Employment figures show city rides out economic slump well

Mayor says emphasis on crime reduction reassures businesses

October 31, 2002|By Tom Pelton | Tom Pelton,SUN STAFF

Last spring, David R. Nelson was thinking of moving his company's 550 employees from downtown Baltimore to the suburbs so the firm could expand and enjoy free parking.

However, during a July meeting at the headquarters of Sierra Military Health Service Inc. on Market Place near the Inner Harbor, Mayor Martin O'Malley pushed hard to persuade Nelson to stay, offering subsidized parking, low-interest loans and a promise of a safer city.

As a result, Nelson's company is opening its new offices not in suburbia but in a new 15-story office tower at 750 E. Pratt St., which is surrounded by several other office buildings under construction.

O'Malley's success in persuading Sierra Military and other businesses to remain or expand in the city is one explanation for why Baltimore is faring better than many other major U.S. cities during the recession, according to some local economists.

Nearly 10,000 more city residents reported having jobs in the city or elsewhere during August than three years earlier, a 3.7 percent increase, according to U.S. Department of Labor statistics. That percentage placed Baltimore seventh among the 20 largest U.S. cities in employment growth among residents during that period.

In addition, Baltimore's home values have surged 19 percent in the past three years, beating the national average of 17 percent during a time of low interest rates.

And six office buildings have been built or are under construction since 1999, ending a decade-long drought for the city that came, with painful irony to some observers, during the largest economic expansion in the nation's history.

The roaring 1990s largely bypassed the town that called itself "Renaissance City" during the 1980s. Now Baltimore - often eccentric and behind the times - is performing well as the rest of the nation slumps, economists say.

"Martin O'Malley was elected mayor [in 1999] during a very soft time in the nation's economy, and yet the city has done very well under him," said Anirban Basu, an economist at Towson University. "It's very much unlike the collapsing job base and disinvestment that happened to the city during the last recession, in the early 1990s."

In addition to the good news for the city from Nelson's company, the New York-based bank Morgan Stanley recently announced that it would hire 150 people in a new office building, Bond Street Wharf, in Fells Point.

And a bill-collection company, NCO, recently announced it would move about 600 employees from the suburbs to the newly renovated Montgomery Park office building in southern Baltimore.

Arnold Packer, a senior fellow at the Johns Hopkins Institute for Policy Studies and former assistant U.S. secretary of labor, cautioned that it's always difficult to deduce cause-and-effect relationships between government policies and the economy.

But, Packer added, "Baltimore is faring surprisingly well. And if you are going to blame the mayor when things go lousy, you might as well give him credit when things go well."

Uneven benefits

The picture is not all rosy for the city. Population losses have continued under O'Malley, and not all areas of the city have participated in the recent real estate boom.

Many poor sections of East and West Baltimore continue to decay while home values in Canton, Charles Village, Butcher's Hill, Roland Park and other stable neighborhoods have surged.

And even though employment surveys show solid job growth here, Baltimore continues to suffer from an overall unemployment rate - 7.8 percent in August - that is higher than most major cities, recent federal numbers show.

Still, there are signs of improvement.

The recent rise in employment was a departure from the way city residents fared during the recession of the early 1990s under Mayor Kurt L. Schmoke, who served from 1987 to 1999.

According to similar employment surveys carried out in August 1990 and August 1993, city residents reported losing 15,247 jobs over that period, about 4.8 percent. The city continued to lose jobs, and housing values stagnated, for much of the 1990s.

Richard Clinch, director of economic research at the Jacob France Institute at the University of Baltimore, said the city might be weathering the recent economic downturn in part because it never had many of the dot-com jobs that disappeared when the Internet bubble burst.

Clinch said Schmoke's administration was not viewed as "pro-business" because it focused on social services and helping the needy instead of creating jobs. This backfired, Clinch said, because poor people need jobs that grow only in a thriving business climate.

Schmoke disputed that characterization, saying his administration was successful in encouraging the tourism industry and others in the city. He said his officials began the planning for much of the construction boom now under way, for example at Inner Harbor East.

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