Blame bad job stats on the counters Since major error in last recession, data undercounted

The Economy

August 30, 1998|By Jay Hancock

Maryland's job-growth reports are sputtering just in time to embarrass Gov. Parris N. Glendening's re-election run.

Maryland had only 0.7 percent more jobs in July than it did a year ago, the U.S. Labor Department said, placing the state in the company of such economic powerhouses as Wyoming and New Hampshire and ranking it close to worst in the country.

On a seasonally adjusted basis, the state actually had fewer jobs in July than it did in January. Such a "jobs recession" indicates that Maryland, almost alone in the republic, has fended off rampant prosperity and coaxed the wolf back to the threshold.

Glendening's opponents are basking in the lack of luster.

Democrat Glendening speaks often of Maryland's alleged vigor, and Ellen R. Sauerbrey, one of the Republicans running against him, is happy to find new evidence for her assertion that Maryland is "under- performing" the nation.

But don't write off Glendening yet. Or Maryland.

The Labor Department's job-growth figures are almost certainly wrong.

"What my a nalysis shows is that job growth is being underestimated and underestimated significantly" in Maryland, said Mark Vitner, an economist with First Union Corp. in Charlotte, N.C.

L "Job growth is a good bit stronger than it's been reported."

The Labor Department has a long, consistent and admitted history of selling Maryland short in the initial jobs reports.

Ever since they had to execute a big, downward, embarrassing correction in employment during the last recession, Maryland job-counters have played it safe.

Zealous not to tally phantom jobs, they've under counted employment in preliminary surveys and then revised results significantly skyward when accurate payroll records arrive many months later.

"We have a several-year history of upward revisions," said Patrick Arnold, director of labor market analysis for Maryland's Department of Labor, Licensing and Regulation, the federal government's contractor to gather the data. When hard payroll data come out, "I think it will be a noticeable upward nudge in the numbers," Arnold said.

This trend has caused no small distortion in Maryland's political conversation.

Every so often, preliminary, weakling employment data have prompted a rending of garments in the business community. When the healthier, accurate job census shows up as much as a year later, people pay less attention.

Glendening's 10 percent income-tax cut last year was carried at least part way through the General Assembly on bogus employment data that seemed to show an economy begging for stimulus.

Today, no indicator except the job count suggests that Maryland is in bad shape.

"I don't think there's anyone out there that believes that, on a seasonally adjusted basis, those [jobs] data have been declining since January," said Michael Funk, an economist who follows the state for the Regional Economic Studies Institute at Towson University.

"If we were losing employment that way , we would certainly see a rise in initial unemployment claims. And we've seen no such rise."

Housing and construction data are strong. Income and spending are holding their own. Office leasing in metro Baltimore and the Maryland suburbs of Washington "has picked up the strongest it has in 10 years," Vitner said.

"Companies wouldn't be leasing if they weren't hiring workers."

They wouldn't be flooding Maryland's treasury with money, either. Tax withholding is up a strapping 8 percent for the first half of 1998.

None of this is to confuse Maryland with South Carolina, which is adding jobs at a 5 percent annual rate.

But all the evidence suggests that state employment is growing a good degree faster than 0.7 percent. Maryland had 2.4 percent more jobs in the fourth quarter of 1997 than a year previously. That's the latest period for which hard payroll figures are at hand.

"I'm sure there's some slowing going on" since then, said Mark Zandi, an economist with Regional Financial Associates outside

Philadelphia.

"But it may be more due to the lack of available labor" than inherent slackness, Zandi said. "At this point I don't read the data to suggest that Maryland's economy is weakening to any significant degree."

Pub Date: 8/30/98

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