Maryland Job Gains Proved Slim in 2010

… Home sales are on the upswing, but it turns out employment is not …

By Jamie Smith Hopkins, The Baltimore Sun

6:30 PM EST, March 10, 2011

Maryland employers created far fewer jobs in 2010 than the federal government originally estimated, with businesses reversing course from gains to cuts in the latter part of the year — painting a picture of a recovery that’s tenuous at best.

The newly revised figures from the U.S. Department of Labor, released Thursday, show Maryland with a gain of about 4,500 jobs in December compared with the corresponding month a year earlier. That’s a fraction of the 25,000-job increase the government had earlier estimated, using preliminary data.

Labor Department estimates also show Maryland employers cutting 7,100 positions this January over the previous month — the fifth-largest drop in the nation.

Bad weather could have added some job losses to the mix in January that might be only temporary, said Charles W. McMillion, president and chief economist of Washington-based MBG Information Services. But the overall trend doesn’t look good, he said.

“The recovery last year was not as strong as we had thought,” McMillion said. “And more troubling is, in recent months it appears that Maryland’s recovery may have stalled.”

The Labor Department, which draws on samples for its monthly figures, relies on a fuller count of payrolls around this time each year to revise past snapshots. Job totals have fallen nationwide through such “benchmark” revisions.

February job numbers, already released for the nation as a whole, were an improvement over January’s. So at least some areas will see an uptick when state-by-state figures for February come out later in the month.

And one local economic report already out for February, home sales in the Baltimore metro area, had some bright spots. Though prices fell unabated, buying activity continued on an upswing, Metropolitan Regional Information Systems said Thursday. The Rockville company runs the multiple-listing service used to buy and sell homes.

About 1,350 homes changed hands in the metro area last month, up 7 percent from a year earlier, when a federal tax credit for homebuyers was still in effect. Sales also rose in January and had stabilized in December after a slump triggered by the end of the tax credit last summer.

Real estate agents have attributed the change to the greater affordability of homes — thanks to the price drops — and buyers’ fears that interest rates will rise if they wait.

But buyers haven’t picked up the pace everywhere. The numbers of homes sold in February rose in Anne Arundel County, Baltimore and Harford County — especially in Baltimore, up 30 percent — while they fell elsewhere in the metro area. Howard County’s drop in sales was the steepest, at 21 percent.

Sandra Hopkins, an associate broker for in the Greater Baltimore area, said the military base reshuffling effort known as BRAC — which is sending thousands of people to installations in Harford and Anne Arundel counties — has brought more buyers to some communities.

But the housing market still feels pretty slow overall, she said. Despite recent gains, the 1,350 homes sold in the metro area last month represent just half the number sold five years earlier, when the housing bubble was just starting to lose air.

“It’ll be interesting to see what the market does once most of these [BRAC] positions are in place, once we get a true feel for market conditions,” Hopkins added.

BRAC means new federal jobs and contractors, good news for the state’s economy. But deficit-fighting efforts in Congress to cut billions of dollars from the federal budget will likely have a negative economic impact in Maryland, where federal employment and procurement are huge drivers.

“The benefit that Maryland always gets from its proximity to federal government and federal contracting may have turned into a problem,” said McMillion, the economist.

Some contractors are already looking to trim their staffs. Northrop Grumman Corp. plans to cut 500 jobs in its locally based Electronic Systems sector by the end of May, first with buyouts and then with layoffs if necessary. Most of the reductions will hit the Baltimore area, with the rest spread out over several states.

But many contractors are in a holding pattern, neither adding nor cutting jobs as they wait for Congress to pass the much-delayed budget for the current fiscal year and start debating the next one, said Neal J. Couture, executive director of the National Contract Management Association in Northern Virginia.

“Six months from now, we’ll have a much more clear view of things, I suppose,” he said.

Maryland’s unemployment rate actually fell in January, to 7.2 percent from 7.4 percent in December. However, much of that decrease was a result of residents dropping out of the labor force — generally a sign of discouraged job seekers taking a break from the hunt for work. People who aren’t actively looking for a job are not counted as unemployed.

All told, the state has about 110,000 fewer jobs now than it did three years ago, as the recession was just getting under way. For Kathleen T. Snyder, president of the Maryland Chamber of Commerce, the newly revised numbers that show only small job gains last year speak to how difficult the recession and its aftereffects have been.

“These numbers are indicative of the problems many small businesses in Maryland are having in trying to grow their business,” she said. “They’re not ready yet to hire more people.”

Snyder said she’s hearing “cautious optimism” from employers that the state’s economy will get better later in the year, which she said could translate into increased hiring. But the impact of budget tightening in Washington is the unknown hanging over many companies.

She said she hopes Maryland elected officials work on ways to diversify the state’s private sector.

“Our dependence on the federal government is something that we need to be very mindful of,” Snyder said.

Copyright © 2011, The Baltimore Sun

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