Jobless rate in Md. up sharply

May figure hits 4%, still below U.S. rate

June 21, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun Reporter

Maryland's unemployment rate hit 4 percent last month for the first time in 2 1/2 years as the national slowdown continued to take its toll, the federal government said yesterday.

The rate jumped from 3.6 percent in April, a big one-month leap. Still, economists say 4 percent isn't high unemployment by any means.

It's substantially below the nationwide rate, which rose to 5.5 percent from 5 percent last month. Joblessness worsened in all states except Louisiana, the Labor Department said.

Maryland employers added 1,100 jobs in May, according to preliminary numbers adjusted for seasonal variations.

That's decent growth, said Andy Bauer, regional economist for the Federal Reserve Bank of Richmond's Baltimore office. But it wasn't nearly enough to accommodate the unusually large number of people who entered the labor force last month looking for work - more than 13,000, the government's survey showed. It also wasn't enough to make up for the 2,600-job loss in April, according to revised estimates.

"It's pretty clear where things are going, and they're not headed ... in a good place in the near term," said Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm.

He foresees a rough period more like the 1990-1991 recession for Maryland than the 2001 downturn, which the state barely felt, thanks to federal spending in the wake of the terrorist attacks that year.

"I would expect the nation's unemployment rate to be roughly 6 percent by year-end and that Maryland's unemployment rate would be in the range of 4.5 [percent] to 5 percent," he said.

At least 65 people went to Goodwill Industries of the Chesapeake's career center in downtown Baltimore yesterday, hoping for help finding a job. That's a lot more than normal.

"We've been seeing about a 50 percent increase," said Phil Holmes, the charity's vice president of public policy and program development.

"We're swamped."

The people who turn to Goodwill have usually been disconnected from the working world for a while. But now a lot more clients are the recently laid-off. Goodwill's job placement numbers are about equal to last year's - it's just that there are more people in need of help.

The unemployment rate is being driven up not only by those who lost jobs last month but also by people who just jumped into the labor pool. Bauer, the Federal Reserve economist, suspects that college students are looking for work in larger numbers.

But he said it's also possible that something went awry with the government's efforts to adjust the figures to account for normal seasonal changes. It has been 12 years since it counted so many Marylanders entering the labor force in a single month.

Considering that employers are contending with a housing slump, a credit crunch and energy shocks, it could be a lot worse, Bauer said.

"We're a strong service state, and the service industries are still doing pretty good except for the finance industries related to the housing market," he said.

Employers in the state added 26,800 jobs in the past 12 months.

The biggest gainer was education and health services, which added 11,400 jobs. Professional and business services, which includes such fields as engineering, added 9,400 jobs.

Among the other gainers was leisure and hospitality, adding 5,400 jobs.

Financial activities employers cut 2,300 jobs in the past 12 months. Construction, facing similar housing and credit problems, cut 1,800 jobs. Manufacturers eliminated 3,700 jobs.

The Gaylord National Resort & Convention Center in Prince George's County, which opened in April with just over 2,000 employees, helped drive up hospitality employment, said Mary Jo McCulloch, president of the Maryland Hotel & Lodging Association. It's not the only place hiring, either.

"We're still having a hard time finding employees," said McCulloch, who is also president of the Maryland Tourism Council.

The industry is feeling the impact of the U.S. slowdown and higher gas prices, though. Leisure travel and meeting planning in Baltimore are "a little bit down," she said. Ocean City reports that visitors aren't staying as long.

"But they also seem to be able to fill those rooms with other people," she said. Visitors are "spending the money on the gas tank but still going."

Bauer said Maryland businesses, which he surveys regularly, are generally pessimistic about the state of the overall economy but report they're doing OK.

More than half of the respondents said things in June are about the same as last month or better at their own company. And about two-thirds expect their businesses will be doing at least as well if not better in six months, despite gloomy economic news, Bauer said: "They see things turning around."

jamie.smith.hopkins@baltsun.com

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