Md. personal income rises above pre-recession levels

Second quarter marks the fifth increase after a recessionary bite

September 20, 2010|By Jamie Smith Hopkins, The Baltimore Sun

Personal income in Maryland has collectively risen back out of the hole the recession dug.

Maryland is one of only two states where personal income — not including government payments such as unemployment benefits and Social Security — is higher than when the economy faltered, according to a Commerce Department analysis released Monday. The agency tallied up wages, dividends and other income earned this spring. The other state is Alaska.

Maryland residents would take in $243 billion on an annual basis at the pace set in the second quarter, minus those government payments, the federal agency reported. It was the fifth quarterly increase in a row and surpassed the third quarter of 2008 — the period right before the recession dragged down income in the state — by nearly $100 million.

"We knew that the recession in Maryland was not nearly as severe as it was nationwide," said Charles W. McMillion, president and chief economist at MBG Information Services in Washington. "Generally for the last year, things have been mostly looking up in Maryland."

The income data were released as the National Bureau of Economic Research declared the end of the recession was June 2009, making it the longest national downturn since the Great Depression.

Economists say the official end date doesn't mean that financial life is back on track for Americans, with nearly 10 percent still unemployed and millions struggling to get by. Even in Maryland, with its lower jobless rate and faster uptick in income, many residents likely feel worse off than they did a few years ago, McMillion said.

Personal income includes everything from wages to dividends to interest, but it's not a measure of net worth. After the recession hit in December 2007, retirement accounts and property values shrunk. Many people, here and elsewhere, took an "enormous hit," McMillion said.

That's particularly true for workers in the construction sector, walloped by the housing slump even before the economy hit the brakes. Maryland construction employment began to rise in the spring after falling drastically, but few are optimistic that the industry is on a steady upward climb.

"Nobody quite knows what to expect because it's never been this bad before," said Champe C. McCulloch, president of the state chapter of the Associated General Contractors of America. "Some companies are really on the ropes. I'd love to think that 2011 was going to show us a return to more normal building levels, but everything we look at suggests that's not going to be the case."

Health care and federal contracting have been saving graces for Maryland. The education and health services sector employs 27,000 more people now than when the recession began. And the U.S. government budgeted $34 billion to buy goods and services here last fiscal year, with about half going to defense. The annual increase far outpaced the ramp-up that came after the Sept. 11 terrorist attacks.

One of the few states with more per-capita federal procurement than Maryland is Alaska. So it's no coincidence that it's the only other state where income — minus unemployment insurance and other government assistance — has returned to pre-recession levels.

The Commerce Department noted that 25 other states are back to their pre-recession income levels only after accounting for the government payments, which rose in the past few years along with the spike in unemployment. In fact, many states have been forced to borrow from the federal government to continue mailing out unemployment-insurance checks.

Including government payments, Marylanders' annualized income topped $280 billion in the second quarter.

The Commerce Department didn't calculate per-capita income, but a separate estimate by the Census Bureau ranks Maryland No. 1 in the nation for median household income. It topped $70,000 in 2008, the most recent figures.

Though income in Maryland has recovered faster than the nation since the recession, second-quarter growth here lagged. Personal income in the state rose 0.9 percent, less than 39 other states. North Dakota, at 2 percent, recorded the biggest jump.

Maryland wasn't far behind the average, though. More than half the states saw personal income rise between 0.8 and 1 percent.

jamie.smith.hopkins@baltsun.com

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