A tumultuous decade for most Maryland workers

Recession shrank jobs in many sectors while leaving others unscathed

December 26, 2010|By Jamie Smith Hopkins, The Baltimore Sun

The past decade not only saw monumental upheaval in the economy but also a reordering of Maryland's work force.

Employers in health care and government steadily added jobs, even through two recessions. But manufacturing, once the cornerstone of the state's economy, shrank by more than a third between the end of 2000 and 2010. Employment in construction, financial services and retail retreated to 1990s levels.

The divergence has been striking. While growth sectors added 200,000 jobs in Maryland over the past 10 years, declining industries shed just over 140,000 jobs, according to a Baltimore Sun analysis of estimates from the U.S. Department of Labor.

That has created a divide in the middle class and widened a gulf between rich and poor, mirroring a national trend. Some have jobs and job security. Others, suddenly, do not.

The shifts also rendered the state less economically diverse, with more residents dependent on the government — directly or indirectly — for their paychecks. That's a problem, with pressure growing for the federal government to curb spending to get a handle on the deficit. Already the Obama administration has moved to freeze federal workers' salaries and rein in contractor spending.

"I'm not saying Maryland will become Detroit," said Richard Clinch, director of economic research at the University of Baltimore's Jacob France Institute, referring to the city whose fortunes rose and fell with the automotive industry. "But the engine of growth for the Maryland economy is going to be removed."

One in every five of the state's jobs is public-sector, an increase from 10 years ago. Nationwide, it's one in six. Professional and business services, a sector that in Maryland includes many government contractors, also grew as a share of the state's job base.

And government plays a sizable role in Maryland's health care and education sector, which passed the 400,000-job mark this year after adding about 90,000 positions. The Johns Hopkins University wins more federal research and development money than any other institution in higher education — year after year.

Public-sector gains helped Maryland's work force grow over the past 10 years — albeit an anemic 2 percent — even as most of the state's private-sector industries cut back.

"We have been far less hit by the last two recessions than the nation, but … the government cannot continue to spend this way," Clinch said.

A deficit-busting, smaller-government sentiment helped sweep Republicans to the majority in the U.S. House of Representatives. The investors who finance the country's debt — China in particular — won't write checks indefinitely, Clinch said.

And state government has its own budget woes. Maryland Gov. Martin O'Malley is offering $15,000 buyout packages to reduce the number of state employees.

Bill Barry, director of labor studies at the Community College of Baltimore County, fears that public-sector cutbacks here and nationally will exacerbate the divide between the haves and have-nots. "My concern is there are going to be 10 [million] to 20 million people who never work again — permanent unemployment," he said.

In a report this month, the Greater Baltimore Committee, a business and civic leadership group, urged elected officials to improve the state's business climate. Maryland's advantages, such as a highly educated work force, aren't enough to outweigh downsides such as uncompetitive taxes and bureaucratic roadblocks, the group said.

"If the recession has taught us anything, it's that the private-sector — not government — is the engine that drives business growth, job creation and ultimately Maryland's economic future," the report states.

A sector-by-sector breakdown shows that while many have ridden the roller coaster of the economy, others are sinking — or thriving — regardless of broader trends.

One major force reshaping the state's economy during the past decade was the housing bubble-turned-bust. Construction firms added 26,000 jobs in the state between 2000 and 2006, only to cut 38,000 over the next four years. Companies specializing in homebuilding took the first hit. Problems then spread into commercial construction as financing dried up and the recession took hold.

"It's been extremely tough," said Rod Easter, president of the Baltimore Building and Construction Trades Council, a coalition of 15 construction unions. "There has just not been any money for big projects, and everyone's scrambling for whatever comes out."

Financial-services employers, rocked by the crisis that toppled lenders and Wall Street firms alike, ended 2010 with about 11,000 fewer jobs in Maryland than a decade earlier. Some cuts are still to come: Money manager Legg Mason announced in May that it would cut 30 percent of its Baltimore-area work force by the end of next year.

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