Busy workers, invisible jobs Employment: Maryland, it seems, has been adding jobs faster than lots of people think. Infant businesses are the reason, and it takes a while for their doings to get counted.

March 02, 1997|By Jay Hancock | Jay Hancock,SUN STAFF

It's late morning at the Blimpie, and John Dickens is bracing for another lunchtime's worth of sub and salad orders. Only 2 months old, his restaurant in Baltimore's Avenue Market has just created 10 jobs in a city and state that badly need them.

But hardly anybody knows they exist.

Not government labor officials, who admit they have a difficult time tracking employment at newly created companies and habitually underestimate Maryland's job growth.

Not state legislators, who are considering big tax changes to improve Maryland's employment growth but who have been given a foggy view of how bad that growth has been recently.

Not Maryland business leaders, who keep bemoaning the state's officially reported 0.5 percent employment increase last year.

In fact, Maryland added jobs at a much better, 1.8 percent rate from December 1995 to December 1996, according to new, more accurate Labor Department figures.

That's much closer to the national job-expansion average of 2 percent.

The new data, which reflect total growth of 39,000 Maryland jobs in the year, won't be officially released until March 13 but were obtained by The Sun.

You can thank "business births" similar to Dickens' for the upgrade.

New businesses have been giving a significant, inadequately documented jolt to Maryland's economy, some analysts believe. Transforming airy dreams into payrolls, inventories and revenues, infant companies are extremely hard for economic bean-counters to find on first scan. It takes months for the firms' tax and unemployment-insurance records to make it onto the official rosters. Meanwhile, they're helping to drive business action.

"I will certainly admit that births are the hardest things for states to get on a current basis," said Alan Paisner, regional commissioner in the Philadelphia office of the U.S. Bureau of Labor Statistics.

"When a company goes out of business, you know that pretty quickly," Paisner said. When a company is created, he added, it takes much longer to find out.

Tracking new businesses has become what Paisner called "a hot issue" not only in Maryland but nationwide as well.

Some prominent economists, including Michael Conte at Towson State University, have criticized the Labor Department's figures for underselling Maryland and a few other states.

"There's been a very consistent pattern, and it is continuing to this day, that involves upward revisions in Maryland and a number of other states," Conte said.

Now the department is working on a scheme to locate new companies sooner.

Growth may be even greater

For Maryland, the issue is doubly relevant because other evidence suggests that company creation accelerated in the second half of 1996 and kept its momentum into this year. Some analysts believe that even the revised, 1.8 percent job-growth figures for last year don't give the state enough credit.

Stuart Frankel is managing director of Grotech Capital Group, a Timonium venture capital firm investing in very small companies with big growth potential. Capital for business start-ups is much more available now than it was a year ago, he said, thanks in part to the stock market's appetite for initial public offerings, or IPOs.

Business start-ups "are doing better for a number of reasons," Frankel said.

"There's more money available from groups like Grotech. There's more money available from banks. And, probably more important than any of those, is this voracious IPO market that we have."

Many of the business sprouts were planted in the sweeping corporate downsizing that hit Maryland and the rest of the country in recent years. Thousands of workers have taken their severance packages from Fortune 500 firms and used the money to capitalize their own outfits.

"We're seeing more and more of these sharp young people who are coming out of corporate America with the skills to run a business and the 401(k)s [retirement packages] to leverage financing," said Larry J. Smith, president of the Council for Economic and Business opportunity, a Baltimore group that helps entrepreneurs. "They move along very quietly, but nonetheless they plug along, hiring people."

Jonathan Brown's Baltimore company, Entrepreneurial Management Services, provides business planning and loan packaging for small companies.

"In the past six months, we've financed about 25 small businesses, and most of the businesses that we've worked with have been start-ups who have to hire people," Brown said. "I think we are seeing more start-ups, and I think you're seeing a better grade of start-up as a result of corporate America's downsizing."

Among the refugees

Blimpie's Dickens is one of the corporate refugees.

An executive at Ceridian Corp., he left the Minneapolis-based payroll-services company when it shifted some operations from Baltimore to California.

"I knew I wanted to start my own business when I walked out of there" in 1995, said Dickens, 59.

He's now an area developer for Blimpie, a growing, New Jersey-based sub-and-salad chain.

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