BRAC's big boom is likely oversold

October 31, 2007|By JAY HANCOCK

I have heard it from merchants. I've heard it from car dealers, Realtors and bankers. Sure, Maryland's economy is slowing, they concede. Homes are sitting empty. Store sales are sinking. Loans are going bust.

But the thousands of jobs that the Defense Base Closure and Realignment Commission is shifting here will not only keep Maryland out of trouble but ensure decent growth even if the country goes into recession.

If only it were so.

Base realignment will limit any pain, true. But the defense jobs moving here are a smaller part of the economy than many believe, and their potential effects have been widely exaggerated.

If the rest of the economy hits the pits, BRAC won't save Maryland's bacon.

The state could gain up to 60,000 jobs through realignment, policymakers keep saying. But the only guaranteed positions are 15,000 government and private-contractor jobs that Washington is obligated to move here.

Mainly they're going to Fort Meade in Anne Arundel County and Aberdeen Proving Ground in Harford County.

Everything else is hoping, guessing and extrapolating.

People assume that "non-embedded" contractors near Fort Belvoir in Virginia or Fort Monmouth in New Jersey will follow clients to Aberdeen or Fort Meade. But in an age of 256-bit encrypted Web sites, they might not have to. In any case, counting them involves big assumptions about procurement trends and contractor hiring.

Many on- and off-base jobs will probably go unfilled for months or years because of a shortage of qualified people with high security clearances. Surveys at Fort Monmouth showed that 70 percent of the employees scheduled to move to Maryland might quit or retire instead, The Sun has reported.

A shortage of affordable housing will also make it hard to fill the gap.

Another uncertain chunk of job growth is supposed to come from off-base suppliers such as office-supply stores and transportation companies.

Even more evanescent are "induced" jobs that will supposedly pop out of the ground.

The hordes from New Jersey, Alabama and elsewhere will need restaurants, real estate agents and dry cleaners, the thinking goes, and this will push BRAC benefits higher than the F-16s being realigned to Andrews Air Force Base.

More sober take

A more sober take comes from RESI, the economic research arm of Towson University.

RESI figures realignment will produce 45,000 Maryland jobs, not 60,000: 15,000 on the bases, 23,000 from off-base suppliers and contractors and 7,000 more in restaurants and so forth.

But even this involves very generous assumptions. And even if it turns out to be true, most jobs won't get here for at least five years.

Realignment effects will stretch until 2015 and afterward, calculates Daraius Irani, RESI's director of applied economics.

5,000 jobs a year

That means average realignment growth between now and then would be about 5,000 jobs a year - two-tenths of a percent of the state's job base, nowhere near enough to revitalize a creaky economy.

Maryland needs employment growth of at least 20,000 jobs a year to keep above water. It'll add 30,000 this year. A great year is 50,000 or 60,000, which it hasn't achieved since the 1990s.

So we need at least six times as many non-BRAC jobs as direct and indirect BRAC jobs to keep up at the present pace, and it's increasingly uncertain where they'll come from.

"We need to consider that [BRAC] is a building block for us to leverage future growth, but it is not a solution to any downturn that may occur," says Irani.

Boondoggle peak

Realignment notwithstanding, the great federal homeland security and defense boondoggle that has turned Maryland into the richest state in the nation is reaching its peak.

The money will keep flowing, but unless there's another bad U.S. terrorist attack it won't fuel the same rate of growth.

Biotechnology isn't adding jobs at nearly the pace we need to pick up the slack left by real estate and manufacturing.

Health care - which is the anchor of metro-Baltimore's economy and responsible for a disproportionate share of its prosperity in recent years - might come under pressure if Congress tackles universal medical coverage.

BRAC reminds me of the Y2K bug - the computer dating glitch that was supposed to throw the world into anarchy on Jan. 1, 2000.

Both could be seen coming years in advance. Both generated huge analysis and media coverage. Both will turn out to be much more important in anticipation than experience.

Chopped liver it's not

OK, BRAC isn't chopped liver, either. RESI didn't count BRAC-related construction jobs, which will expand the economic halo. Irani figures average pay for BRAC-related jobs will be more than $70,000, which can buy a lot of restaurant meals and dry cleaning.

BRAC might even enable Maryland to grow faster than the rest of the country.

But I wouldn't bet my company on it.

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