Still Ticking

The Bureau of Labor Statistics reported that Maryland's unemployment rate rose in September to 4.6% from a rate of 4.5% in August.  More than 138,000 Marylanders are looking for work but unable to find it - an increase of about 33% since the beginning of the year.

Yet, the unemployment rate in Maryland is still well below the national unemployment rate of 6.1% and far below the rate in some of the traditional industrial states like Michigan (8.9%), Illinois (7.3%) and Ohio (7.4%) and some of the 'new industrial' states like South Carolina (7.6%) and Mississippi (7.7%).

The basic reason for our performance, of course, is that Maryland shed its manufacturing jobs many years ago and the economy today is primarily a 'knowledge economy' focused on the health and government sectors. 

In the 1950s, the steel mill and shipyard at Sparrows Point (partially picured above) employed 31,000 people.  Today, employment there is 3,500.  The largest private employer in the state is now Johns Hopkins Medical Center.  In 1950, one out of three jobs in the Baltimore area was in manufacturing.  Today, it's one out of twenty and most of those are manufacturing high-tech items such as missiles and missile launchers, defense electronics and radar systems and medical devices. 

Many more in Maryland are employed in the thriving biotech industry along the I-270 corridor and in the new biotech parks outside of Baltimore.  The sector continues to grow - yesterday the Army dedicated it's new biodefense lab at Fort Detrich in Frederick.  The Baltimore area added 70,000 new jobs between 2000 and 2007.  At the same time, the Cleveland area lost almost as many and the Detroit area lost some 250,000. 

Of course, this hasn't come painlessly.  Tens of thousands of workers who spent their entire lives working for Bethlehem Steel at Sparrows Point ended up losing their health care, their life insurance and finally their pensions as the company failed.  Retired GM workers will lose their health benefits soon. 

While the knowledge economy has bought considerable income and some resistance to economic downturns, most of its jobs are not open to those with just a high school diploma or less.  A knowledge economy requires knowledge workers and that's where our education system comes in.

With the budget problems the state faces, it's tempting to make cuts to state aid to community colleges and higher education.  The Governor and the legislature will need to resist this temptation because it's the availability of skilled and productive workers that attract high-tech companies to Maryland. 

Much has been made of the Tax Foundation's rankings showing Maryland falling from 24th to 45th in its business tax climate rankings.  But, of course taxes only are one of the factors businesses consider when they decide where to locate.  To look at another perspective, the Milken Insitute publishes an annual State Science and Technology Index which ranks states in terms of their technology and science assets and their ability to leverage those assets to achieve economic growth.  Maryland ranked second this year, behind only Massachusetts. 

So yes, taxes are higher here than I would like.  But I'd rather be where we are economically than where Michigan, Ohio, South Carolina or Mississippi are.