Md. jobless rate falls

Unemployment at 3.8% in Jan., but only 1,300 new jobs are created

March 09, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Unemployment in Maryland dropped to a low 3.8 percent in January, the federal government said yesterday, but employers didn't add very many jobs - just 1,300.

The preliminary numbers, adjusted by the Labor Department to account for seasonal variations, continue a trend of conflicting messages about the state's job market. The unemployment rate, which improved from 3.9 percent in December, is nearly as good as it was in the economic boom years of 1999 and 2000. But job growth has turned fairly anemic.

Employers created 23,900 jobs in the 12 months ending in January, a number that isn't seasonally adjusted because it is annual. That compares with the roughly 40,000 jobs created between January 2005 and January 2006.

Usually, if the jobless rate improves at a time of tepid job growth, it's because discouraged would-be workers are dropping out of the labor force, artificially lowering the unemployment numbers. But that's not the case here. In fact, a growing number of Maryland residents have jobs.

Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, says he sees no signs that the state's economy is faltering.

He offers two explanations for the low job growth: Worker shortages are preventing companies from adding jobs as quickly as they otherwise would, and - perhaps even more important - more Marylanders are working in Washington and Northern Virginia. The unemployment rate is based on where people live, but the jobs number measures where people work.

And Virginia needs more workers. Its unemployment rate was 2.8 percent in January, compared with the national rate of 4.6 percent. Economists typically dub anything below 4 percent "full employment."

"The Washington area is doing so well, much of Baltimore is now a suburb of Washington," Clinch said.

Mitch Halbrich of the Mergis Group, a recruitment agency, can attest to the worker shortage problem.

Mergis, which helps companies find white-collar workers in such fields as accounting and marketing, finds that firms are much more willing to hire people they wouldn't have considered before - those who can't work more than 25 hours a week, for instance.

"We're scrambling for candidates," said Halbrich, who is based in Mergis' Baltimore office as senior managing director for interim executives for the Mid-Atlantic region. "It just feels to me like there's less people."

The state could help by changing its transit options to better link residents in Baltimore City and Prince George's County with job-rich suburbs, Clinch said. Both urban jurisdictions have higher-than-average unemployment rates, but residents without cars are often stuck close to home.

"MTA is very well set up, I guess, for getting people into the city or around the city but not out into suburban areas," he said.

The Maryland sectors that grew the most in the past 12 months were education and health services, which added 7,600 jobs; leisure and hospitality, up 7,000 jobs; and professional and business services, up 6,200 jobs.

But several sectors shed a significant number of jobs over the same period, according to the government numbers. The continually contracting manufacturing sector cut 2,500 jobs. Employment in trade, transportation and utilities fell by 1,800, and the information sector eliminated 1,500 jobs.

Newly revised numbers from the federal government also show that job growth last year was not as high as was previously thought. Employers added about 32,000 jobs, not 36,400. That's on par with 2004 but short of 2005 - and far short of 1999 and 2000, when annual job growth topped 60,000.

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