance Magazine and the Kiplinger Washington Letter. "And we have a long way to go in overcoming haughtiness. This is an area in which it is difficult to get things done for business."

He said North Carolina can make routine regulatory decisions in 10 days, compared to 10 months to two years here and in surrounding jurisdictions.

"The middle Atlantic idea of streamlining is slow compared to other parts of the U.S.," he said.

That attitude comes from "the enormous prosperity this region has known so long," he said. Although the economy has turned "sluggish in the last couple of years," the negative business climate remains, he said.

Elsewhere, for example, cities would be delighted to have a National Football League franchise, Mr. Kiplinger said. But in this area, the Washington Redskins have been rejected by three communities: Washington, Alexandria, Va., and Laurel.

Likewise, many communities looking to generate jobs would welcome a Disney theme park, Mr. Kiplinger said -- but not this area. Haymarket, Va., turned thumbs down. "Unless you get out of this area, you can't appreciate the engines driving this economy."

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